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ENERGY COMMITTEE NEWSLETTER, Sept. 7, 2001

NIAGARA MOHAWK - NATIONAL GRID MERGER

On Tuesday, September 5th, the leadership of Niagara Mohawk Holdings and National Grid of England unveiled merger plans. National Grid, the sole power transmission company of England and Wales, also has extensive holdings in New England. National Grid recently purchased New England Electric Service System and Eastern Utilities Association both in New England. The addition of Niagara Mohawk will make National Grid the ninth largest utility in the nation.

Niagara Mohawk will keep its company name with the addition "A National Grid Company." The new entity will serve 3.3 million customers in both New York and New England with a workforce of about 10,000. The transaction is expected to be completed by 2001. The merger is subject to stockholder and Public Service Commission approval.

PUBLIC SERVICE COMMISSION

The Public Service Commission (PSC) at its August 14th meeting passed a resolution (Case 00-E-1380) ordering the ISO to provide certain information (software, market design, tariff provisions, and operating rules and bids). The PSC stated that it was their statutory responsibility "to ensure the safe and adequate provision of electricity at just and reasonably rates" and therefore they should be allowed to have access to this data. It was the intention of the PSC to obtain the data in order to better understand the ISO workings.
In response to the order, the ISO filed a Motion for Protective Order, Motion for Clarification, and Motion for Stay (NYISO Motion). The ISO, cognizant of the sensitivity of the material and of the proprietary nature of market information, asked for assurances of security. An order clarifying the situation and assurances of confidentiality were issued by the PSC on August 23rd.

The PSC also issued Order 00G0996 "In the Matter of Criteria for Interruptible [Natural] Gas Service." The order requires all users of interruptible gas to secure a seven to ten day supply of alternative fuel by October 1st. If the interruptible customers fail to comply with the order, utilities are required to charge them higher rates. The Business Council raised several concerns about this order including storage, environmental, and costs problems for electrical generators in New York.

The next meeting of the PSC will be on September 20, 2000 in New York City.

POWER AUTHORITY ADDS GENERATORS

The New York Power Authority recently purchased eleven gas turbine generator sets from General Electric. The total amount of power from these generators is 520,000 kilowatts. NYPA's Board of Trustees approved the purchase on August 29th in an effort to close the "generation gap." With the lag between plant construction and increased demand, the Power Authority decided to help "bolster the reliability of New York's electrical system and help stabilize prices."

CON ED SUES STATE OVER REFUND BILL

Consolidated Edison recently filed a federal lawsuit as a result of Chapter 190 of the Laws of 2000. The new law legislatively blocks their ability to pass along the cost of replacement electricity due to the Indian Point 2 nuclear power plant shutdown in February. On August 8th the Governor signed the bill (A.10096/S.7094) denying recovery cost. Con Ed is now forced to refund about $162 million to ratepayers in their service territory this week The case is before a federal judge who has scheduled a hearing on the injunction for September 19th. Con Ed claims that the legislation is unconstitutional since it is within the power of the PSC to order rebates on prudency grounds.