The new Long Island Power Authority has pulled the plug on its old way of buying electricity.
That's shockingly positive news.
Shocking that it took so long to find a better way to calculate future demand for power, and shocking that lower costs, conservation and increased use of renewable sources are now top priorities.
LIPA's board of trustees -- based on the recommendations of the new system operator, PSEG Long Island -- has derailed what seemed inevitable: the building of a new 750-megawatt power plant in Yaphank alongside a similar 350-megawatt facility that came online in 2009. The Caithness II project was expensive, estimated at $3 billion, or a 3 percent increase for ratepayers. Based on experience, that was lowballing it.
But that wasn't the only upending news from LIPA, the public utility we love to hate. PSEG is now taking a new look at every generation project under consideration by LIPA. That includes the repowering of the Barrett plant in Island Park, adding 400 megawatts from renewable on-Island sources, including wind and solar batteries, and smaller, locally placed generating units.
New Jersey-based PSEG took over management of LIPA's transmission and delivery system at the start of 2014, but wasn't supposed to dive into the more complex and politically fraught task of power planning until this January.
In April, however, Gov. Andrew M. Cuomo outlined New York's version of what is known as Utility 2.0, an industrywide effort to modernize the nation's electric grid through new technologies, alternative fuels, energy storage and energy efficiency.
An expensive fossil-fuel plant, no matter how efficient, no longer seemed so enticing. Using the same Albany guidelines, Con Edison recently postponed the building of a $1-billion substation in Manhattan.
But Caithness II, which would have been fueled by natural gas, was being fast-tracked by LIPA in anticipation of approval this fall -- before PSEG could incorporate the new state policy into LIPA's long-term plans. LIPA had already authorized $15 million in contracts to a company that would obtain permits for two new gas pipelines to supply fuel to the plant, as well as a $22-million deal to upgrade the grid to deliver the added power. That's money that doesn't need to be spent now.
The rush for Caithness was based on long-standing assumptions that the Island needed to have a minimum of 6,300 megawatts available by 2018 to meet requirements beyond peak capacity. But PSEG found those numbers were padded by LIPA in an abundance of caution. And the numbers became outdated: growth slowed, appliances and lightbulbs used less juice, and programs to reduce consumption were succeeding. Working with revised data from federal, regional and state regulators, PSEG determined that only 5,959 megawatts would be needed to meet the requirements. by 2018.
And if LIPA implements Utility 2.0 ideas, the amount of new power actually needed in 2022 could be considerably less, by nearly 800 megawatts. These new projections would save ratepayers hundreds of millions of dollars, according to PSEG, whose management contract includes bonuses for keeping bills down.
PSEG Long Island president David Daly says he'll start with "a clean whiteboard" to find the least expensive energy sources, while fulfilling the state's goal of increasing the use of renewable sources. Daly thinks there is room to reduce costs by renegotiating some contracts with suppliers. And he will look at larger-scale renewable projects that would be less expensive than smaller ones here and there.
Is it too good to be true? Stunned and strapped ratepayers might be understandably unconvinced that anything will change. Only the "amount due" box on our bills will tell.
This fresh start with the admirable goal of incorporating more clean energy will lose its spark rather quickly if promises made aren't kept.