Power Struggle

From the June 18, 2001 issue of New York Magazine

http://newyorkmetro.com/nymetro/news/politics/newyork/features/4816/index.html

Feature
Power Struggle


The scramble to keep the lights on this summer has already cost a fortune and enraged environmentalists -- and it's only going to heat up when the mercury rises. If we don't get smarter about energy sources for the city, in two years it's California, here we come.

By Amanda Griscom

It's not the hottest day this summer that Jim Castle fears most. It's the third scorcher in a row. After three days over 90 degrees, New York City's brick and concrete buildings have soaked up so much heat that virtually every air conditioner in the city is running full-blast. That's when the city's energy consumption hits what Castle and his colleagues in Albany call "peak load." And compared with New York's needs on an average day, the amount of electricity required to keep the city running nearly doubles.


As the operations manager of the Independent Systems Operator, a not-for-profit Albany company that regulates the energy supply for New York State, Castle oversees a control room that rivals the bridge of the Starship Enterprise, eyeing the needles drawing spikes across the seismographlike chart recorders that track the city's electricity usage.

If a heat wave pushes the demand for electricity beyond the expected peak, Castle issues what's called

A "max gen pickup alert," ordering each of the ten active power plants and hundreds of smaller generators on the city's power grid to run at maximum capacity. This is when he starts to get nervous: The longer the plants run at full throttle, the likelier it is that he'll hear the alarm that indicates one of the generators has buckled under the strain.

"They're heavy mechanical devices, and when you run these facilities all-out for days, you're increasing the likelihood of equipment failure," says Castle. Many of New York's power plants are more than a half-century old, and tubes can rupture, pumps can fail.

"If we don't act fast, we could see ourselves in a California scenario in two years."

What happens next all depends on how lucky we are. In order to shore up diminished supply, Castle will try to increase the amount of energy flowing from upstate and New Jersey through the transmission lines that run into the city. If those cables max out, he'll initiate emergency operating procedures: First, he'll order previously designated office buildings to switch off some lights, elevators, and air conditioners; then he'll tell Con Ed to put out a news alert asking the public to turn off unneeded appliances; finally, he'll call for a "5 percent voltage reduction," a small-scale controlled brownout that cuts everyone's electricity by a barely noticeable amount. If all goes well, the crisis will fade with the heat.

If demand continues to outstrip supply, the transmission lines that run into New York City are at stake, and Castle will check the map at the ISO command center that displays their status. If he sees the blinking lights that signal an overload, he'll put in a call to Con Ed's West End Avenue control room and issue the command for rolling blackouts: "Time to shed load."

On July 13, 1977, 8 million New Yorkers were plunged into darkness when lightning struck transmission lines north of the city and fried every wire on the power grid. For 25 hours, New York was paralyzed: Thousands got trapped in subways, cars backed up in gridlock without traffic lights, and looters rampaged. By the time the lights went on, three people had died and police had made nearly 4,000 arrests. In the wake of that disaster, Con Ed added new lines, installed safety gauges to prevent overloads from cascading into neighboring networks, and maintained so much reserve energy that for the past two decades, New York's power system has seemed invincible.

By the time California began to implement rolling blackouts last fall, it didn't seem quite so invincible anymore. In November, ISO officials announced that our reserve capacity for this summer would be 5 percent below New York State's reliability requirements. In March, the mayor told a group of Wall Street executives that "no one can tell you we're not in serious danger this summer." And in May, President Bush announced that his team of energy-policy experts predicted the entire Northeast could be facing an energy crisis this summer.

As of now, the city's reserves are back up to state requirements -- but only because of controversial last-minute moves by Albany. These reserves should be sufficient for a normal summer, says Maureen Helmer, energy chairman of the Department of Public Service, but "if we have a very hot summer, the city could be facing difficulty." And it will likely be hotter than last year, meteorologists say, because La Niña has faded.

