Thursday, July 14, 2011

If Indian Point Closes, Plenty of Challenges

Peculiarities of the electricity system in New York State, including its unusual independent status, would make it difficult and expensive to replace electricity from the Indian Point nuclear power plant if Gov. Andrew M. Cuomo succeeds in shutting it down, experts on the grid warn.
Closing the plant could also increase the frequency of power failures, officials who run the state’s high-voltage grid say, given that New York has weak ties to generation capacity in other states.
Citing safety concerns, Mr. Cuomo warned Indian Point’s owner, Entergy, last month that he would insist that the plant’s two reactors in Westchester County be retired in 2013 and 2015, when their initial 40-year licenses expire. He maintains that some combination of new generators and new transmission lines could be ready in time to cope with summer 2016, the first peak demand period that power-hungry New York City and Long Island would face without both reactors.
But industry experts are skeptical that new generators or transmission lines could be built that quickly in the New York metropolitan region’s cumbersome regulatory environment. Obtaining construction permits, countering legal challenges and then building a plant or transmission line almost always takes more than five years, they note.
While a downstate coal or natural gas plant could step up production once Indian Point closed, that electricity could prove far more expensive, industry analysts say. And a lighting strike or other event that knocks out a transmission line — a problem that the system can usually ride through today — could lead to rotating blackouts, they add.
“The answer is pretty simple: prices will be higher and reliability will be lower,” said Edward Kee, vice president of the firm NERA Economic Consulting.
Up to 2.1 million customers in southern New York would be vulnerable to power interruptions from 2016 to 2020 if Indian Point shut down, Rick Gonzales, chief operating officer of the New York Independent System Operator, or I.S.O., told a State Senate committee in May.
Officials at the I.S.O., which runs the state’s grid, estimate that Westchester and New York’s five boroughs will use about 64,500 gigawatt-hours this year. Indian Point will generate about a quarter of that, or 16,000 gigawatt-hours.
If both Indian Point reactors were to close, wholesale electricity prices would rise about 12 percent, or $1.4 billion a year, according to a projection from Consolidated Edison, which serves more than three million customers in New York City and part of Westchester.
In New York’s daily energy auctions, the I.S.O. prices electricity by matching offering bids from suppliers against the amount of energy that utilities say they need to serve their customers. Nuclear plants always submit relatively low offers because their costs are the same whether they are running or not, and they want to be assured of having a market.
If Indian Point closes, the list of successful bidders will eventually include more plants fired by coal or natural gas. Their operating costs are higher and they will therefore bid higher, analysts say. And in a quirk of New York’s system, every supplier is paid at the price of the most expensive megawatt-hour needed to satisfy the region’s demand, which will magnify the rise in prices.
The price impact would be smaller if the state added some low-cost generation or transmission. So far, Mr. Cuomo has not been specific about where substitute power would come from, but aides say proposals are certain to emerge, now that he has taken a hard line on closing Indian Point.
“We recognize the window is relatively short,” said an aide, referring to the time it takes to build plants and transmission capacity. The aide spoke on the condition of anonymity because the policy has not been made final.
Some experts on New York’s electricity system suggest that existing transmission lines could be rebuilt to operate at higher voltage and thus provide more capacity. A proposal for a new line running from Quebec to New York City under Lake Champlain and the Hudson River is inching forward, for example, and sponsors say it could be completed by 2015.
Ashok Gupta, an energy expert at the Natural Resources Defense Council, has suggested that some generators in northeastern Queens that run on natural gas could be replaced by newer ones that get more power out of a given amount of fuel. Such steps should be taken regardless of Indian Point’s fate, he and others contend.
“Everything we’re saying should be done if Indian Point should be shut down — should be done anyway,” he said, referring to proposals for cleaner and more efficient technology and new transmission lines.
The challenges facing electricity suppliers in New York are rooted partly in the way the system is administered. While New York City is in a densely populated region, it is only loosely tied to power generators in neighboring states. The city is served mainly by five big transmission lines that run from upstate New York, squeezing through the narrow stretch where Westchester is corseted by New Jersey and Connecticut to deliver a mix of power from energy sources in Quebec, Ontario and upstate.
By contrast, the six New England states have been integrated for decades into a single system, which gives each far more flexibility in balancing supply and demand in peak periods. From New Jersey southward, PJM Interconnection — the letters once stood for Pennsylvania, Jersey and Maryland — manages supply and demand for all or part of 13 states and the District of Columbia.
Even in New York State, connections are weak, further limiting options. “New York’s grid is a patchwork,” said Mr. Gonzales of the I.S.O., which keeps a round-the-clock watch on how heavily the state’s power lines are loaded. The agency divides the state into 11 zones mimicking the former territories of utilities, and it prices electricity separately in each one because of the weak way they are interconnected.
As a result, some parts of the system are highly congested, and power in those places can sell for double what it does in better-connected areas with strong generation like northern New York. In a region that stretches from south of Albany down through Dutchess, Ulster, Orange, Rockland and Westchester Counties, the five boroughs and Long Island, prices are sometimes double what they are in upstate or western New York.
Sometimes wind turbines upstate generate electricity for which there is no local market, but the energy cannot be delivered to the New York area because of congestion on the grid. Wind power could one day help replace Indian Point, experts say, but not without more transmission capacity.
Yet construction of new lines or new plants tends to stir enormous opposition, industry experts say. Paul Steidler, a spokesman for an energy lobbying group largely financed by Indian Point’s owner, pointed to NYRI, a proposed 190-mile high-voltage link between upstate and downstate that was shelved in 2009 after major objections from people in areas it would pass through.
“Based on the NYRI experience, I do not think it is possible to underestimate the amount of opposition that the Champlain line will face,” Mr. Steidler said. “We shouldn’t count on it until it is up and running and all the lawsuits are resolved.”
Power plant construction in the New York City area faces yet another hurdle: because the air already violates the smog standard, for each ton of nitrogen oxides that any new power plant would emit, the Environmental Protection Agency requires the builder to cut output of that pollutant from another source by 1.3 tons. That means a developer wanting to build a new plant has to find another plant to clean up.
Closing the Indian Point reactors would, however, hardly be gloom and doom for everyone. Any company that runs a generator in downstate New York ends up selling its output at a higher price, and would share in the $1.4 billion a year that Con Edison says its customers will pay if the nuclear plant closes.

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