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ENERGY COMMITTEE MEETING, MINUTES - December 2, 2003

Staff Contact: Ken Pokalsky

Attendance

Mike Rose, Chair National Fuel
Johnny Evers, The Business Council of New York State
Lou Friscoe, Mirant N.Y.
Mark Glaser, Couch White, LLP
Steve Sullivan, Power Communications
Kevin Lanahan, Con Edison
Joe Brendel, Brendel Associates
Michael Madigan, Barton & Loguidice, P.C.
Paul Gister, General Mills
Davis Ardman, Barton & Loguidice, P.C.
Jerry Mominee, General Mills
Bill Flynn, Niagara Mohawk
Howard Shapiro, The Energy Association
Lisa Dubois, General Mills
Brent Archer, Columbia Transmission/ Millennium Pipeline
Peter Bannigan, Schwartz Heslin, Inc.
Greg Sovas, Spectra Environmental Group, Inc.
John P. Glusko, Central Hudson Gas & Electric
Peter R. Smith, NYSERDA
Bob Callender, NYSERDA
Christine Benedict, NYSERDA
James M. Shaw, AlcoaBarbara Brenner Couch White, LLP
Frank Bifera, Hiscock & Barclay, LLP
Don Mele, Partnership for NYC
Dan Thompson, Dynergy Northeast
Carol E. Murphy, NYISO
Garry Brown, NYISO
Chris Cernik, Couch White, LLP
Michael Murphy, Couch White, LLP
Diana P. Georgia, Coppola Ryan McHugh
John Hamo,r NYPA
Andrea Phillips, NYPA
Gary Paslow, NYPA
Gavin Donohue, IPPNY
Radmila Miletich, IPPNY
Chris McGrath, NY Capitol Consultants, Inc.
Jon Pierce Pierce, Communications for Glenville Energy
Don LaVada, NYSERDA
Michael Santarcangelo, Empire State Development
Keith Corneau, Empire State Development
Jack Vandervort, Vandervort Group, LLC
Chris Revere, Vandervort Group, LLC
Gary Davidson, Public Service Commission
Victoria Galsterer, Public Service Commission
Diane Frazier, Bogdan, Lasky & Kopley
Patrick Curran, Energy Association of New York State
Stuart Silbergleit, Energy Association of New York State
Mike Rynasko, Energy Association of New York State
Jack Rice, The Business Council of New York State
Bob Ward, The Business Council of New York State
Ed Reinfurt, The Business Council of New York State
Brian McMahan, NYSEDC
Leonard Kovalsky, Super Power
Stephen Hanse, Energy Association of New York State
Thomas DeJesu, KeySpan
Cindy Chadwick, NYSEG
Anne Van Buren, The Business Council of New York State
Mike Doyle, New York State Petroleum Council
Ty Tafel, Price Chopper (Golub Corp.)
John Casellini, CSX

Meeting Minutes

  1. Opening and Welcome, Michael Rose, National Fuel Gas, Committee Chairman. Johnny Evers introduced some new members of the committee as well as Anne Van Buren who was hired by The Business Council to handle Telecommunication and Transmission issues, Small Business and The Business Council's Political Action Committee. Anne will also be active with the Energy Committee. Previously she had worked in the State Assembly and for the Energy Association.

  2. Article VII and Article X of the Public Service Law

    Article VII was discussed by the committee. The bill was submitted at the request of the Governor this fall as S.5728 and passed in the Senate. Copies were distributed to the full committee. The committee endorsed the bill and will seek its passage in the upcoming session.

    Article X was discussed by the committee. With the expiration of Article X on December 31, 2002 the state has not enacted a successor siting law. The committee discussed S. 5673-A which was passed by the State Senate and supported by the Governor. Copies of the bill were distributed to the full committee. The committee will again support this legislation in the upcoming session.

  3. Federal Energy Bill

    Copies of the EEI (Edison Electric Institute) summation of the federal energy bill were distributed to the committee. The bill was passed by the U.S. House but failed to pass the Senate. Passage is not likely this year. Possible passage next year in the Spring, however nothing is definitive. Staff will continue to monitor the situation. For more information on the bill access the EEI home page: www.eei.org/

  4. Green House Gas Initiative

    Ken Pokalsky, Director of Manufacturing and Environmental Programs for The Business Council provided a status report on the regional greenhouse gas initiative. This effort, initiated by Governor Pataki this past August, is an effort to develop a regional cap and trade program for power plant emissions of CO2. The initiative is considering a target of 25% below 1990 levels by 2020.