"I am confident, at this point, that the people of New York will not have to feel it the way the people of California have had to feel it," says Richard Sheirer, director of the mayor's Office of Emergency Management. Still, he's prepared: When hot weather hits, "for the first time, my watch commanders will be checking in every evening with Con Ed to get a projection of how much usage they expect for the next day, what reserves they have, and how close we are going to be to the cusp."

To forestall the crisis, state officials spent the past several months building emergency turbines and recommissioning every last scrap of energy-producing equipment that could be put to use in a heat wave -- including old, dirty plants and even privately owned backup diesel generators that can pump extra power back into the grid. "We're going to squeak through the summer," says Carol Murphy, executive director of governmental affairs and communications for the ISO. "But we have a razor-thin margin." And even this margin is based on a fleet of new emergency turbines the Pataki administration commissioned in November without going through the traditional environmental- and public-review process required for most power plants.

Unlike California's, our problems aren't simply the result of a convoluted deregulation process. Driven by population growth, a dramatic increase in the use of computer equipment, and Pataki's 1995 cutbacks in the state's energy-efficiency program, the demand for electricity in New York City has surged nearly 10 percent in the past five years. But no major new plants have been built here for decades. "It is more difficult to build power plants in the Con Ed grid than anywhere else, because of three things," says Steven Sullivan, a spokesman for the ISO. "There's extremely limited space, what space is available is extremely expensive, and the resistance groups within the communities are extremely sophisticated."

Since the majority of our current power plants run on oil and natural gas -- as opposed to coal, nuclear, or hydroelectric power -- the price of the energy they produce has risen dramatically along with the costs of those fuels. That's not a shock if you've looked at your Con Ed statement lately: New York City's electricity bills, traditionally among the highest in the country, rose almost 40 percent in the past two years. And the worst may not be over. Based on market activity in May, "I believe prices are going to be much higher this summer than they were last summer," says Bryan Kimmell, president of Strategic Energy Management, a consulting group for the energy industry in New England and New York.

California handled its energy crisis by importing electricity from bordering states -- albeit at exorbitant prices. But the Con Ed grid, which accounts for more than a third of the state's electricity load, can't rely on its neighbors: There are only three transmission hubs through which power can flow into the city. And there's only so much power those lines can carry. Picture a bottleneck in the Holland Tunnel and you'll get the idea: A heat wave this summer would fill transmission to capacity, like the tunnel on a Friday afternoon in August.

"Transmission is a huge issue," says Kimmell. "In terms of its ability to bring power in, New York City is more restricted than anywhere in the country."

In energy-industry terminology, New York is what's called a load pocket, a region where the design constraints of the electricity grid dictate that local generators must supply most of the power -- in our case, 80 percent. For at least the foreseeable future, it's likely to stay that way: Adding additional transmission lines to import more power is trickier than it seems. There are two kinds of transmission lines -- copper cables that run underground and aluminum cables that must be suspended from huge, hideous towers -- and the suburbs around New York City are too densely populated to make room for the former and too concerned about property values to tolerate the latter. Even if Con Ed could find a place to put such lines, New York State Public Service Commission officials estimate it would take at least five years just to get them approved.

"These guys go from boredom to sheer terror in about a second. The adrenal response is extraordinary."

The controversial new turbines cost the Pataki administration half a billion dollars, but they won't solve the problem for long: Based on relatively inefficient technology, each produces about one tenth the energy of a mid-size plant. And if demand continues to rise, they will no longer be sufficient to meet the city's needs within two years, experts say. In fact, ISO officials say New York City should increase its generating capacity by more than 40 percent over the next five years. To do that, we'd need to start building large-scale power plants -- and soon. "They take at least two to three years to build," says Sullivan. "We need to get our shovels in the ground now. If we don't act fast, we could see ourselves in a California scenario two years from now."

