Costs make LIPA reconsider offshore NY wind farm

NEW YORK (Reuters) - The Long Island Power Authority is reconsidering an offshore wind project after a study it commissioned showed it could add $2.50 to the average monthly consumer power bill.

LIPA said the independent review by Pace Global Energy Services showed the project's costs could reach $811 million, including construction and financing.

"We are at the point were LIPA will have to consider whether to continue with the project or go with an alternative renewable energy," a LIPA spokesman said in an interview.

In 2004, LIPA selected a proposal by FPL Energy, a subsidiary of FPL Group Inc, of Juno Beach, Florida, to install 40 3.6-megawatt wind turbines about 4.1 miles off the south shore of Long Island.

The turbines would be capable of producing 140 MW of electricity, enough to supply about 44,000 average-sized Long Island homes.

LIPA, which supplies power to over 1.1 million customers in Long Island and New York city, requested the study after FPL Energy had given the Authority in late 2006 an updated cost estimate of $697 million.

It showed the cost premium spread out over 20 years of the wind-generated power over the cost of electricity from natural gas plants would amount to about $66 million per year, or about $2.50 per month for the typical residential consumer.

The LIPA spokesman said the price of wind turbines has risen as strong natural gas and oil prices have boosted demand for the alternative power equipment. Strong steel prices have also pushed turbine prices higher.

LIPA's board of trustees will discuss the proposed offshore wind project and possible alternatives at a meeting September 25.