NEW YORK STATE BOARD ON ELECTRIC GENERATION SITING AND THE ENVIRONMENT IN THE MATTER of the Application by Kings Park Energy, LLC for a Certificate of Environmental Compatibility and Public Need to Construct and Operate a 300 Megawatt Simple Cycle Generating Facility in the Town of Smithtown, Suffolk County, New York Case 00-F-1356 Direct, Rebuttal and Surrebuttal Testimonies of David A. Schlissel On behalf of Townline Association, Inc. September 2002, October 2002 and January 2003 NEW YORK STATE BOARD ON ELECTRIC GENERATION SITING AND THE ENVIRONMENT IN THE MATTER of the Application by Kings Park Energy, LLC for a Certificate of Environmental Compatibility and Public Need to Construct and Operate a 300 Megawatt Simple Cycle Generating Facility in the Town of Smithtown, Suffolk County, New York Case 00-F-1356 Direct Testimony of David A. Schlissel On behalf of Townline Association, Inc. September 30, 2002 Table of Contents Qualifications...................................................................................................................... 1 Introduction......................................................................................................................... 2 Summary of findings........................................................................................................... 4 Article X Issue No. 14 - The reasonableness of the claims in the Article X Application concerning the need for the proposed facility ........................................................... 8 Article X Issue No. 5 – Whether the construction and operation of the proposed facility would be in the public interest ................................................................................ 17 Article X Issue No. 3 – Combined cycle versus simple cycle generation ........................ 29 Article X Issue No. 16 - The need for the capability to burn a backup fuel..................... 31 Article X Issue No. 1 – whether the proposed facility will contribute to competition in electricity markets generally and in the spinning reserve, ancillary-services market specifically .............................................................................................................. 33 List of Exhibits Exhibit DAS-1 – Resume Exhibit DAS-2 – Kings Park Energy discovery responses Exhibit DAS-3 – Cover pages and tables from the New England Power Pool’s April 1, 2002, “Forecast of Capacity, Energy, Loads and Transmission – 2002-2001” Exhibit DAS-4 – The Feasibility of Re-Powering KeySpan’s Long Island Electric Generating Plants to Meet Future Energy Needs, Long Island University, Center for Management Analysis, August 6, 2002. Case 00-F-1356 David A. Schlissel 1 QUALIFICATIONS 2 Q. Please state your name, position and business address. 3 A. My name is David A. Schlissel. I am a Senior Consultant at Synapse Energy 4 Economics, Inc, 22 Pearl Street, Cambridge, MA 02139. 5 Q. On whose behalf are you testifying in this case? 6 A. I am testifying on behalf of the Townline Association, Inc. ("TAI"). 7 Q. Please describe Synapse Energy Economics. 8 A. Synapse Energy Economics ("Synapse") is a research and consulting firm 9 specializing in energy and environmental issues, including electric generation, 10 transmission and distribution system reliability, market power, electricity market 11 prices, stranded costs, efficiency, renewable energy, environmental quality, and 12 nuclear power. 13 Q. Please summarize your educational background and recent work experience. 14 A. I graduated from the Massachusetts Institute of Technology in 1968 with a 15 Bachelor of Science Degree in Engineering. In 1969, I received a Master of 16 Science Degree in Engineering from Stanford University. In 1973, I received a 17 Law Degree from Stanford University. In addition, I studied nuclear engineering 18 at the Massachusetts Institute of Technology during the years 1983-1986. 19 Since 1983 I have been retained by governmental bodies, publicly-owned utilities, 20 and private organizations in 24 states to prepare expert testimony and analyses on 21 engineering and economic issues related to electric utilities. My clients have 22 included the Staff of the California Public Utilities Commission, the Staff of the 23 Arizona Corporation Commission, the Staff of the Kansas State Corporation 24 Commission, the Arkansas Public Service Commission, municipal utility systems 25 in Massachusetts, New York, Texas, and North Carolina, and the Attorney 26 General of the Commonwealth of Massachusetts. Page 1 Case 00-F-1356 David A. Schlissel 1 I have testified before state regulatory commissions in Arizona, New Jersey, 2 Connecticut, Kansas, Texas, New Mexico, New York, Vermont, North Carolina, 3 South Carolina, Maine, Illinois, Indiana, Ohio, Massachusetts, Missouri, and 4 Wisconsin and before an Atomic Safety & Licensing Board of the U.S. Nuclear 5 Regulatory Commission. 