From the outside, the suburban Albany building where Jim Castle and his team manage New York State's power grid is nameless, windowless, and completely anonymous. "If Saddam Hussein showed up in town, we wouldn't want him to know which place to bomb!" explains one of Castle's employees. Inside, it's the nexus of every wire in New York. Five men, four of whom are wearing plaid short-sleeve shirts, sit at boomerang-shaped computer consoles, glancing back and forth between the hives of monitors in front of them and the "Big Board," a 30-foot-high, 80-foot-wide concave display with a map showing every major power plant and transmission line in New York State. On the base of the board is the all-important "enunciator panel," an LED screen with red numbers that track the state's electricity needs in megawatts.

Burly, bearded, and jocular, Castle spends twelve-hour shifts leading a team that makes sure that number matches the amount of energy the state's generators are putting out. Since electricity can't stay in the grid, the amount of energy coming into it must always match the amount being used. Too much and wires will melt; too little and a power surge will disrupt the flow of energy through the grid. Because all the grids are connected, a problem in New York could have consequences in Maryland.

To ensure that everything runs smoothly, the team holds conference calls throughout the day with generator operators to assess available supply and with Con Ed to forecast demand. Every hour, it reviews bids from various generators and matches them with wholesale buyers including Con Ed. Every six seconds, it makes last-minute adjustments to fine-tune the balance.

"There's never a moment when these consoles aren't manned," says Castle, peering down from the glassed-in gallery above the floor. "These guys can't go out to the local diner for dinner." If nature calls, he says, they have to make sure someone else is covering for them.

The excitement is sporadic but certainly intense. "These guys will go from boredom to sheer terror in about a second," Castle says. "I've been in there when things just start falling apart with no advance warning at all -- it could be a storm, or some equipment failure -- and the adrenal response is extraordinary." It needs to be. When a power plant blows a pump or a line "trips off" -- not uncommon occurrences -- Castle's team has to reroute the flow of energy or find an alternative supply. Within a matter of seconds.

Since the stakes are so high, Castle puts all of his operators through aptitude tests, simulated catastrophes, and then a psychological exam to see how they operate under pressure. He himself learned to handle the stress in the Navy, where he graduated from the advanced electronics program at 19 and rose to become the supervisor of electronic technicians on the U.S.S. Nimitz, a 1,100-foot aircraft carrier, by 21. After eight years in the military, he got a degree in electrical engineering at Syracuse and went to work for NY State Electric & Gas before helping to establish the ISO.

The control center runs with the precision of a military agency, but it has the geekish camaraderie of a Silicon Alley start-up. "Hey -- I betcha don't know what the difference is between a mho and an ohm!" jokes Castle, jabbing one of his colleagues in the side. He and one of the other operators furrow their brows. "Just like the words, they're opposites -- one's a measure of resistance, and one's a measure of conductivity!" Both of the operators slap their foreheads in mock exasperation.

"Even if I come in at 5:30 in the morning and leave at 7:30 at night, I'm not ready to go home," Castle confides later in the spare, corporate-looking lobby. "I just go out there and sit in the control room. Guys will ask me questions and I'll just sit there and sorta soak it in. And I'll just think, I can't believe it . . . what an awesome job!"

Before Pataki's New York State Power Authority announced that it was building eleven emergency turbines, Tony Gigantiello was a school custodian who ran high-pressure boilers. Before that, he was a city engineer who ran air-conditioner turbines in the basements of skyscrapers. With a Magnum, P.I., mustache and the square stance of a linebacker, he's an unlikely choice to become the Erin Brockovich of Astoria.

On a blustery morning in winter, Gigantiello climbs onto a plywood stage erected for the day just north of the Queensboro Bridge. As a small crowd of neighborhood residents cheer and half a dozen TV cameras focus in, he delivers a passionate screed about why the new NYPA turbines shouldn't be put in his neighborhood -- or anyone's. "This is not a nimby fight," he says, his husky voice rising to a yell. Albany is distorting statistics to underrepresent the state's energy supply, he says, so Pataki can keep electricity prices down and voters happy for the upcoming election. The turbines that will be polluting his neighborhood by June, he continues, aren't even necessary.

