News Archive 2003

Electricity use soars
Despite big job losses, demand jumps as New Yorkers snap up air conditioners, gadgets;
supply is tight
By Philip Lentz
Crain’s New York Business
May 19, 2003

Despite a severe recession and the loss of 236,000 jobs over the last two years, New York City will use a record amount of electricity this summer amid burgeoning energy demand.

Industry officials say they are surprised by the rapid increase in electrical demand, which they trace to growing sales of air conditioners, a continued boom in housing and an explosion in the use of new electronic gadgets.

"We're intrigued by it," says Eugene McGrath, chairman of Consolidated Edison Inc. "We can look at our meters, and we see energy use growing and our peaks growing."

The increase in electric usage puts a strain on the city power supply, though officials say the city should squeeze by this summer with programs that encourage large users to get off the power grid during times of peak usage. Prices are expected to rise slightly this year because natural gas, used to produce much of the city's electricity, is more costly than it was last year.

Because of the increased demand, Con Ed now expects electricity usage to grow by between 200 and 250 megawatts a year for the next five years. This is 25% higher than the 150- to 200-megawatt annual increase during the economic boom years of the late 1990s.

This summer, the utility predicts, city peak usage on a hot day will reach 11,020 megawatts, 355 megawatts above the 2002 forecast. Actual peak usage last year, adjusted for weather variations, was 10,795 megawatts.

The biggest reason for increased electrical demand is growth in sales of air conditioners. Con Ed estimates that 200,000 new air conditioners a year will be bought in its service territory of New York City and Westchester County over the next five years, compared with an average increase of 100,000 units annually in previous years.

Con Ed says sales are going up because prices have fallen and people are no longer content with just one unit, located in the bedroom. The utility estimates that 85% of the households in its service territory now have air conditioners, compared with 80% five years ago. That figure is expected to rise to 95% by 2012, it says.

The city's population boom, combined with low interest rates, has fueled a housing explosion in the city, which has also increased electrical demand.

Last year, the city issued permits for 18,500 housing units, the highest figure since 1985 and nearly double the number issued just five years before. Despite the recession, permits were up 2.1% in January and February of this year, compared with figures in the first two months of 2002.
More housing means more air conditioning and electrical usage, since new housing is nearly always built with central air.

The proliferation of new electronic gadgets is also boosting electrical use-from more powerful computers and fax machines to cell phones and personal digital assistants.

"Look around the house," says Greg Wortham, vice president of 1st Rochdale Cooperative Group, an energy supply firm. "Everyone has one or two cell phones, which have to be charged and plugged in. They have PDAs and their chargers. We all have one, two or three computers at home, maybe a fax machine and an extra TV box that didn't use to exist."

Working more at home

The drop in city jobs has not lowered overall electrical demand, experts say, because office buildings must still run central air conditioning units and because commercial energy use per square foot has increased as well.

"When businesses cut back, we don't see a corresponding drop in usage," Mr. McGrath says. "If you let four people go, you don't shut off a lot of lights, and your air conditioning doesn't go down much."
Instead, people who have been laid off may stay at home more and, during summer months, use more air conditioning and other home appliances. Con Ed found in a poll taken last summer that 58% of homes in the city and Westchester County were occupied during the day, compared with 51% in previous years.

"That's a big difference," Mr. McGrath says.

Commercial electrical usage is also increasing because businesses are buying more powerful computers and servers to operate computer networks. This has occurred despite the fact that Manhattan's office vacancy rate rose to 14.6% this March, compared with 5.5% in March 2000.

Commercial use up as well

"People often forget, when you're Web surfing, you're not just using the electricity of one computer," says a spokesman for the New York Independent System Operator, which runs the state power grid. "In reality, you're using a whole system of routers, switches and servers each time you jump to another Web page. And they all take electricity."

Peter DiCapua, senior vice president of Atco Properties & Management Inc., estimates that commercial electric usage is now between 10 and 12 watts per square foot. It was as low as 6 watts in the early 1990s.

"Commercial electric consumption hasn't gone down with the bad economy," he says.
While rising demand makes industry officials nervous, several power projects are under way that could ease the city's supply problems for the next few years.

A 250-megawatt expansion of KeySpan's Ravenswood plant in Queens is expected to be on line by this fall, which should help prevent any shortfall in the summer of 2004.

Other projects planned for future years include Con Ed's expansion of its East River plant, which would add 125 megawatts; a 500-megawatt plant at the Poletti station in Queens operated by the New York Power Authority; and a 1,000-megawatt plant proposed by SCS Energy in Astoria, Queens.

Also, several energy companies have proposed building new transmission lines into the city, which would also add to the local supply.

The most prominent project, by PSEG Power in New Jersey, would run a 500-megawatt line from Bergen County into Manhattan, under the Hudson River.

BACK TO TOP