By PHILIP LENTZ
Nov 12, 2000 (Crain’s New York Business)The new power plants planned for New York City are desperately needed as demand for electricity soars. But experts fear there will not be enough natural gas to power them.
Several new regional gas pipelines have been proposed to increase the supply of gas into the city by 25%, but all have run into community opposition, and it is unclear whether they will be approved and built in time to fuel the new plants.
Delays in building new pipelines could also drive up the cost of electricity by forcing existing power plants to buy gas on the more expensive spot market or burn oil. Fuel costs could also increase for large users, such as hospitals, universities and apartment houses, which have to switch to other fuels when gas isn’t available.
Residential and small business customers of natural gas would be largely unaffected, since the local utilities, Consolidated Edison Co. of New York and KeySpan Corp., guarantee the same delivery price to them year-round.
Low on gas
“We characterize supply as tight,” says Phillip Teumim, director of gas and water for the state Public Service Commission. “We need additional pipeline capacity to meet core load growth.”
New Yorkers saw the impact of a capacity shortage last winter when a cold snap sent local gas prices skyrocketing. And weather forecasters say this winter is likely to be colder than recent winters, which could limit gas supplies.
“Our pipeline is for all practical purposes full,” says a spokesman for Houston-based Transcontinental Gas Pipeline Corp., which provides about two-thirds of the natural gas in the New York area. “Demand has gone up, but the capacity has remained the same.”
The driving force behind the need for more pipeline capacity is the 13 applications for new or expanded power plants in the city. The plants, which combined would produce more than 6,000 megawatts of power, are designed to meet the city’s rising electric demand. All would be fueled by natural gas, which is cleaner than oil or coal and was, until recently, less expensive.
Also, the New York Power Authority has proposed installing 11 small gas turbines in the city by next summer to provide 520 megawatts of emergency electric power.
Not all of the proposed plants will end up being built, of course. But the PSC estimates that the city will need to increase capacity by 25%, or 700 million cubic feet a day, over the next five years to fuel new plants and meet increased demand from an expanding economy.
Schedules in doubt
Three new pipelines have been proposed to increase the region’s natural gas capacity: MarketLink, a 150-mile expansion of an existing Pennsylvania-to-New Jersey pipeline by Transco; Millennium, a 440-mile pipeline from Lake Erie to Westchester County by Columbia Gas Transmission Corp. of Fairfax, Va.; and Eastchester, a 30-mile spur planned by Iroquois Gas Transmission System from its main Long Island pipeline into the Bronx.
While the three are targeted to be completed before new power plants come on line, all have run into stiff local opposition, which put their schedules in doubt.
MarketLink has aroused fierce local opposition in New Jersey, putting its April 2001 construction start date in doubt. Transco recently asked the Federal Energy Regulatory Commission, which approves pipelines, for permission to build the pipeline in stages.
Millennium’s route in Westchester hit resistance when Columbia suggested putting the pipeline under Con Ed’s high-tension lines. Columbia now says it wants to put the pipeline along Route 9 and Route 9A. First proposed in 1997, the pipeline had its completion date postponed by backers for a year, to November 2002.
Iroquois also ran into local opposition in the Bronx when its original route was slated to go under a portion of Pelham Bay Park. That route has been changed, and the pipeline is scheduled to be completed in late 2002.
“Pipelines are getting as hard to build as power plants,” says Steve Bergstrom, president of Dynergy Inc., a Houston-based power producer. “The industry believes we are going to get decent pipeline expansion into the Northeast, but it’s not going to happen in the next two years.”
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