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New York Power Authority Awards Natural Gas Contracts to Three Suppliers

Michael Saltzman

November 27, 2007


WHITE PLAINS—A highly efficient and clean generating facility that the New York Power Authority (NYPA) operates in Astoria, Queens, is assured of reliable and economical supplies of natural gas under three contracts approved Tuesday by the NYPA Board of Trustees.  

The contracts are with Colonial Energy, UBS Energy LLC and Virginia Power Energy Marketing (VPEM), for a total estimated cost of $245 million over a two-year duration.  The agreements stem from a NYPA solicitation for competitive bids for the supply and delivery of natural gas, with the three lowest responsive bids submitted by Colonial, UBS and VPEM.   

The contracts, which will provide natural gas supplies equaling 35,000 MMBtu (35 billion British thermal units) per day, will cover approximately half of the gas requirements of the Queens plant, which the Power Authority placed in commercial operation in December 2005. The other half will be satisfied through short-term, spot-market purchases as part of a balanced supply portfolio. 

The new contracts will replace existing supply agreements with VPEM and BP Energy Co., expiring on Dec. 31.

The three companies awarded the new contracts will be responsible for transporting the natural gas from the Texas-Louisiana region via an interstate pipeline network that connects with a local pipeline system operated by Con Edison. That system then transports the gas to NYPA’s 500-megawatt plant. 

The plant uses a combined-cycle technology for capturing heat normally lost in the production of electricity. Natural gas powers two turbine-generators to produce power at the facility. The resulting hot gases are then harnessed to create steam to drive a third turbine-generator.

The plant, equipped with the most advanced emission controls, is located on a 47-acre East River site shared by another NYPA generating facility, the Charles Poletti Power Project.

The Power Authority built the combined-cycle plant to help it continue to meet the electricity requirements of its large governmental customers in New York City, who save hundreds of millions of dollars a year in lower energy costs as NYPA customers. They include tax-supported schools, hospitals, municipal buildings, and the subways and commuter trains. Those customers also benefit from a wide range of energy-efficiency projects financed and undertaken by NYPA for further savings.  

 About NYPA:

■    NYPA uses no tax money or state credit.  It finances its operations through the sale of bonds and revenues earned in large part through sales of electricity.  ■    NYPA is a leader in promoting energy-efficiency, new energy technologies and electric transportation initiatives.  ■    It is the nation’s largest state-owned electric utility, with 18 generating facilities in various parts of the state and more than 1,400 circuit-miles of transmission lines.

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