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State Energy Plan Will Mean Higher Costs, Less Reliability

August 13, 2009

By Max Schulz

Gov. David Paterson released his draft State Energy Plan this week, and after reading its 123 pages, one thing is crystal clear: This is a draft that should be dodged at all costs.

Utterly divorced from economic realities, the Paterson energy plan is a mishmash of feel-good proposals based on super-sized servings of wishful thinking. If enacted, the result would be higher costs, less reliability, and greater susceptibility to blackouts

The Paterson plan hinges on something called “45 by 15.” By 2015, New York should decrease overall electricity usage by 15 percent through energy efficiency, while generating 30 percent of its power from renewable energy sources. Neither is likely to happen. New York already has an energy-efficient economy because of the high number of apartment dwellers and because high energy prices have driven heavy manufacturing away. Hopes for finding substantial efficiency gains to lower consumption are slim without a prolonged economic slump, which is hardly consistent with calls for robust economic growth.

Meeting the renewable power goal will be a stretch as well. Renewables make up about 21 percent of New Yorkers’ electricity already, but that statistic is a mirage. Large-scale hydropower accounts for 19 percent, while wind and biomass are less than two percent combined (solar power is virtually nonexistent in New York). The state’s hydropower resources are already developed, so the difference can’t be made up there. Getting to 30 percent will require adding five times as much power from other renewables, which are much more expensive than coal. That means much higher subsidies, paid for through increases in ratepayers’ bills.

Paterson also continues Eliot Spitzer’s crusade to shut down Indian Point’s two nuclear reactors, which produce more than 2,000 megawatts but no carbon emissions. Echoing Robert Kennedy, Jr., the governor cites concerns about terrorism and evacuation plans. But those fears are unfounded. The federal government approved a post-9/11 evacuation plan in 2003, and Indian Point satisfies the government’s stringent regulations on security and vulnerabilities at nuclear plants.

Despite environmentalists’ objections, the state needs Indian Point merely to keep the lights on. The New York Independent System Operator, which operates the state’s electricity grid, warned that losing just one of the two reactors “would cause an immediate violation of reliability standards.” Closing both reactors would make blackouts a regular occurrence, especially considering the state’s inability to site and build needed power plants to replace the lost juice.

To his credit, Gov. Paterson calls for enacting a siting law that would help large power plants get built. But that good news is tempered by his demand that such a law “address environmental justice issues.” It’s hard to interpret that exactly, since it’s otherwise not spelled out. But in the parlance of environmental debates, those are code words for litigation, obstruction and delay - hardly providing confidence that the power plants New York needs built can be approved. A better way would be to pass a law that doesn’t discriminate on the basis of fuel source or type of energy technology. Power plants already must comply with a host of environmental regulations and requirements; as long as a proposed plant meets those criteria, the siting process should be neutral.

The same goes for opening up the massive Marcellus Shale to natural gas development. The governor professes support for it, but his administration has been holding up drilling in the Marcellus Shale for over a year while neighboring Pennsylvania has raced ahead. Paterson calls for “environmental safeguards that are protective of water supplies and natural resources.” But those safeguards already exist, and Paterson’s delay in approving drilling applications is costing the state needed revenue and hampering efforts at economic recovery

After a 60-day comment period the State Energy Planning Board will regroup and put the finishing touches on the final version of the official State Energy Plan. New Yorkers would be better served if they tossed out this plan and started over.

The writer is a senior fellow at the Manhattan Institute, a conservative think tank, and the author of “New York Unplugged? Building Energy Capacity and Curbing Energy Rates in the Empire State.”

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