He's referring to research by Ashok Gupta, energy economist of the Natural Resources Defense Council, that shows that New York City will have more energy available this summer than the ISO has predicted. By calculating the supply of electricity on a plant-by-plant basis, he's come up with numbers that call into question Albany's official conclusions -- and even the predictions of a summer energy crisis that the Pataki administration used to make its case to build the emergency turbines. "They made the decision to build the plants," says Gail Suchman, an environmental lawyer. "Then they grasped for numbers that would enable them to justify it. NYPA circumvented the law."

"If customers are going to be able to pay their utility bills, they have to be breathing."

One by one, Astoria residents who belong to the community group Gigantiello leads, choke (Coalition Helping to Organize a Kleaner Environment), step onto the stage to argue that there's already too much pollution in their neighborhood because of existing power plants. A young woman born and raised next to the Poletti plant in Astoria says she was diagnosed with lung cancer at 27, having never smoked a cigarette in her life. A father who lives in a nearby housing project remembers a night last summer when he checked himself and each of his five children into the emergency room with asthma attacks. City Council chairman and mayoral candidate Peter Vallone takes the microphone to condemn "environmental racism." As he speaks, a hundred yards behind the stage, construction workers are putting up the cement walls that will surround the new turbine.

Besides blighting the landscape and lowering property values, power plants and turbines also spew particulate matter, microscopic soot made up of metals and carbon. When inhaled, the particles can become embedded in the lungs and pass into the bloodstream, causing and aggravating heart and respiratory illnesses. Whereas much of the environmental debate has traditionally focused on greenhouse gasses, particulate matter is becoming a major concern. In April, the EPA issued a report confirming studies that found strong links between the recent rise in levels of particulate matter and a rise in death rates.

New York City has one of the highest rates of particulate-matter concentration in the U.S., which is the main reason local emergency rooms treat 46,000 pollution-related asthma attacks a year, according to a 2000 study by the Clean Air Task Force. Already, New York has 2,290 deaths a year related to particulate-matter pollution. If the standard for particulate-matter pollution supported by Christine Whitman's EPA were enacted by the Bush White House, New York would already be well above it.

The problem is especially bad in areas zoned for industrial development, generally also home to minority and low-income communities. All eleven turbines are located in such neighborhoods, many of which already have other polluting facilities like bus depots and waste-transfer stations. choke is only one of the organizations that have protested NYPA's decision to build turbines without subjecting them to the normal environmental-review process. There's also Williamsburg's Stop the Barge and El Puente, the Bronx's Nos Quedamos, the United Puerto Rican Organization of Sunset Park (uprose), and Communities United for Responsible Energy (cure), an umbrella organization that coordinates their efforts. In April, a dozen community groups represented by Gail Suchman of New York Lawyers for the Public Interest filed a lawsuit against NYPA to stop construction on the turbines. Although they lost -- they filed an appeal, which will be heard June 29 -- their case received endorsements from national environmental groups including the Natural Resources Defense Council and Environmental Advocates.

One of their less likely allies was Silvercup Studios, the Queens filming location for The Sopranos and Sex and the City, which filed a separate suit arguing that the proposed turbines on the Queens waterfront would interfere with owners Stuart and Michael Suna's plan to make the area "the Hollywood of the East Coast." In April, the State Supreme Court ordered NYPA to halt construction on those two turbines, on the grounds that the agency had failed to consider whether they would interfere with business development and pose an environmental threat to the community. On the evidence of Gupta's numbers, the Judge ruled that NYPA and the ISO couldn't make a convincing case that New York was facing an imminent energy crisis in the first place. NYPA appealed the decision and was granted a temporary stay that allowed the agency to continue construction.

So how did we get into this mess, anyway? Although New York's energy problem is different from California's, both share some roots in an unanticipated demand for electricity. Like many other states, we simply didn't see it coming. With a healthy reserve margin and little political interest in conservation or increasing the power supply, New York hasn't built a major power plant in 30 years.

