New York Property Leaders Debate Strategies to Protect Region’s Energy System

02/28/2006 |

ConsumerPowerline roundtable reveals innovative strategies to help the state avoid shortages

Engaging in a sometimes-heated debate, nearly two dozen leading energy strategists from the New York metropolitan region’s energy stakeholders - including commercial, retail, and residential property owners and managers; regulators; and consumer advocates - probed the strategies available to help protect Gotham’s energy system and create a vision for a sustainable New York City energy market.

ConsumerPowerline, a strategic energy asset management firm, facilitated the conversation and hosted the event at the Morgan Stanley Executive Conference Center, where participants wrestled with a wide range of immediate, near-, and long-term energy issues that hold significant ramifications for New York’s future economic stability. Key issues discussed included developing lease language that promotes and provides incentives for efficient-energy consumption, co-generation, distributed generation, steam-based chilling, and electricity curtailment.

According to experts in the region, New York City is projected to need an additional 6,000 megawatts of electricity by 2025 to sustain projected growth in residential, commercial, and industrial sectors. The current electrical power generation and distribution system cannot support the projected growth unless some significant changes are instituted.

The roundtable kicked off with a status report from Gil Quiniones, chairman of Mayor Bloomberg’s Task Force on Energy. Currently, New York City is in the second year of the Mayor’s 6-year initiative/task force on energy policy for the city, a program that was designed to support businesses in the city and offers assistance in accessing a variety of energy incentives to lower consumption, raise conservation, and help avoid future energy crises.

“This [roundtable] is a very important event, and a very important initiative from the perspective of not only New York’s short-term electricity needs, but also our long-term electricity needs,” says Gil Quiniones. “Imagine that if only 10 percent of the peak electrical requirement can be made flexible through peak load management or demand response programs, the equivalent of three large power plants' worth of electricity could be saved.”

Continuing the discussion, Andrew Cooke of Hines/Morgan Stanley states: “... load curtailment is an essential strategy in the responsible management of our available power supply. It maximizes utilization of existing resources and avoids the cost of building additional capacity, additional power plants, and this ultimately benefits all consumers.”

“The most important thing driving this roundtable is that we all need to understand our energy-use profiles. So many major facilities are in the dark about how their buildings operate and how they use power. Understanding these profiles enables each of us to identify avenues already in the marketplace that can save money and, most importantly, electricity,” say Tim Daniels, assistant vice president of energy policy, the New York City Economic Development Corp. “At the same time, the greater our self-knowledge the greater we can be in predicting and managing the final energy threshold.”

The goal of the program was to provide participants access to best practices developed across industries and areas of expertise, allowing each panel member to come away from the process with real, actionable steps that could impact their bottom lines.

John Lembo, energy manager for Starwood Hotels explains: “The people who run the buildings are concerned with putting heads in beds - which is great. But when you stop to see what’s happening in the energy markets today as a result of a Katrina, Rita, and Wilma, it’s time to realize that although energy costs represent only four percent of revenue in the hospitality industry, they are over 10 percent of EBITDA (Earning Before Interest, Taxes, Depreciation, and Amortization). So, clearly, these costs hit the bottom line directly.”

Mr. Lembo continues stating, “Now the awareness of these costs is starting to reach the c-level suites across our company and companies like ours with executives starting to ask, ‘What do we do about it?’...  It really has to do with managing the behaviors of the people at the property level to engage, commit, and start to reduce and become aware of their impact on the whole equation.”

One of the key strategies debated was the use of demand response and load management to create grid stability and generate significant economic returns for end-users who reduce peak load consumption.

Douglas Lutzy, chief, Rates & Tariffs, Office of Electricity & Environment, from the New York Public Services Commission explains the value of this strategy saying, “... what this is meant to do, essentially, is provide even greater incentives and greater information to customers about the widely varying cost of electricity and when it might actually behoove customers to make even greater efforts to strategically manage their loads and create even greater demand savings than they’ve found it economically beneficial to do up to this point.”

While curtailment was one of the strategies discussed, the area that brought the most heated debate centered around steam-chilling. Jennifer Kearny-Herold, energy program manager for New York Presbyterian Hospitals; Robert Gisolfi, energy manager for Macy’s East; and Tom Barone, program manager from NYSERDA all held very different and strong opinions about the costs/benefits associated with this power strategy.

“I think there is a major misconception about the cost to cool with steam, and if you don’t know what it costs, then you can’t really determine the value of the load shift when determining whether to switch to or from steam resources,” said Jennifer Kearny Herold. 

“The challenge for all of us is how do we get the biggest bang for every dollar of the $175-million System Benefit Fund available through NYSERDA, and the $224 million dollars within the Con Edison service territory. So, we need to think about the right policies, the right regulations, [and] the right programs so that we use that money as effectively and efficiently as possible,” Quiniones added.

“We aim to spotlight sharp, innovative approaches by companies like Morgan Stanley, Starwood, Macy’s, Forest City Ratner Cos., New York Presbyterian Hospital, and others to capture simple value out of complex market opportunities,” said Michael Gordon, president and founder of ConsumerPowerline. “The electricity markets are complex markets. At ConsumerPowerline, we seek to provide clarity and simplicity in the decision-making process and deliver both significant economic value and clout to the end-user.”

Participants in the Second Annual ConsumerPowerline Energy Roundtable engaged in a dialogue with energy managers who directly influence at least 2,500 megawatts of building loads and more than $2 billion in annual energy purchasing, and public and private influencers who shape market rules and incentive structures. Participants included:

-John Lembo, energy manager, Starwood Hotels.

- Robert Gisolfi, energy manager, Macy’s East.

-Mike Gordon, founder and president, ConsumerPowerline.

-Tim Daniels, NYC Economic Development Corp.

-Jennifer Kearny Herold, energy manager, New York Presbyterian Hospitals.

-John Bowen, director of engineering, Forest City Ratner Cos.

-John Gilbert, executive vice president & COO, Rudin Management.

-Tom Barone, NYSERDA.

-Dave Lawrence, NY Independent System Operator.

-Shirley Neff, Columbia University faculty, former senior economist U.S. Congress.

-Ashok Gupta, head of air and energy program, Natural Resources Defense Council.

 

This information was reprinted with permission from ConsumerPowerline. To find out more about ConsumerPowerline, a provider of strategic energy asset management (SEAM), visit (www.consumerpowerline.com). ConsumerPowerline’s products and services help its customers pay the least for energy, get the most for energy they buy, and earn the most for what they can reduce.


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