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Energy For Grown-Ups: The New York Angle

by Conn Nugent

Let us talk, as New Yorkers, of energy in general and electricity in particular.

Waste no time on the bogus crisis of rising gasoline prices. Adjusted for inflation, pump prices today are lower than they were before the Scare of 1973. Gasoline is still cheaper than bottled water. American jawboning and Saudi acquiescence have forced OPEC to increase oil supplies; already prices are holding steady or heading downward. But if, over the middle and long terms, gasoline prices actually do rise over their historical levels, then two cheers. Expensive fuel will be a good thing for New York City. Mostly. Relative to other places.

New Yorkers require less energy than most other groups of Americans. That's because we burn less fossil fuel per capita, and that, in turn, is because we drive less and because we live and work in older, smaller spaces. The American activities that consume more energy than all others combined are driving cars and constructing and operating buildings. New Yorkers can ride trains and buses and even walk more easily than their compatriots. And old New York buildings use less energy per occupant than structures in newer places in comparable climates.

So when gasoline and electricity prices rise, New York gains the competitive upper hand. Mostly. Three counter forces are important, however. One, many New York buildings are heated by oil, and local landlord-tenant custom is such that nobody has much of an incentive to conserve. Two, New York, because it is a city of islands, is unusually dependent on energy-intensive truck shipping rather than energy-conserving rail freight. Three, New York electrical demand is rising dramatically each year -- faster than the growth in other cities -- because of our booming economy: offices are more wired for telecommunications, and residential air conditioning has become near-ubiquitous.

Demand for electricity is way up, but the supply of electricity is not rising to meet it. And this imbalance will only get worse in the near future, experts say: rate hikes and brownouts will become more frequent until new generating facilities come on line. (Check out the forecasts of service unreliability by the North American Electrical Reliability Council) We had a preview in early July. Upper East Siders lost their juice for a few hours, and pols vented: Who's in charge here?! What does Con Ed have to say?!

Well, says Con Ed, it's not our fault. The state ordered us to sell our power plants. So we're not a power-generating company anymore. We're a power-transmitting company. More precisely, we're an energy-distribution company (EDC), with a subsidiary that's an energy-services company (ESCO). But our energy-servicees company is now just one of many. Remember the push for de-regulation? Now you got it. Besides, says Con Ed, we've increased our annual delivery-upgrade budget by $100 million this year. Don't blame us.

That's right (more or less), agrees the once-mighty New York State Public Service Commission. The only sure way for New Yorkers to avoid price hikes and shortages is to encourage the creation of some new generating capacity.

Blechh, say neighborhood activists and their elected officials, power plants! Can't we just buy more electricity from some faraway place?

Not quickly and not cheaply. Transmitting megawatts of electricity over long distances requires special lines and transformers. Even then, energy will dissipate en route. Current economics make it cheaper to generate the extra supply from a spot relatively nearby. And indeed there are proposals for at least six new power plants within the City boundaries, all of which would be relatively clean-burning, energy-efficient, gas-fired models. City Council Speaker Peter Vallone wants no such new model sited in his home district of western Queens, which already has several sites. His subsequent critique of deregulation lends credence to Phil Lentz's prediction that de-reg might soon go re-reg.

Maybe, but not if Chuck Schumer gets his way. The New York junior Senator has introduced a bill (with Phil Graham of Texas) that would compel nationwide de-regulation by the end of 2002. So long as energy vendors promise lower rates, the popular tide seems to be running slowly in de-reg's favor. A case can be made that a mature electricity "market" doesn't yet exist, but privatization proceeds apace nonetheless.

And what, you ask, is the proper attitude of an engaged and environmentally-upright New Yorker. Let the current supply/demand assymetry worsen for a while, in the hope that enough annoying power outages would re-confer a sense of urgency to the task of energy conservation. More efficient appliances; thicker insulation; less piggy habits. But on the side you might want to grease the wheels for some new, small, relatively benign natural gas co-generation plants as you phase out their bigger, uglier ancestors.

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