UPDATE 1-NYPA picks Astoria Energy to build NYC power plant

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NEW YORK, April 29 (Reuters) - The New York Power Authority (NYPA) Trustees Tuesday authorized the selection of Astoria Energy LLC to build a new power plant in New York City to supply its governmental customers.

In a release, the state-owned Power Authority said privately held Astoria Energy plans to build a second 500-megawatt natural gas-fueled plant in Queens to supply power under a proposed 20-year contract with NYPA.

Astoria Energy expects the new plant, which is fully licensed, to enter service by the summer of 2011.

In 2001, the New York State Siting Board approved the construction of 1,000 MW of generating capacity at a 23-acre site in Astoria, Queens.

NYPA did not say how much the new facility would cost. Astoria Energy spent about $1 billion to build the first 500 MW phase of the project, which provides power to New York power company Consolidated Edison Inc (ED.N) under a long-term contract. The existing plant entered service in May 2006.

The new plant will basically be the twin of the existing plant.

NYPA's government customers in the city include the City of New York, the Metropolitan Transportation Authority, the Port Authority of New York and New Jersey, the New York City Housing Authority and the New York State Office of General Services.

Together the government customers' peak summer demand is more than 1,800 MW, NYPA has said. One megawatt powers about 800 homes in New York.

NYPA said the Board selected the Astoria Energy project after reviewing more than 30 proposals from nine prospective suppliers for new in-city capacity. The bids stemmed from NYPA's issuance of a Request for Proposals (RFP) last November.

In an earlier RFP, NYPA in November 2006 selected a proposal by Hudson Transmission and Juno Beach, Florida-based FPL Group Inc's (FPL.N) FPL Energy subsidiary to build a new 345-kilovolt transmission line under the Hudson River to deliver up to 500 MW of supply from an existing power plant in New Jersey.

Hudson Transmission has said it hopes to start construction in 2009 with the line entering service about 2011. Electricity traders estimated the Hudson Transmission line would cost about $600 million.

The Power Authority said the power from both RFPs was needed to meet the government customers' increased electric demand and to make up for the scheduled retirement in January 2010 of NYPA's 847-megawatt oil/gas-fired Charles Poletti power plant in Queens. Poletti entered service in 1977.

NYPA owns and operates more than 6,000 MW of generating capacity, markets energy commodities and transmits electricity to private companies, utilities, neighboring states and government agencies. (Reporting by Scott DiSavino; Editing by Christian Wiessner)