E.J. McMahon is a senior fellow at the Manhattan Institute for Policy Research and its Albany-based Empire Center
Residents of the metropolitan area pay some of the highest energy prices in the nation -- fully 50 percent above the national average for electricity and 21 percent above average for natural gas, according to the latest federal data.
Unfortunately, the situation is only likely to get worse in years ahead, thanks in part to New York State energy policy that seems grounded mainly in wishful thinking.
The crux of the problem is the uncertain future of Indian Point Energy Center, the nuclear power plant on the shores of the Hudson River in Westchester County. Federal licenses for the two Indian Point reactors expire in 2013 and 2015, respectively, but the plant owner's bid for a 20-year license extension is opposed by Gov. Andrew M. Cuomo and by environmental groups.
While safety concerns about nuclear power are endlessly debatable, there's no debating Indian Point's role in meeting energy needs. The two reactors now generate 30 percent of the downstate region's "baseload" electricity -- the minimum required on any given day for the needs of homes, businesses and public services, including the subway and rail transit systems.
No one believes the state can or will actually allow such a big chunk of the region's electrical generating capacity to disappear within four years. So far, however, Cuomo's vaunted "energy highway" initiative is little more than a slick new marketing campaign wrapped around the same old state energy planning process, which has yet to produce a clear strategy for replacing Indian Point on any timetable.
The problem is that any conceivable alternative to the nuclear plant won't be ready by 2016 -- and inevitably will entail some big and costly changes to the status quo, as pointed out in a study issued this week by the Manhattan Institute, the nonprofit think tank for which I work. Depending on what solution is put in place, the study predicts the economic impacts would include a $1.5 billion to $2.2 billon increase in energy costs, and the loss of 26,000 to 40,000 jobs.
"Each alternative presents its own set of challenges," notes the study's author, economist Jonathan Lesser. For example, he writes, replacing Indian Point with new gas-fired plants would require construction of new gas pipelines, since the existing pipeline capacity is already insufficient. But "building natural gas pipelines through heavily populated areas must be done within a complex regulatory framework and, if past experience is any guide, is likely to spark opposition." Greater reliance on windmills and photovoltaic panels wouldn't eliminate the need for more pipeline capacity. Because renewables don't generate power when the wind isn't blowing or the sun isn't shining, they still must be backed up by gas- or oil-fired plants.
Another option -- importing more electricity from plants outside the downstate region -- requires construction of new transmission lines, but "the process of siting, permitting and constructing new transmission lines is complex, costly and far from guaranteed," Lesser says.
The latest such proposal, known as Champlain Hudson Power Express, would carry electricity to downstate from wind and hydro plants in Quebec. But it would replace only half of the power lost from closing Indian Point. And the line is opposed by some leading state lawmakers, who argue that it would needlessly promote subsidized Canadian competition with existing private power plants upstate that are not currently operating at full capacity.
Meanwhile, the projected electricity needs of metro New York, including Long Island and the Hudson Valley, continue to grow. And the clock keeps ticking toward the expiration date on those Indian Point licenses.
E.J. McMahon is senior fellow at the Manhattan Institute's Empire Center for New York State Policy.