Vital Energy

Alternative Power

A Price-Stable Energy Source

Indian Point Energy Center generates 2,000 megawatts of electricity, or 20 percent to 40 percent of the electric power used in our area depending on time of year and load on the grid. The facility provides power to millions of homes, thousands of businesses, and hundreds of critical transportation, health and municipal systems. Replacing the 2,000 megawatts would cost over $1 billion a year in electricity costs, and would lead to electricity shortages, price spikes of as much as 40 percent, and rolling blackouts.

Nuclear energy is a price-stable energy source and does not fluctuate like natural gas prices or other fossil fuels. For New York State’s electrical grid, closing Indian Point would reduce the amount of power available by 11 percent. Resulting blackouts will cost area businesses an additional $3 billion. In fact, the Comptroller General of the United States concluded that shutting down Indian Point would cost a total of $27 billion over a 15-year period.

A Vital Part of the System

U.S. Representative Nita Lowey (D-NY) commissioned a study by the National Academy of Sciences National Research Council in June 2006 that stated that while replacing Indian Point was “technically feasible,” political, regulatory, and financial hurdles would make doing so difficult.” The National Research Council, which conducted the survey, concluded that:

The NAS study went on to report that the shutdown would require new energy sources and reduced demand for electricity that add up to about 5,000 megawatts–2,000 to replace the lost production of Indian Point and the balance to meet projected increases in demand and to compensate for other possible power plant closings. Shutting down the reactors sooner, beginning in 2008, would be much more difficult, the committee said, noting that it would take an unprecedented level of cooperation among government leaders and agencies. An earlier closing would not allow much time for building appropriate replacement sources of energy. If the capacity of replacement power sources is inadequate, the reliability of the state's power system would be threatened, possibly resulting in wide-scale power outages.

The study emphasizes that the issues associated with the potential shutdown of Indian Point are complex and intertwined with broader energy issues. Even with Indian Point still operating in 2008, for example, southeastern New York would require 500 more megawatts of new generating capacity than is now under construction in the state. And if Indian Point were closed, New York's current government mechanisms and regulatory policies may limit its ability to address the consequences. Closing the plant would require a long-term, integrated strategy that may include changes to state law and policies, such as reauthorization of the Article X statute, which was designed to facilitate the environmental review and siting of new power plants.

New power plants, improvements in electricity transmission and energy efficiency, and distributed generation could contribute to replacing the energy lost by the closure of Indian Point, the report says. Most new power plants are likely to be fueled with natural gas. However, the committee expressed concern over this increasing reliance on natural gas because new sources of the fuel, such as imported liquefied natural gas, may be required. It noted that constructing new power plants upstate may be easier than doing so in New York City or Westchester County, but building upstate would require upgraded transmission capacity as well.

Electricity from new plants is almost certain to be more costly than that from Indian Point, the committee said. However, given the state's new regulatory structure for pricing electricity, the committee could not accurately estimate the increase in the cost of electricity to consumers that might result from the plant's closure. In addition, to the extent that the reactors are replaced with plants that burn fossil fuel, emissions of carbon dioxide will be higher, complicating efforts by New York to reduce greenhouse gases under the Regional Greenhouse Gas Initiative.

Most recently, the Manhattan Institute and Westchester Business Alliance also released their own respective studies in early 2008 that discuss the energy volatility in New York, identifying Indian Point as a critical component of the State’s energy future.