Electricity OUTLOOK:
Powering New York City through 2030

Table of Contents

Introduction and Background
Findings
Planning for Summer 2011
Supply and Demand of Electricity Capacity 2005-2010
The Outlook for Added Electricity Capacity in New York City 2011-2015
NYISO Forecasts for 2011-2021
Forecasting for the Important Summer Peak Demand
Assessing New York's Economy and the NYISO Forecasts
Looking Ahead to 2030
Conclusion

Generation
Two near-term generation projects are expected to add 1,062 MW in New York City by the summers of 2011 and 2012:

• Phase 2 of the Astoria Energy Project came online in early summer 2011, providing 550 MW of power.
• The Bayonne Energy Center project with 512 MW is expected to be completed in 2012, and will be directly connected to New York City's electric grid.

U.S. PowerGen's 105 MW South Pier Improvement Project is fully permitted, but the company will only begin construction when market price signals become favorable. The company's proposed Luyster Creek plant in Astoria is in the final stages of permitting for a 400 MW combined cycle repowering project, which would result in 200 MW of additional electric capacity.

NRG Energy's proposed Astoria Repowering Project would replace 600 MW of older combustion turbine units with 1,040 MW of new natural gas-fired combined cycle capacity at its Astoria site. If proposal details are finalized soon, construction of the project's two planned phases could be complete by the summer of 2013.

With these enhancements, New York City could gain about 1,100 MW of additional electrical generating capacity within the next year and the potential of another 700 MW of capacity by 2015.

Transmission
While New York City's status as a "load pocket" requires that approximately 80 percent of electricity generation be located in-City, restricted transmission capacity into the City has long been a cause of congestion that prevents the import of lower-priced power from upstate or neighboring utilities. Improved and increased transmission capacity not only offers the potential to lower in-City electricity prices, but can also be preferable to investment in generation capacity.

Since 2005, two new transmission facilities have been completed, directly increasing electricity supply in New York City:

• The 300 MW Variable Frequency Transformer (VFT) between Linden, New Jersey, and Staten Island.
• Con Edison's M29 line, which allows for an additional 350 MW of power from Upstate New York to the City, was placed into service in February 2011.

Another project that will add electricity capacity is the recently approved 660 MW HVDC transmission link being developed by Hudson Transmission Partners. The line, which will run under the Hudson River between Ridgefield, New Jersey, and Con Edison's 49th Street Substation in Manhattan, will be capable of delivering power directly from the PJM³ system to New York City. The project began construction in May 2011, with completion expected by May of 2013.

New York State's transmission owners, together with the New York Power Authority (NYPA) and NYISO, are pursuing longer term planning for transmission needs in New York City and New York State through the State Transmission Assessment and Reliability Study (STARS). In addition, NYISO has proposed a "Broader Regional Market" program to the Federal Energy Regulatory Commission (FERC) to improve efficiency in congestion management and pricing between neighboring grid operators in the Northeast and eastern Canada.

Without doubt, substantial improvements to interconnect the electricity grids serving the greater Northeast area could help increase imports of lower-cost power to New York City.

Alternative Energies
The investments now being made in wind farms in upstate New York offer little likelihood that the wind generation can be delivered to New York City without some upgrade of the transmission system from upstate to the City. Possible breakthroughs in alternative energies, such as locally sited projects for wind, solar power, or for distributed generation, will likely not materialize for several more years. A new solar project based in New Jersey offers the prototype for similar projects in New York City, and several recent proposals for offshore wind farms in New York, New Jersey, and Rhode Island have begun moving through the planning and permitting stage. These could potentially provide significant volumes of electricity in the next decade.

Natural Gas Supply
Supplies of natural gas are vital to New York City's residential and business community for household use, for production of steam, and increasingly, as the primary source for electricity generation. In 2011, natural gas will supply nearly 75 percent of all fuel for in-City power plants.⁴ In addition to the increased need for fuel for power generation, household demand for natural gas is expected to continue increasing over the next 20 years.

