USA: LIPA Trustees Approve Actions to Meet Long Island’s Long-Term Energy Needs

The Long Island Power Authority (LIPA) Board of Trustees voted yesterday to authorize staff to begin negotiating potential power purchase agreements (PPA) for new generating resources consistent with LIPA’s Electric Resource Energy Plan. The Trustees also authorized actions related to diversifying LIPA’s resource portfolio, including efforts and investments to improve energy efficiency through the Efficiency Long Island Program, its renewable energy programs, future renewable energy procurements, and other actions and investments targeting up to a minimum of an additional 400 megawatts (MW) by 2018 resulting in a total of over 700 MW installed.

LIPA Chairman Howard Steinberg called the action today significant and precedent setting. “The action today to support the addition of new, clean and more efficient natural gas, base-load generation, coupled with an aggressive renewable energy program and continued support for our $924 million 10-year energy efficiency program, positions LIPA to diversify its energy portfolio and begin the transition to a cleaner, more reliable, and reasonably priced electric system on Long Island.”

“Today’s action by the LIPA Board is a giant step forward toward securing our energy future,” said LIPA Chief Operating Officer, Michael Hervey. “While LIPA has consistently supplied safe and reliable energy to our customers over the last decade, the fact is that peak demand continues to grow on Long Island. This comprehensive energy plan will ensure that we will be able to meet our future energy needs using a diverse mix of energy resources and efficiency measures that are reliable, economic, and environmentally friendly.”

Competitive results of LIPA’s Generation and Transmission Request for Proposals
In 2010, LIPA issued a request for proposals (RFP) seeking new and/or repowered resources to help meet Long Island’s growing energy demand and the requirements of the New York State Reliability Council and New York Independent System Operator.

LIPA received 45 proposals from 16 entities on March 31, 2011, which reflected a variety of technologies and project sizes. The analysis showed that the best proposals provided potential savings of several hundred millions of dollars while the less competitive proposals could have cost several billion dollars.

Following a comprehensive analysis, it was determined that the projects proposed by J-Power USA Development Co., Inc. (J-Power) at the Shoreham generation site and by Caithness Long Island II, LLC. (Caithness) in Yaphank were the highest ranked proposals. LIPA Trustees decided to conduct negotiations with each proposer to ultimately determine which project would be able to receive all necessary regulatory approvals and permits in a timely fashion and would provide the best value to LIPA customers.

“The selection of new generation resources has the potential to create 700 to 1300 highly-skilled construction and trades jobs on Long Island and up to 30 permanent jobs during operation, further helping the region recover from the most severe economic downturn since the Great Depression. This coupled with significant expansion of LIPA’s renewable energy program and continued investment in energy efficiency will add thousands of new jobs to the region and improve our environment,” said Paul DeCotis, LIPA’s Vice President of Power Markets. “The addition of new base-load resources will also provide the opportunity and resources necessary to repower the Port Jefferson steam plant, which must be removed from service prior to repowering. Securing new additional generation now will further support this effort and reduce customer costs over what they might otherwise have been.”

The Caithness Project
Caithness (a wholly owned subsidiary of Caithness Energy LLC.) proposes to develop, operate, and own a new 706 MW natural gas-fired, combined cycle power plant in Yaphank, New York in the Town of Brookhaven on the same site as its existing 326 MW combined cycle generation plant. Caithness proposes to sell the entire output of the proposed project to LIPA under a 20-year PPA following its proposed May 1, 2017 commercial operation date (COD). Natural gas for the new plant would be delivered using either the existing National Grid gas system or through a new gas pipeline being proposed by Northville Industries.

The J-Power Project
J-Power (an indirect wholly-owned subsidiary of Electric Power Development Co. Ltd.) proposes to develop, operate, and own a new 377 MW natural gas-fired, combined cycle power plant in Shoreham, New York in the Town of Brookhaven on a site owned by LIPA. J-Power proposes to use the latest Mitsubishi 501G combined cycle technology designed for maximum efficiency.