6 A copy of my current resume is attached as Exhibit DAS-1. 7 Q. Have you previously testified in any Article X Proceedings before the Siting 8 Board? 9 A. Yes. I have testified in Case 99-F-1627 concerning NYPA's proposed 500 MW 10 Astoria Project. I also submitted testimony in Case 99-F-1191 concerning the 11 proposed SCS Astoria Energy facility. However, that case was settled before I 12 testified. 13 INTRODUCTION 14 Q. What is the purpose of your testimony. 15 A. Synapse was retained by TAI to examine a number of issues related to Kings Park 16 Energy's (also "the Applicant") proposed 300 Megawatt simple cycle electric 17 generating facility. This testimony presents the results of our examination and 18 investigation of the following issues set forth in the Examiners' June 12, 2002 19 Ruling Identifying Article X Issues and Establishing Schedule Milestones: 20 1. Article X Issue No. 14 - Are the Article X Application's claims about the 21 need for the proposed facility reasonable and, if not, what are the 22 implications of this in the context of evaluating requested waivers of local 23 laws and determining if the facility is in the public interest. 24 2. Article X Issue No. 5 - Is the proposed facility in the public interest taking 25 into account: Page 2 Case 00-F-1356 David A. Schlissel 1 a. whether the proposed facility will displace generation by older 2 facilities, and thereby reduce air emissions and improve air quality 3 on Long Island. 4 b. whether the proposed facility will provide power at a relatively 5 lower price. 6 3. Article X Issue No. 3 - Would the proposed simple cycle generation 7 facility minimize adverse environmental impacts (excluding air and 8 wastewater discharge impacts) considering the state, nature, and 9 economics of combined cycle technology. 10 4. Article X Issue No. 16 - The need for the capability to burn a backup fuel. 11 5. Article X Issue No. 1 - Was the facility selected pursuant to an approved 12 procurement process, and will it contribute to competition in electricity 13 markets generally and in the spinning reserve, ancillary-services market 14 specifically. 15 Q. Please explain how Synapse conducted its investigations and analyses on 16 these issues. 17 A. We reviewed the Article X Application and the appendices to the Application. We 18 also submitted discovery to Kings Park Energy and reviewed the materials that 19 were provided in response to that discovery. In particular, we examined the 20 Applicant’s production modeling analysis and assessed the reasonableness of the 21 input assumptions used in these analyses. 22 We also reviewed materials that were presented in other recent Article X 23 proceedings in New York State. In particular, we compared the results of Kings 24 Park Energy's analyses with the production modeling analyses that have been 25 presented by other Article X applicants. 26 Finally, we reviewed materials issued by LIPA, the New York Independent 27 System Operator ("NYISO") and the New England Power Pool. Page 3 Case 00-F-1356 David A. Schlissel 1 SUMMARY OF FINDINGS 2 Q. Please summarize your findings. 3 A. We have found that: 4 1. The claims in the Article X Application concerning the need for the 5 proposed Kings Park Energy facility are not reasonable because they do 6 not reflect either the 407.6 MW of new peaking capacity that has been 7 installed on Long Island this year or the new power plants that have been 8 certified by the Siting Board or that are currently undergoing Siting Board 9 review. 10 2. An independent assessment of projected peak system demands and 11 available generating capacity demonstrates that it is not reasonable to 12 claim that the 300 MW of capacity from the proposed Kings Park Energy 13 facility will be needed before 2008 or 2009, at the earliest, even if Long 14 Island continues to experience extreme summer weather conditions. 15 3. If more typical summer weather conditions are assumed, it is not 16 reasonable to claim that the 300 MW of capacity from the proposed Kings 17 Park Energy facility will be needed before 2015 or 2016, at the earliest. 18 4. Long Island will have enough generating capacity to satisfy the New York 19 Independent System Operator’s locational installed capacity requirements 20 under projected extreme summer weather conditions even without the 21 proposed Kings Park Energy facility. 22 5. My conclusion that the claims in the Article X Application concerning the 23 need for the proposed Kings Park Energy facility are unreasonable is 24 conservative because it does not reflect the potential repowering of any of 25 KeySpan’s existing generating facilities. Generally speaking,