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ENERGY COMMITTEE MEETING MINUTES - MARCH 18, 2003

Attendance

Johnny Evers, The Business Council
Ron Liberty, PSC
Carolyn Brown, IPPNY
Chris McGrath, NY Capitol Consultants
Chris Revere, The Vandervort Group
Todd Vandervort, The Vandervort Group
Dan Whyte, PG & E
John Glusko, CH Energy
Dan Dubois, PG & E
Chris Wentlent, AES-NY
Stephen Leahy, Northeast Gas Assoc.
Frank Bifera, Hiscock & Barclay
Greg Sovas, Spectra Environmental
Andrea Phillips, NYPA
Eileen Cifone, KeySpan
Thomas DeJesu, KeySpan
Anne Van Buren, The Energy Association
Howard Shapiro, The Energy Association
Kevin Lanahan, Con Edison
Terri Crowley, Hinman Straub
Cindy Chadwick, NYSEG
Dan Thompson, Dynegy Northeast
Stephen Hanse, The Energy Association
Sandra Meier, Environ. Energy Alliance
Gavin Donohue, IPPNY
Michael Murphy, Couch White
Mike Rynasko, The Energy Association
Christine Benedict, NYSERDA
John Martin, NYSERDA
Frank Privitera, Word Management
Bradley Field, DEC

Meeting Minutes

  1. Welcome and Introductions, Johnny Evers, The Business Council of New York State, Inc.
  2. Guest Speakers
    Mr. Bradley Field, Department of Environmental Conservation, Director of Mineral Resources.

    Mr. Field addressed the committee on natural gas and petroleum deposits in New York State. He talked on the department’s role in the leasing of state lands for the exploration for these resources, the care taking of spent and abandoned wells, natural gas storage and the revenues produced by this industry.

    Mr. Field gave a slide show presentation that he offered to forward to any member of the committee who would like a copy. The presentation was very involved and extremely helpful in explaining one of New York State’s least understood energy field: in-state production of energy resources in the natural gas/oil fields.

    Mr. Ron Liberty, Department of Public Service, addressed the committee on federal energy issues.

    Mr. Liberty discussed several federal-state issues for the committee. Nuclear waste and its involved process was addressed. Mr. Liberty stated that NYS has a growing storage problem. This is the source of some talk in Washington due to the national nuclear debate. Transmission upgrades has been a topic at FERC and many private sector groups in NYS have been undertaking some major projects. Security concerns have drawn much federal attention. This has also been true in the NYS Legislature. The issues of FERC pursuing a national standard market design (SMD) was also discussed. This last topic was also discussed in the context of RTOs and the ISO and ISO-NE merger that had been discussed recently as well as talks of mergers between several ISOs and the national movement toward RTOs. Mr. Liberty also discussed current energy legislation in the Congress.
  3. Acid Deposition Reduction Initiative.
    Ms. Sandra Meier, Environmental Energy Alliance, discussed Governor Pataki's "acid deposition reduction initiative." The State Environmental Board approved two new regulations, 6 NYCRR Parts 237 and 238 which, respectively, addresses NOx and SO2 emissions from large electric generating stations.

    Part 237 applies to generator units with capacity of 25MW or greater that "sells any amount of electricity." Sources whose NOx emissions are capped at 25 tons or less during the ozone season (October 1 through April 30) are generally exempt. Part 238 applies to generator units that are regulated as "affected units" under Title IV of the federal Clean Air Act.

    These rules will affect about 70 large, base-line electric power generating facilities that use fossil fuel (i.e., natural gas, oil and coal) as a fuel source. In summary, Part 237 would require that summer-time restrictions on NOx emissions - imposed to combat ozone pollution - be extended year-round; and Part 238 would limit SO2 emissions to one-half of the levels allowed under Title IV of the federal Clean Air Act.

    The Business Council, and many businesses directly affected by the proposed rule, believe that these rules will have a significant, adverse impact on the price, reliability and future supply of electric energy in New York State. The Department of Environmental Conservation's own economic impact statement projected capital costs of $430 million, and average increases in the wholesale cost of electric power of 5.4 percent, or $370 million per year, with significantly higher cost increases in Rochester (9 percent) and Long Island (16 percent.) It projects job losses of up to 6,000 positions. Many industry experts believed these impacts were significantly underestimated, since they were based on overly optimistic projections of new generating capacity coming on-line.

    Despite significant concern raised by the business community regarding the cost and limited benefits of this program, the final rule was not significantly modified from earlier versions.
  4. Legislative Update.
    The committee discussed a number of legislative bills and proposals:

    S.2301 (DeFransico) / A.2546 (Tonko) - An act to amend the Public Service Law in relation to natural gas and electric service. ("Pilot light bill")

    A.6248 (Tonko) - Relates to siting of major electric generating facilities; also relates to provision for "portfolio management services" as defined and to powers of LIPA. (Article X bill)

    S.1353 (Wright) - Relating to extending expiration of provisions of law providing for state energy planning and siting of major electric generating facilities. (Article X bill)

    A.1829 (Brodsky) / S.1362 (Morahan) - Relating to directing the public service commission to calculate local, county, and state government fiscal impacts and actual costs for nuclear emergency preparedness.

    A.1961 (Levy) - Relating to requiring the public service commission to review compensation paid to certain high level policy making employees of gas or electric corporations.

    A.3102 (Gianaris) / S.667 (Padavan) - Relating to requiring the director of public security to create and implement security measures for power generating and transmitting facilities.

    A.200-A (Cahill) - Relating to enacting the "Electric and Gas Customer Service Improvement Act of 2003".

    A.6950 (Grannis) / S.3003 (Marcellino) - Enacts the healthy, safe and energy efficient outdoor lighting act to reduce harmful outdoor lighting
  5. Renewable Portfolio Standards, Public Service Commission Case 03-E-0188.
    On March 4th the Department of Public Service (DPS), at the direction of the Public Service Commission (PSC), began the process which will culminate in the adoption of a renewable portfolio standard (RPS) for the State of New York. In his State of the State Address, Governor Pataki asserted that within ten years, at least 25 percent of all energy electricity bought in New York State should come from renewable energy resources.

    The PSC at its February 19th meeting established Case 03-E-0188, the Proceeding on Motion of the Commission Regarding a Retail Renewable Portfolio Standard. The procedural conference for the case was held on March 4th in the PSC offices in Albany. The Business Council attended the conference as a party to the case and will follow the proceedings as they develop. The opening steps in the proceeding entailed the identification of legal, policy and factual issues and the facilitation of discussion among the parties to seek out opportunities for negotiated outcomes.

    Overall, there were more than three dozen parties for the case representing the environmental, business, electricity, utility and other energy interests. Preliminary schedules and a summation of the procedural conference is due out shortly. The outcome of the case will be based on initial comments due in March and collaborative meetings scheduled for early April. A status report will be transmitted to PSC Chairman in early May. The hearings will identify a variety of issues, but tantamount to the case will be the issue of what constitutes renewable sources of electricity and how the state will reach the directed level of 25% within the time allotted. The committee discussed the issue and several members stated that they were providing comments on the issue.
  6. Adjournment and Next Meeting.
    The meeting adjourned at 3pm. The committee will meet again during the 2003 session as needed.