Monday, November 08, 2010
Plan for Electric Cable to Grid Nears Deadline
A deadline looms to save a project, years in the planning, that would involve digging under the Hudson River to connect New Jersey and Manhattan, but government officials cannot agree on how to share the costs. Sound familiar?
But this project is not the commuter rail tunnel that New Jersey’s governor, Chris Christie, scrapped late last month. It is a proposed seven-mile-long cable that would hook New York City to the main electric power grid west of the Hudson. The project was developed to avert power shortages in the city.
But the city, which had supported the project, is now holding out for better rates on the electricity, and the planners say there is no more time for negotiating.
The chief executive of the New York Power Authority, Richard M. Kessel, called the cable a must-do project that within a few years “is going to be needed to keep the lights on in the city.”
And unless city officials reach an agreement with the authority in the next week, Mr. Kessel said, “the project will go away.”
The developer, Hudson Transmission Partners, has cleared almost all of the regulatory hurdles for its plan to draw power from the regional grid in Ridgefield, N.J., and transmit it to a Con Edison substation at the west end of 49th Street in Manhattan, at a total cost estimated at $850 million.
The plan received environmental permits and permission from the New York State Public Service Commission to start construction next year.
Hudson Transmission can do the underwater work only in the summer and early fall, said Edward M. Stern, president of PowerBridge, the developer’s parent company. If it is delayed beyond 2011, he said, some of the developer’s other agreements, with investors and property owners, are likely to fall apart, he said.
The board of the Power Authority, a state-owned utility that supplies electricity to the New York City Housing Authority and other city agencies, made a commitment to pay more than $165 million for necessary improvements to the power grid.
But that guarantee is scheduled to expire next Monday, and the authority’s trustees have said they will not approve another extension.
“We are at the end of the rope and the project will be gone forever,” Mr. Stern said. “The project needs to move ahead now, and it can’t wait for the political process to finish up at its customary pace.”
City officials said they would not agree to pay more than what they thought was fair just to save the project.
“At the right price and under the right conditions, this would be a good deal,” said Seth W. Pinsky, president of the city’s Economic Development Corporation.
Mr. Pinsky and the other city officials involved in the long-running negotiations describe the project in less than urgent terms. They said it would reduce the chances of power shortages or failures. Still, they said, the city has time to find alternatives if the cable from New Jersey does not work out.
The cable would carry as much as 660 megawatts of power within a few blocks of Times Square. That would cover most of the growth in demand that is projected over the next decade: Con Edison’s latest long-term forecast estimated that the city’s peak demand for electricity will rise by 760 megawatts in 10 years to about 14,000 megawatts.
Con Edison has vouched for the project. In a letter to the state’s Public Service Commission in April, a Con Ed executive said that without the cable, “a future electric system emergency” could force the utility to overload parts of its transmission network and jeopardize the reliability of the overall system.
The project could also benefit homes and businesses in the city with lower costs for electricity, since power imported from the grid in New Jersey is cheaper.
Mr. Kessel said the savings could add up to $2 billion over 20 years. But those projections are based on assumptions of a wide spread between the market prices for electricity in the city and in the states served by the regional grid.
Since the recession set in and reduced demand for power, the gap between those prices has shrunk, making imported electricity less attractive.
The narrowed spread has also changed the tune of city officials.
Just five months ago, the Economic Development Corporation expressed support for the cable project, saying it should lower electricity prices and reduce the city’s reliance on older generators that produce more pollution.
At the time, though, the project was being monitored by Robert C. Lieber, who was the deputy mayor for economic development; he left the job in June.
Since then, Mayor Michael R. Bloomberg recruited Stephen Goldsmith as a deputy mayor. Mr. Goldsmith, who has been looking for ways to cut the city budget, has taken responsibility for the negotiations over the cable project.
“We made a deal to do this project. Then a new guy came in and they want to change the whole thing,” Mr. Kessel said, referring to city officials. “It’s a shame on all of us if we can’t get this project done.”