Energy Items in Governor's Proposed Budget

Increase fees paid by operators of the six nuclear power reactors

Re-authorize the New York Power Authority to make voluntary contributions to the General Fund to fully support the Power for Jobs program in calendar year 2003

Authorize certain State agencies to finance their activities with revenues from assessments on public utilities and cable companies

Authorize assessments on utilities to be used for New York State Energy Research and Development Authority research costs

Increase oil and gas depth fees

Extend the authorization for the State to recover from the industry the cost of appraising oil and natural gas wells for local property taxation purposes

Governor Pataki also chose to continue implementation of the following tax reductions that were previously enacted:

Council Advocates for Indian Point Power Plants

The Business Council, in a February 3rd letter to the James Lee Witt Associates, expressed support for Entergy Nuclear Northeast's continued operation of the Indian Point Energy Center. Entergy owns both Indian Point Nuclear Plants 2 and 3 as well as Plant 1 which has ceased operations. The James Lee Witt report was commissioned by Governor Pataki in 2002 and has been released in draft form. The public comment period on the draft report ends February 7th. The report was critical of the emergency plans surrounding the plant and took issue with many federal mandates surrounding evacuation and planning strategies. However, it should be noted that nothing in the Witt report claims that the plant is unsafe. Entergy has expressed continued interest in working with all interested parties in emergency planning and has spent millions on plant security improvements. Entergy is complying with the federal mandates that govern security and emergency planning at its facilities.

The closing of the plant would result in a loss of almost 2,000 megawatts of electricity severely impacting both price and reliability in the surrounding areas and New York City. As much as 15% to 30% of the New York City power supply is provided by the Indian Point Energy Center. Even if the plant were to be closed, emergency plans would still be needed since fuel and spent fuel rods would still be housed at the site. The only difference would be the loss of critical amounts of electricity from the site. This issue has state and national ramifications since there are 104 nuclear powered generating facilities in the United States who are governed by FEMA and NRC mandates and local and state compliance with them.

Last Friday, January 31st, New York State notified the Federal Government, specifically the Federal Emergency Management Agency (FEMA), that it could not certify the emergency plans for the four counties (Westchester, Rockland, Orange and Putnam) surrounding the Indian Point Nuclear facilities in Buchanan, Westchester County. The state informed FEMA that it could not certify the plans, which are prepared by state, local and plant officials, because the four counties would not certify them. The state is charged with an annual certification that amounts to a "checklist" of items with which localities must comply -- drills, training, emergency plans, evacuation routes, sirens, etc. The state is now looking to the federal government for input. The Nuclear Regulatory Commission (NRC) requires a FEMA-approved plan as a condition of a plant's operating license. NRC has never closed an operating plant against the wishes of the operators of a plant. The federal government, through FEMA, has asked the state to renew its review of the plans and is working to gather more information including the final recommendations of the Witt Report. The Business Council's press release.

William Flynn Confirmed as Public Service Commission (PSC) Chairman

William Flynn was appointed by Governor Pataki to head the Public Service Commission on January 4, 2003 and was confirmed by the State Senate on February 4th. Mr. Flynn succeeds the Honorable Maureen O. Helmer who stepped down from the PSC Chairmanship on January 31st. Prior to his appointment, Mr. Flynn served as President of the New York State Energy Research and Development Authority (NYSERDA) and had previously served as Vice President, Treasurer, and Secretary to the Board of NYSERDA.

Mr. Flynn also serves as a member of the State Environmental Board, the New York State Energy Research and Development Authority Board, and the Disaster Preparedness Commission. He also serves on the State Board on Electric Generation Siting and the Environment. Mr. Flynn previously served as First Deputy Attorney General, Chief of Staff, and Special Counsel to State Attorney General, Dennis C. Vacco. In the early 1990s, Mr. Flynn was an Assistant United States Attorney and Executive Assistant in the Western District of New York.

The Public Service Commission regulates the state's electric, gas, steam, telecommunications, and water utilities and oversees the cable industry. The Commission is charged by law with the responsibility for setting rates and ensuring that adequate service is provided by New York's utilities. The staff arm of the Commission is the Department of Public Service. The Commission also exercises jurisdiction over the siting of major gas and electric transmission facilities and has responsibility for ensuring the safety of natural gas and liquid petroleum pipelines. Bipartisan by law since 1970, the Commission consists of up to five members, each appointed by the Governor and confirmed by the State Senate for a term of six years or to complete an unexpired term of a former Commissioner.

"Below Cost Sales" Vetoed By Governor

The "Motor Fuel Marketing Practices Act", also know as "below cost sales", was vetoed by the Governor as a pocket veto on January 31st. S.4522-B (Nozzolio) / A.1626-C (Tonko) would have established a retail sales system under which the sale of petroleum fuels are regulated along with a correlating penalty system. It provided for a three year sunset. In veto message number 48 of 2002 the Governor stated that he could not approve the bill in its current form. Under the bill, the sale of motor fuel at a price even slightly below cost could constitute a violation. Indeed, it could constitute a violation so long as the effect was to "injure" even a single competitor; notably, the bill does not preclude liability where the extent of the injury to a competitor is relatively minor. The Governor stated that it would have been extremely difficult to determining the cost of motor fuel sold by a particular seller based on the stipulations within the bill and that there may exist better ways to determine and enforce injury to competitors. He ended his message with an invitation to the sponsors to work with his staff on a new version of the bill this session.