NY releases Energy Highway Blueprint

This week New York Governor Cuomo released the New York Energy Highway Blueprint (12 megabyte PDF), the state’s plan to “rebuild and rejuvenate New York State’s electric power system and enable the state to meet the needs of a 21st century economy and society.”

The Blueprint outlines 13 recommended actions in four focus areas, including:

• Expand and Strengthen the Energy Highway: building $1 billion of new electric transmission totaling over 1,000 MW of capacity, develop reliability contingency plans for power plant retirements (including energy efficiency and demand response), and support flexibility in public power authority contracting
• Accelerate Construction and Repair: advance up to $800 million of investments in electric generation, transmission, and distribution, and advance up to $500 million of investments in natural gas distribution to reduce costs to customers and enhance reliability, safety, and emission reductions
• Support Clean Energy: execute new contracts for up to $250 million within the next year with renewable energy developers under the Renewable Portfolio Standard to leverage an additional $425 million in private-sector investment to build up to 270 MW, study NY’s Atlantic offshore wind resource, and repower 750 MW of inefficient power plants on Long Island
• Drive Technology Innovation: facilitate smart grid initiatives with the investment of up to $250 million

Nothing in the Blueprint is mandatory, but it appears to have significant political force behind it.  What will the Blueprint likely lead to?

One likely result is significant transmission development.  If this happens, the new transmission lines could enhance reliability and create opportunities for energy produced upstate or in rural areas to be transmitted to load centers like New York City.  Transmission line development typically involves significant construction work and related employment, but can be expensive.  How this transmission development will be paid for remains to be seen, and may not be resolved for several years.

Another area of interest involves the development of reliability contingency plans for power plant retirements.  The Indian Point nuclear plant, located about 30 miles north of NYC, is currently undergoing a relicensing proceeding before the Nuclear Regulatory Commission.  It is unclear whether either or both of the two reactors at Indian Point will be relicensed, meaning New York may need to secure replacement power by 2016 (or sooner).  The Blueprint recommends that contingency plans for partial or full retirement of the Indian Point plant include energy efficiency and demand response.

The Blueprint also includes plans to increase the availability of natural gas, including for the purpose of switching customers from oil to gas. The NY Department of Public Service is slated to issue a notice on natural gas expansion policies by the end of 2012. It is unclear how the program will split its focus between residential, commercial, and industrial customers, but it could help reduce the cost and environmental impacts of oil use in New York.

Overall, the Blueprint could result in the addition of up to 3,200 megawatts of additional electric generation and transmission capacity through up to $5.7 billion in private investments.  Over the upcoming months, state agencies and the New York legislature will consider the Blueprint, and whether and how it can be implemented.  At the same time, businesses are evaluating the Blueprint to see if it can help them develop renewable and traditional generation, transmission lines, energy efficiency, demand response, and other energy projects.