J-Power proposes to sell the entire output of the proposed project to LIPA under a 20-year PPA following its proposed for May 1, 2017 COD. Natural gas for the new plant would be delivered using either a new marine, pipeline extension proposed by Iroquois Gas Transmission or through a new gas pipeline being proposed by Northville Industries.

Before any selected project could commence construction, a full environmental review must be completed by the developer, and LIPA’s Board of Trustees may be required to adopt all environmental findings produced prior to authorizing the execution of any resulting PPA. The agreement would also be subject to review and approval of the New York State Attorney General and the New York State Comptroller.

“The Long Island Federation of Labor, AFL-CIO fully supports the decision by the Long Island Power Authority Trustees to maintain a dependable supply of power on Long Island. Building a new generating facility here on Long Island is the right decision for our regional economy. LIPA’s decision will create hundreds of construction jobs and allow for the repowering of existing facilities, which will save existing union jobs,” said John R. Durso, President, Long Island Federation of Labor, AFL-CIO.

LIPA’s continued commitment to invest in efficiency and renewable energy
While neither project selected will fully meet LIPA’s future energy needs on its own, LIPA envisions that this gap will be made up through a combination of energy efficiency, clean technologies, and renewable projects such as solar, wind, and fuel cells. In furtherance of implementing its electric resource plan, LIPA will expand its successful solar rebate and feed-in (FIT) tariff and issue a new competitive solicitation for renewable energy on Long Island, actions that are consistent with the recommendations of Governor Cuomo’s Energy Highway Taskforce. Specifically, LIPA will:

1. Immediately modify the Solar Pioneer program to provide rebates to residential customers who lease qualifying solar PV systems.
2. Commit to issuing an additional 100 MW of renewable energy capacity, no later than July, 1, 2013 under the Clean Solar Initiative feed-in-tariff (FIT)
3. Commit to modifying LIPA’s tariff, no later than July 1, 2013 to allow wind, fuel cells and “other” renewable resources to compete for an additional 20 MW block of capacity.
4. Commit to issuing a competitive procurement for additional renewable energy supply, including offshore wind, for up to 280 MW of capacity by 2018.This procurement, combined with the expansion of the FIT would bring an additional 400 MW on-line by 2018.
5. Along with NYPA and Con Edison, continue to pursue and seek private and federal funds where feasible for the LI-NYC Offshore Wind Project which could produce between 350-700 MW and is currently in the lease application stage with The Bureau of Energy Ocean Management.
6. In addition, LIPA will initiate a process involving LIPA staff, renewable and energy efficiency industry experts, and environmental and consumer interest groups to expand LIPA’s use of renewable resources and efficiency programs beyond 2018 to ensure that LIPA is adding renewable energy capacity at a level comparable to the rest of the state.

“In early 2012, Governor Cuomo announced the New York Sun Initiative with goals to significantly expand the deployment of solar energy in New York State. LIPA is to be commended for their vision and their response to the New York Sun Initiative in expanding the deployment of solar on Long Island. A goal of 400 MW by 2018 is a huge step in the right direction and LISEIA looks forward to working with LIPA on the details of each of the initiative,” said Chairman of The Long Island Solar Energy Industries Association, Sail Van Nostrand.

“We commend the LIPA staff and Board for their continued work to promote and expand solar on Long Island,” said Co-Founder and CEO of Green Logic Energy, Marc Clejan. “The addition of 100 MW of solar thru the Feed-In Tariff program is a great step in that direction. We particularly commend LIPA on their commitment to ensure the FIT program continues to encourage the development of more smaller distributed generation sites which help create a broader, deeper and more sustainable market for renewable energy on Long Island.”

“We can’t afford not to invest in renewable energy,” said LIPA Vice President of Environmental Affairs, Michael Deering. “However, the time, the projects and the price has to be right in order to continue to meet our on-island regulatory requirements and continue to keep prices stable for our customers. The renewable energy and efficiency component of this plan will allow us to further diversify our energy portfolio and reduce peak load with projects that are environmentally and cost friendly.” 

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Press release, October 26, 2012; Image: EERE