But there's plenty of blame to go around. When Governor Pataki took office in 1995, he took his cues from what Reagan did on a national level in the eighties. He shut down the New York State Energy Office, then charged with planning new plants, and reduced or eliminated many conservation and alternative-energy programs in preparation for his deregulation efforts.

In 1997, when he opened New York State's power market to competing energy suppliers, Pataki ended Con Ed's regulated monopoly on every aspect of the city's electricity-production-and-delivery process. Con Ed remains the owner and operator of the electricity grid, but it was forced to sell off its generators and allow other companies to pump energy into its wires. (In media terms, the grid would be Time Warner's cable system and the energy would be content from MTV or Showtime.) For the first time, New Yorkers could choose their energy provider the way they picked their long-distance carrier, and receive two separate bills: one from Con Ed for their use of the grid and another from an energy provider for the power they used. (Since there's no way to route electricity from a particular generator to a particular consumer, independent providers simply determine how much energy their customers are using and pump that amount into the grid.) Since then, New Yorkers who receive electricity bills from Con Ed have really been purchasing energy it buys from other companies.

In the wake of Pataki's decision, a new generation of energy companies scrambled to claim a slice of New York City's $8 billion energy market, buying up Con Ed's old plants and applying for licenses to build new ones. All the companies -- including KeySpan, Enron, Orion Power Holdings, and 1st Rochdale Cooperative -- control different parts of the process. Some own power plants; others purchase that power and distribute it to consumers.

The theory behind deregulation -- for New York, California, and about 30 other states -- was that a free market would encourage companies to build new power plants, which utilities never had an incentive to construct. With consumers free to choose energy providers -- known as energy-service companies, or escos for short -- companies would compete to supply electricity at the lowest possible rate.

So far, though, the deregulated market hasn't been very competitive here. Fewer than 2 percent of New Yorkers have switched from Con Ed to another energy provider -- many don't even know they have a choice -- and the anticipated price decreases haven't panned out.

Neither did the expected new plants -- new generating companies like Keyspan and Orion have been producing energy in plants they purchased from Con Ed -- partly because New York is such a difficult market to enter. "If you're a developer who wants to build a plant and you're deciding between Texas and New York, you have to consider that you're going to spend a lot more resources trying to get into New York," says Lance Brasher, a lawyer who represents power companies at Skadden, Arps in Washington, D.C. "The process is far more cumbersome in New York. The regulations are all the same, but you have to jump through a lot more hoops to get the same approval and you have a stronger element that is resisting."

As of yet, none of the generation companies that want to do business in New York have been able to get the necessary permits to build new plants. "There are proposals to build as much as 4,000 megawatts of additional capacity in the metropolitan area," says David Flanagan, a spokesman for the New York State Public Service Commission. "It can be frustrating," says Liam Baker, an asset manager at Orion, which is in the process of getting approvals to build a new plant on the site of an old Con Ed facility in Queens. "You have to deal with a cornucopia of agencies: the Department of Environmental Conservation, the Department of Health, the Economic Development Corporation, the Department of Transportation, and the ISO. It's a process that could definitely be streamlined."

But though deregulation is largely responsible for getting us into this mess, it may also be the best hope we have of getting out of it. As generation companies expand and upgrade existing Con Ed plants, they're learning how to cooperate with communities. At choke's request, for example, both Keyspan and Orion have agreed to "repowering programs" to clean up the existing plants as they add new capacity.

Deregulation gives companies an incentive to upgrade older, less efficient plants with modern technology that's also cleaner. Since new "combined cycle" generators operate with roughly twice the fuel efficiency of older "simple cycle" technology, all of the power plants in the development pipeline will use that system. "Think of power plants as if they were cars," says the ISO's Steven Sullivan. "If you had to drive upstate in a Honda Civic, it would be a reliable, relatively inexpensive trip. But what if you had to pull your grandfather's 1965 Mercury Marquis out of the garage? The Marquis is a gas guzzler, and if you run it pedal to the metal the whole trip, it'll be superexpensive and you'll have a breakdown."

