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Energy Committee Newsletter, April 30, 2001

NEW YORK ISO RELEASES ITS MARKET MONITORING REPORT

The New York Independent System Operator, the entity charged with overseeing and administering the state's wholesale electricity market, released its market evaluation report, The Annual Assessment of the New York Electric Markets. It was compiled by Independent Market Advisor Dr. David B. Patton who delivered the results of his year-long study to the ISO's Board of Directors in Albany on April 17th. The report examined the operations of the ISO, its various markets, its operations, and a number of highlights as well as concerns.

The report stated that the wholesale electricity markets in New York are competitive but New Yorkers will experience higher electricity prices "unless significant levels of new generation are added to the system in the near future". The report stated that much of the blame for high prices in 2000 were driven by the high cost of natural gas and oil and due to the outage of the Indian Point 2 nuclear power plant in Westchester.

In addition to the need for new generation the report also stated that (except in certain instances) suppliers have been bidding competitively into the market. The ISO does have the ability to take the proper corrective action if that situation were to change

Also, the report found that the new markets have resulted in the delivery of more power with existing facilities.

The report also stated that the inability of developers to site addition generation will cause great problems in the electricity market. With growing demand and stagnant supply the market could suffer "large price fluctuations, even with fully competitive conduct of suppliers." Tightening of supply and growing transmission constraints will have a large effect on pricing and need to be addressed.

NYPA NEW YORK CITY POWER PLANTS

The New York Power Authority is continuing to build its natural gas-fired generators at 6 sites (10 generators) inside New York City and one on Long Island. NYPA has recently won court cases that attempted to block the construction of the plants. NYPA won its case in Brooklyn Supreme Court and its case in Queens on appeal. A June 1st start-up date for the plants is planned.

NYSERDA ANNOUNCES STATEWIDE ENERGY $MART FORUMS

The New York State Energy Research and Development Authority (NYSERDA) has announced the dates for its New York Energy $mart forums. The forums will be held in seven locations throughout the state including Binghamton, Buffalo, New York City, Rochester, Syracuse, Poughkeepsie, and Albany. The first forum will be held in Binghamton on May 3rd. It will be followed by another forum every Thursday thereafter until June 28th

The forums will highlight the details and funding opportunities for the following programs: Opportunities for Energy Efficiency Service Programs; Renewables, Distributed Generation, and Research and Development; Doing Business with NYSERDA; Residential Energy Affordability, and; Overview of NYSERDA's New York Energy $mart Program

The programs are day-long forums sponsored by NYSERDA to highlight the New York Energy $mart Program and seek public
participation. Of particular interest to industrial and commercial members are the areas of energy efficiency, renewables and
distributed generation.

PUBLIC SERVICE COMMISSION

The Public Service Commission (PSC) met in Albany on April 25th

The commission approved the following items dealing with the Electronic Data Interchange (EDI), customer billing arrangements, and retail access business practices:

The Commission approved the initial set of standards governing the electronic interchange of business information among electricity and natural gas providers. The Commission also directed all utilities to incorporate a uniform set of billing practices that will be incorporated into operating procedures and billing service agreements with companies supplying electricity and/or natural gas to customers

The EDI will insure uniform standards to allow the flow of information between Energy Service Companies (ESCOs) and utilities to facilitate retail competition.

CALIFORNIA PRICE RESTRAINTS

On April 25th the Federal Energy Regulatory Commission (FERC) voted to impose restraints when California reaches a Stage 1 alert, called when demand rises to within 7.5 percent of supply. The measure will last for one year.

The FERC order also included a requirement that California file to join an eight-state regional transmission organization (RTO)

TRANSMISSION UPGRADES BY NYPA AT MARCY INTERCHANGE

The New York Power Authority announced in mid-April the improvements made at the east-west transmission interchange in central New York

The improvements due to a Convertible Static Compensator (CSC) at the New York Power Authority's Frederick R. Clark Energy Center has begun to increase the amount of electricity that can be moved over existing transmission lines. The CSC will allow power flows through the Utica-Albany corridor of transmission to increase by approximately 60 megawatts (MW)

Transmission lines from all areas of the state converge in Central New York, causing a severe transmission bottleneck along the Utica-Albany corridor. By next summer the CSC is expected to increase power flows by some 240 MW.