Long Island Power Authority (LIPA) Chairman Richard M. Kessel has announced that as a result of last week’s record use of electricity during a multi-day heat wave, he has directed LIPA’s Power Markets Division to review a three-pronged strategy that includes: the possible repowering of at least one major on-island power plant; adding an additional 500 MW of resources either through a new cable and/or a new base-load generation plant; and saving up to 500 MW of demand through the creation of a massive energy efficiency program.

Kessel said that “LIPA was able to meet last week’s record-breaking peak-hour demand and 24-hour sustained demand because of its ongoing planning process and its success in adding over 1100 MW of new resources over the last few years.”

Kessel said, however, that he is “extremely concerned” about meeting demand in the 2010/2011 time frame.

“We need to focus on developing a large-scale energy efficiency power program that seeks to cut electric use on Long Island by up to 500 MW beginning in the 2007/2008 time frame,” said Kessel. “Additionally, LIPA is working with KeySpan on a plan for repowering and cleaning up some of the older plants on Long Island, which could provide additional power while significantly cutting emissions. Finally, we also need to look at the possibility of adding another cable or base-load plant on Long Island in the out years of the long-term plan.”

On Thursday, Aug. 3, LIPA set a peak-hour electricity demand record of 5,792 MW, which was a jump of 525 MW, or 10%, over last year’s peak hour demand, and the largest year-to-year increase in peak hour demand ever. The 10% jump in peak demand is also the largest in the region.

LIPA also set a 24-hour energy demand requirement on Aug. 3, delivering a total of 113,951 MWh of electricity to Long Island, which is a 15% increase over last year’s 24-hour record.

Over the course of three consecutive days last week, LIPA set new records for energy consumption each day. At the same time, with developments in the Middle East and the announcement of a 400,000 barrel a day reduction in crude oil being carried by the Alaska Pipeline for an indefinite period of time, new records for the cost of a barrel of oil and gas could soon be reached.

With the potential for a significant run up in the price of oil and natural gas as a result of problems with the Alaska pipeline, Middle East tensions, and on going oil-related issues in Africa and South America, Kessel has also directed LIPA’s Power Markets Division to review the Authority’s energy supply planning criteria in light of the extraordinary demand for power on Long Island and the increased frequency of heat waves in our region.

“Based on the possibility of extremely high gas and oil prices in the near future, we need to know what other projects can be justified based on energy savings going forward,” Kessel said.

In addition to the 1,100 MW of new supply added in recent years, LIPA’s Energy Plan calls for the development of the Neptune Regional Transmission System that’s due in 2007, and the Caithness Long Island Energy Center and FPL Energy’s Off-shore Wind Farm that are due in 2009.

Kessel pointed out that if demand continues to grow at even half the current rate, these new projects would just meet demand growth in the next four years, and that new projects would be needed by 2010/2011.

The Neptune project, a 65-mile undersea cable, will allow LIPA to import as much as 660 MW of less expensive power from the Pennsylvania, New Jersey and Maryland market. Construction is well underway and the projected is expected to be in commercial operation by next summer.

The Caithness project is a 350 MW state-of-the-art, combined-cycle facility to be built in Yaphank. LIPA has contracted for the purchase of 290 MWs of capacity and energy beginning in 2009. Finally, LIPA selected FPL Energy to construct a 140 MW Off-shore Wind Farm, which is currently in the regulatory process and could be completed in 2009.

Kessel indicated that he would make specific recommendations to LIPA’s Board of Trustees by the end of the year.

“Our planning process has worked well,” said Kessel. “We successfully added the resources needed to meet last week’s demand records, and we have additional resources due on line in the near term. Now we must turn to the planning process for longer-term projects to make sure we can meet Long Island’s demand for electricity beyond 2011.”