Tommy Thompson pops the escape hatch on the top floor of a midtown co-op and dashes across a gusty stretch of rooftop with the frantic resolve of someone trying to catch a getaway chopper. He halts suddenly, cocks his head back, and scans the sky. Nothing. He peers into the canvas tote bag that dangles from his elbow, removes a black box the size of a toaster, and places it at his feet. Then he tilts his face into the sun and widens his iridescent blue eyes. It seems completely conceivable that he's trying to summon a flying saucer.

Thompson is a renewable-energy guru, and he's figuring out the proper placement for an array of solar panels he's going to install on the roof of this 800-unit apartment building. The black box is a device that helps him determine the angle of the sun. "The exposure up here is dy-no-mite," he shouts. "This is the highest building around, so we don't have to worry about shadow." His eyes dart toward the power plants that line the Queens side of the East River. "No Dark Side here!"

Thompson is one of the few energy experts in New York City thinking outside the grid. "The bottom line," he says, "is that if customers are going to be able to pay their utility bills, they have to be breathing!" A reedy jokester given to wearing a purple fanny pack, Thompson directs the sustainability division of 1st Rochdale Cooperative, a two-year-old not-for-profit esco focused on improving clients' energy efficiency and providing the cleanest energy possible.

In December, 1st Rochdale launched its "Green Apple Initiative," aimed at installing solar panels, microturbines, and emission-free fuel-cell generators onto 1,600 New York City businesses and residences over the next ten years. Metered by 1st Rochdale, such installations will pump electricity directly into buildings, bypassing the grid and its attendant pressures. While they won't meet all of a building's energy needs, 1st Rochdale provides electricity from traditional generators to make up the shortfall.

Though it requires a considerable investment, using diverse energy sources makes economic sense in the long run. Richard Perez, an energy researcher at suny Albany, found that New York's peak-load periods correspond to the days when the city gets maximum exposure to the sun. Since those are also the times when prices spike and supply gets scarce, solar panels are one obvious solution.

"We are at an energy crossroads," Gupta says. "Free-market forces, environmental regulations, and technological innovation are dramatically changing the landscape of the energy industry." Even the Pataki administration is beginning to catch on: Six years after eliminating the New York State Energy Office, the governor in January doubled his funding for subsidies to offset investments in clean technology and energy-efficient appliances; soon after, he proposed tax credits for energy-efficient buildings.

Two years ago, architect Robert Fox oversaw the completion of Condé Nast's 4 Times Square headquarters, the first building in New York to incorporate renewable-energy technology, in the form of fuel cells on the fourth floor and solar panels built into the upper part of the structure's façade. "A building that is environmentally smart is economically smart," says Fox, who predicts that by 2005, every new building that goes up in New York will incorporate energy-saving measures.

Since Fox paved the way, dozens of existing buildings, from the New School to the Cathedral of St. John the Divine, have made plans to install rooftop solar panels. And the Building Congress recently launched an outreach program to educate real-estate owners and commercial tenants about conserving energy with insulated windows, efficient heating and cooling systems, and sensors that shut off unneeded lights and appliances.

But the most ambitious energy innovation could be a building Fox has planned with developer Douglas Durst, a proposed office complex that would occupy a full city block between Eleventh and Twelfth Avenues and 57th and 58th Streets. It would include its own power plant -- six gas turbines with emissions filters -- with sufficient generation capacity to stand independent from the city's grid. "The Durst building is a model of the way we should build buildings in the future," says Thompson.

Many of the tenants will need the energy. The space not used for offices will serve as a telecom hotel, Fox explains, "one of the energy-guzzling buildings that's partly responsible for causing such a huge increase in energy demand."