http://www.timesunion.com/AspStories/story.asp?storyID=106003&category=REGION&BCCode=HOME&newsdate=2/16/2003

Firm out to power the Big Apple

Albany-- Transmission lines would be buried on part of Albany County-to-NYC route

By ELIZABETH BENJAMIN, Capitol bureau
First published: Sunday, February 16, 2003

As the state teeters on the edge of an energy crisis, a new company is looking to send power from Albany County to New York City in one of the largest transmission projects of its kind.

Conjunction LLC's plan is getting attention at the state Capitol not only because of the amount of energy it would move, but because its unique design may defuse aesthetic, health and environmental concerns that typically fuel the opposition to such proposals.

Experts say transporting power to where it's needed is just as difficult -- if not more so -- as siting a new power plant. While plants have a few neighbors, a power line can cross thousands of properties, generating thousands of opponents.

Steven Mitnick, a principal in Conjunction, thinks he has a solution.

Mitnick wants to run a double power line alongside the train tracks from just outside Albany into Manhattan, using existing railroad rights of way. He plans to bury the cables along about one-third of the 140-mile route, aiming to head off opponents who believe power lines mar the landscape.

If he succeeds, Mitnick claims, the $750 million project dubbed the Empire Connection will be the longest underground cable system in the nation and perhaps the world.

"Countries have done 50 miles of cable underwater, but never at this distance buried on land because it's unbelievably expensive," said Mitnick, who estimated that burying the lines will cost $3 million to $3.5 million per mile. "But ... the need for power in New York City is so great that you can make it pay."

New York City, the state's largest energy consumer, sucks up one-third of its power and continually cries for more. The additional juice could reduce the city's power costs by more than $100 million annually, Mitnick said.

The proposal from Conjunction, which Mitnick formed with seven other electric utility industry veterans, has sparked interests recently because of its potential to carry 2,000 megawatts -- the same amount generated by the controversial Indian Point nuclear plant in Westchester County, which many nearby residents and lawmakers want closed. Mitnick said the 2,000-megawatt match is a coincidence, but acknowledged it could help advance his project.

"This and other creative and new proposals are what we need to do, and we need to pursue this vigorously," said Assemblyman Richard Brodsky, D-Westchester, an Indian Point critic. "I think this is one of the ways that, as we get closer to closing Indian Point, we can meet whatever impact on supply might occur."

Several environmental groups said they like the idea of a power delivery system that would have a limited impact on the land. They also like that Mitnick wants to convert energy from alternating current, or AC, to direct current, DC, to avoid the health threat some believe AC poses from electromagnetic fields.

However, environmentalists note the Empire Connection doesn't address the problem of air pollution caused by "dirty" power plants.

"You always have to ask the question: What's on the other side of the transmission line?" said Ashok Gupta of the Natural Resources Defense Council.

Power industry representatives are generally enthusiastic about Mitnick's proposal, but warn that simply shifting power from one place to another won't solve New York's shortage. They also bristle at talk that the Empire Connection could replace Indian Point.

"This project and Indian Point have nothing to do with each other," said Gavin Donohue, executive director of the Independent Power Producers of New York, a trade association of power plant developers and operators. "We as a state have a tremendous appetite for power, and it grows every year. This is a transmission project, which would improve what is a terribly congested system, but it doesn't deal with the future need for generation growth."

The New York Independent System Operator in Guilderland, which oversees the power market, estimates the state will need 7,100 megawatts of new electricity by 2005 to maintain reliability and low prices. The outlook for that much new supply is anything but certain.

Several new plants slated to open upstate over the next few years have been delayed, and the parent companies of existing plants are experiencing financial difficulty in the post-Enron energy market.

Mitnick has proposed opening the Empire Connection in 2005. He's banking on the projection that there will be enough energy available at the New Scotland substation, where he plans to tap into the power grid, to pick up 2,000 megawatts and carry it to New York City. One megawatt is enough to power about 1,000 homes for an hour.

But some are concerned the supply is limited, particularly at peak demand times, and that selling upstate energy to New York City will drive up electricity prices for upstate residents.

"Upstate producers have extra power, but I don't think there's enough to maintain the margins you need both here and downstate," said state Sen. James Wright, R-Watertown, chairman of the Senate Energy Committee.

The Empire Connection needs three approvals. Conjunction applied to the Federal Energy Regulatory Commission on Jan. 27 and plans to submit an application to the state Public Service Commission in three months. Mitnick said Conjunction is currently studying the Empire Connection's potential effect on the state's power grid for the ISO, which must also sign off.

Despite much positive reaction, Conjunction faces significant roadblocks. The biggest could be financing. The details that make Empire Connection unique -- buried lines and AC/DC conversion -- also make it much more expensive than a traditional transmission project. Investors have been wary of power projects since Enron's collapse, and the struggling economy doesn't help.

Another hurdle is negotiating leases with the three companies that own the rail beds along which Conjunction wants to run cables: CSX Corp., Metro-North Railroad and Amtrak.

Representatives from CSX and Metro-North were noncommittal when asked about the Empire Connection proposal. One said it seems backward to allow Conjunction to erect new poles when most rail companies are burying their communication lines and consider poles an "eyesore." Amtrak did not return a call for comment.

Undeterred, Mitnick is meeting with lawmakers, political power brokers and environmentalists to build support. Conjunction has hired two powerful lobbying firms: Powers Crane & Company and Constantinople Consulting.

Conjunction will begin auctioning off space on its cables in May even though they won't be ready to carry energy for at least two more years. In effect, the Empire Connection will act as a toll road for energy companies to transport their product downstate by "renting" space on the cables. The point of starting the auction this early is to demonstrate to financiers that there is enough interest to make the project a lucrative investment, Mitnick said.

"We've budgeted a lot of money to do this right," Mitnick said. "We're spending three times as much as you would normally to build a transmission system. But we can afford it because the need is huge."