Con Edison estimates that, on average, total gas usage will increase at an annual rate of 1.7 percent per year between 2010 and 2030. If there is stronger economic and population growth than contained in their baseline forecast, the annual growth rate could increase by three percent.⁵

New York City's April 2011 update to its PlaNYC report states, "New York City has
a critical need for additional natural gas capacity. Despite decades of population and
economic growth, no new major direct transmission pipelines have reached the City
in more than 40 years." ⁶ The City's plan to "accelerate the phase-out of highly
polluting residual heating oil" will also require additional supplies of natural gas.⁷

Pipeline Capacity
The most recent major addition to pipeline capacity into the downstate New York area was the Millennium Pipeline, a 182-mile long project that terminates in Rockland County. This was brought into service in late December 2008.

Three additional pipeline projects are in the construction or proposal stage.

• Transco Williams is constructing six miles of new and replacement pipeline into the Bayonne Energy Center from its main pipeline in Essex County (expected to be completed in the summer of 2011).
• Transco Williams expects to file an application with FERC in late 2011 to build a three-mile lateral from its Lower New York Bay Extension to National Grid in the Rockaways, Queens, New York.⁸
• Spectra Energy Corporation filed a proposal with FERC in December 2010 to build a new 16-mile pipeline plus five miles of replacement pipeline from Linden, New Jersey, underwater to Manhattan. Although some resistance to the planned route remains, particularly in Jersey City, the project is on schedule to be completed by year-end 2013.

Shale Gas
Considerable quantities of gas trapped in shale rock formations are now capable of recovery through advances in drilling technologies, as well as favored by the current price of natural gas from conventional deposits. One of the largest formations in North America is the Marcellus Shale, located in New York State, Pennsylvania, and West Virginia. The Energy Information Administration (EIA) projects that the 2010 level of 4.9 Tcf of shale oil production, which is now 20 percent of total U.S. natural gas production, could reach 10.6 Tcf in 2030. Shale gas would then account for more than 40 percent of U.S. production.⁹

However, further improvements in drilling technologies may be needed to address environmental concerns over the potential side effects of chemicals used in the hydro-fracking process, and potential seismic effects from high-pressure water injections to penetrate the rock formations.

In June 2011, Governor Andrew Cuomo expressed support for shale gas exploration in New York State, but reiterated concerns included in the City of New York's April 2011 PlaNYC report that watershed areas for New York City and Syracuse need protecting. As a result, shale gas exploration in New York, which offers the promise of plentiful supply in future decades, will depend on the industry's ability to demonstrate to State officials that the environment and New York City's watershed can be protected.¹⁰

Smart Grid Technologies
Increased investments in new "smart grid" technologies are expected to improve customer ability to manage time-of-day usage and improve security of vital transmission systems. Con Edison has received $136 million in federal stimulus funding through the United States Department of Energy for smart grid technologies that are designed to "integrate information and communications technology into electricity generation, delivery and consumption."11 As part of a pilot program in Long Island City, Con Edison is installing approximately 1,500 meters to evaluate benefits for homes and businesses and will review charging profiles for plug-in electric vehicles.

3 — PJM is the regional transmission organization coordinating wholesale electricity in all or parts of 13
states and the District of Columbia. For more information, see www.pjm.com.
4 — Gas Long Range Plan, Con Edison December 2010, p. 28.
5 — Op.cit. Con Ed report, p. 34.
6 — A Greener, Greater New York PlaNYC, issued April 2011, p. 116.
7 — Ibid, p. 106.
8 — Williams Partners L.P. presentation, Northeast LDC Gas Forum, Boston, June 7, 2011.
9 — December 2010 update, from EIA website.
10 — The City of New York, in its April 2011 update to A Greener Greater New York PlaNYC, wrote "We
will work with state officials to protect New York City's watershed from natural gas exploration." p. 116.
11— Con Edison Press Release, June 7, 2010