New York power authority underestimate power plant costs by $275m

14 May 2004 – The New York Power Authority, which preaches efficient energy use to its customers, should listen more closely to its own advice on efficiency, according to State Comptroller Alan Hevesi.

Poor planning and skewed cost estimates have swelled projected costs for the authority’s new Poletti power plant in New York City by $275m, according to an audit issued yesterday by the State Comptroller’s office.

The mismanagement eventually will hit regular consumers in the pocket, Hevesi’s office warned.

The Authority countered that New York City needed a new power plant to meet its growing energy needs. It also pointed out that it built small power plants that were needed to help prevent brownouts and blackouts in the summer of 2001 and again in 2002.

Still, Hevesi’s office said that the mismanagement of the plant was inexcusable.

“They haven’t addressed the fact they didn’t manage this project in a cost-effective way,” said Jeffrey Gordon, a spokesman for Hevesi.

The State comptrollers audit also found that:

The Authority committed almost $31m to the Queens electric plant project without looking for cheaper alternatives.

If the Authority had used an estimate closer to the actual $650m cost, instead of the $375m estimate, it might may have looked at more cost-effective options.

The Power Authority’s “PowerNow!” project, where it installed 11 small generators to avoid an energy shortage in New York City, cost 42 per cent more than projected.