There's a saying in the energy industry that the cheapest power plant is the one you don't have to build.
Stephen G. Whitley, the man who's in charge of the state's power grid, is taking that a step further. With the state's demand for electricity projected to rise by anywhere between 8 percent and 15 percent over the next 10 years, Whitley is firmly seated on the renewable energy bandwagon and is pushing for significant changes in the way businesses and residents pay for their electricity.
Whitley, who took over as president and chief executive officer of the New York Independent System Operator in July, is a big believer in the power of the free market.
He says wholesale electricity prices would have dropped by 11 percent, even at the peak of the energy price spike last August, if not for the soaring cost of the natural gas and oil that fuels almost 40 percent of upstate's power plants.
And those power plants are much more efficient today, in the hands of private energy producers, than they were under the control of utilities in the pre-deregulation days. The state's power plants now are available more than 94 percent of the time, compared with less than an average of 88 percent from 1992 to 1999. With existing plants available more often, that's the equivalent of adding four mid-sized generating plants to the state's power grid.
But with demand still expected to rise, Whitley says it's important to make even further changes that will encourage consumers to use less electricity and even time some of that use to periods when demand is lower.
A big part of that is through the use of more sophisticated electric metering equipment, which would allow energy providers to adjust rates to changes in demand at different times of the day. That way, consumers who run their dishwashers at night, when the demand for electricity is lower, would pay less for that energy, while easing the strain on the power grid during times of higher use. Likewise, it would cost more to run an air conditioner on the hottest summer afternoons, when electricity use is at its greatest.
To do that on a widespread basis would take a huge investment, but the notion has backing in the White House, where President Obama has called for the installation of 40 million so-called "smart meters." His stimulus plan devotes $4.5 billion to upgrade electric meters and building 3,000 miles of transmission lines, but that's just a fraction of an upgrade that a 2004 industry study pegged at $165 billion.
Whitley, during a stop in Buffalo last week, says he hopes Obama's stimulus plan also will ease the financing crunch facing renewable energy projects. Those projects also aren't nearly as viable financially now that oil prices have dropped to around $40 a barrel and natural gas is under $5 per 1,000 cubic feet.
"Now is the time to get ahead of the curve," Whitley said, predicting that the supply crunch will return, and energy prices will jump once again, when the economy rebounds. That's why he backs Gov. David A. Paterson's goal of 30 percent of New York's power from renewable sources by 2015, while also reducing energy demand by 15 percent during that time.
Roughly doubling the state's current wind power capacity will save about $300 million a year, Whitley says. Every 5 percent reduction in electricity use saves about $900 million.
Further savings could come from upgrading the state's aging transmission lines. Spending about $80 million to install new equipment could increase capacity and save about $60 million a year, Whitley says.
"The benefits of that are enormous," Whitley says. "The environmental benefits are enormous."