March 12, 2004

New Energy Committee Chair

The Business Council's Energy Committee has a new chair: Cindy Thorne Chadwick . Ms. Chadwick is the Manager-Public Affairs for NYSEG (New York State Electric & Gas Corporation). She will take over the reins of the Energy committee at its March 29th meeting. The current chair, Mike Rose of National Fuel Gas, has decided to step down after 4 ½ years at the helm. Mike was recently appointed Vice-Chairman of The Business Council's Government Affairs Council and has been the chairman of The Council's Political Action Committee (PAC) for the last two years. A great presiding chairman with a sense of humor, Mike was an excellent leader who led the committee through the first years of New York's electricity/energy restructuring.

Ms. Chadwick, a graduate of Cornell University, has been with NYSEG for 22 years and has held positions in customer service, consumer education and federal government affairs. In 1994, she began her current duties in state government affairs, representing the company in Albany.

NYSEG, a subsidiary of Energy East Corporation, serves 830,000 electricity customers and 250,000 natural gas customers across more than 40% of upstate New York. We wish Cindy well in her new role as Energy Committee Chairperson.

PSC Release Interim Blackout Report

On March 1st the Public Service Commission released its initial report on the August 14, 2003 blackout. It stated that New York State's power grid did not contribute to the August 2003 blackout, but utility companies need to secure more backup power in the future. The report listed a number of recommendations based on the over 900 requests for information, interviews with regulators and utilities, and thousands of industry documents.

The report stated that although the power surges from the Midwest cascaded through New York and the surrounding region, there is no evidence of any significant failures in the operations of New York's electric system. The report supports earlier findings that there was no warning to New York utilities or the NYISO as to the magnitude of the problems originating in the Midwest that might have allowed New York's utilities and regulators to take actions to prevent or minimize the impact on New York's electric system.

Despite the impact of the blackout on New York State the report determined that, under the circumstances, electric, telecommunications, gas and water systems generally performed well. Total restoration was accomplished in 30 hours. The PSC stated that a number of recommendations should be implemented including national reliability standards. However, it should be noted that New York already operates under mandatory, and more stringent, reliability rules than those required by NERC and NPCC.

The state Public Service Commission will release a completed report on the blackout next month. A full copy of the initial report is available at www.dps.state.ny.us

Federal Nuclear Regulators Give Indian Point High Grades

The Nuclear Regulatory Commission (NRC), the federal regulatory committee that oversees nuclear power, has declared the nuclear reactors at Indian Point 2 and 3 "fit," and changed the plant's level of oversight from "heightened" to "standard." The Committee said safety issues at the plant concerning faulty construction had been resolved, and the plant was now eligible for the NRC's highest rating.

Entergy Nuclear Northeast, which owns and operates Indian Point, spent millions on improvements at the Westchester plant. The Business Council has argued the plant is necessary to help meet the state's energy needs. The Business Council stated in a May 2002 letter to New York City leaders that the plant's power is needed to fuel the City. Likewise, The Business Council testified before the New York City Council in February 2003 that the plant is capable of supplying nearly 20% of the load in New York City.

A February, 2002 report by The Public Policy Institute warned that New York already faces a dangerous energy gap. In that report, The Power to Grow, The Institute concluded that New York must add at least a dozen new power plants with capacity totaling at least 9,200 megawatts in the next five years. Other organizations, including the New York Independent System Operator (ISO), have reached similar conclusions about New York's capacity shortfall. The ISO has said that the city alone will need as much as 3,000 megawatts of new generating capacity by 2005. The Business Council restated its finding in testimony submitted to the New York City Council in February 2004. These testimonies are available on The Business Council's Energy page.

Millennium Pipeline Project

The developers of the Millennium pipeline project announced on February 17th a two-stage plan that will supply more natural gas to peak demand areas of New York. The project will now involve two of New York's largest natural gas companies, National Fuel Gas in western New York and KeySpan in the New York City metropolitan area.

Phase one will replace and upgrade 186 miles of an existing pipeline from Corning to Ramapo. The project, which is expected to be in service by November 1, 2006, will also link the National Fuel Gas Company's Empire State pipeline with energy markets in eastern New York. Phase one of the project will also use KeySpan as a new anchor shipper, increasing the supply of natural gas to KeySpan's customers.

The second phase will link the New York City metropolitan area with Millennium by building a pipeline under the Hudson River. Millennium is awaiting a ruling from the U.S. Federal District Court before proceeding with the second phase of the plan, but said phase one will proceed as planned. Phase 1 will allow the companies to begin delivering much-needed new energy supplies to the region, while Millennium continues to work to complete Millennium's link to energy consumers in the New York City metropolitan market.

The new plan will provide much-needed energy to New Yorkers who are relying on natural gas more and more, and natural gas use in electricity generation continues to grow. It's important that this plan succeed in order to meet the future energy needs of New York. The Business Council is supporting the Millennium project, sponsored by Columbia Gas Transmission Corp. and others, as one step in resolving the growing threat of gaps between New York's energy needs and capacity.

For more information access: www.millenniumpipeline.com