    At present, eight northeast states have agreed to join with New York in a discussion of a regional cap and trade program. These include Connecticut, Delaware, Maine, Massachusetts, New Hampshire, New Jersey, Rhode Island and Vermont, with Pennsylvania and Maryland as "observers." DEC Commissioner Erin Crotty is the principle New York State representative in the process, with key staff participants including Franz Litz at DEC, and Jim Gallagher and Tina Palmero at the Department of Public Service.

    In September, the participating states reached agreement on an "action plan" for moving forward. Key provisions included the following:<
    • develop a multi-state
    • cap and trade program for GHG emissions, initially aimed at CO2 emissions from power plants.
    • reach agreement on "program design" by April 2005, "or sooner"
    • consider broader application of cap and trade program after that date.
    • the initial program would entail allocation and trading allowances within the power sector only; external offsets would be considered after the basic program implementation.
    • plans for a "stakeholder process" & web site plans were due to be completed by the end of October (but are still pending.)

    The Business Council and several other energy-related organizations have formed an informal coalition to track and respond to this initiative. Their initial effort was to petition for a timely launch of the stakeholder process, and to argue for a comprehensive review of implementation alternatives and their relative costs and benefits.

  5. Renewable Portfolio Standard (RPS)

    The committee was briefed on the RPS proceeding by Johnny Evers and a brief history was presented. The RPS was instituted by the Public Service Commission after the Governor announced in this year's State of the State Address that 25% of all electricity consumed in the state should come from renewable sources by 2013. The PSC initiated a proceeding this spring in Case 03-E-0133. The Business Council as well as several member companies are among the parties to this case. Preliminary studies have been done by the Department of Public Service and other parties. Comments on the case were submitted by parties in September and second round reply comments were submitted in October. The Business Council's comments were handed out and the PSC web site location for all other RPS comments and information was reviewed by the committee.

    The Business Council joined the Independent Power Producers (IPPNY) in its motion to delay the release of a DPS staff recommended Decision (RD) in a November filing with the Administrative Law Judge (ALJ). Other co-movants in this motion were the Joint Utilities, the Energy Association, Multiple Interveners (MI) and several unions. The motion was partly granted and the ALJ determined that some additional study would be conducted prior to an RD. Therefore the DPS staff will pursue additional cost studies and the results of the Phase One NYSERDA/ISO reliability study will be examined prior to an RD. In addition, parties will be afforded an opportunity to study and comment on the further studies.

    At this juncture, several persons discussed the case and its status. These included representatives from IPPNY, the Energy Association and MI. IPPNY thanked the co-movants for participating in their motion. All discussed the impact of the RPS and the need to incorporate cost analysis and feasibility studies in DPS and other studies.

    The Business Council stressed the importance of the cost studies being undertaken by the DPS. At this juncture it is of vital importance to bring to the attention of the DPS, the ALJ and other parties the key role that cost will have in any RPS. The studies MUST include exhaustive and thorough explanations as to how the RPS standard is implemented and the costs associated with it. We are asking all of our members to continue to work with us to insure this is done. The committee was asked to forward any concerns they have on the RPS to The Business Council so that they may be studied in the context of the RPS.

    The Business Council stressed: If there are any members that have cost factor concerns, knowledge of items that must be considered in a DPS (or other study) please forward them to The Business Council immediately. This is especially true for those in the generating, energy producing, and development businesses. The RPS, if it has a cost associated with its implementation will also impact the rate payers as well. It will have the largest impact on those who are large consumers - the industrial and commercial classes.

    The ISO representatives discussed the timetable for their report. Preliminary report is due out on December 31 st with a final report by January 31 st . The report will concentrate on reliability.

    The Business Council and other parties again stated that the ISO study will shed light on interconnections and planning (especially in regards to interconnecting possible wind projects) BUT cost is associated with such studies. This must be made clear in the DPS studies.

    Mr. Gary Davidson from the Public Service Commission briefly discussed the time table of the case and the proceeding generally. He thanked those present for their interest in the RPS and the other issues being undertaken by the PSC. He stated that it was his understanding that the DPS is continuing its studies and looking into additional areas beyond the DPS report from the summer of 2003. Parties will have opportunities to participate in technical conferences and further comments early next year.

    The committee discussed the idea of this being its number one priority for 2003. In a related vein, Johnny Evers of The Business Council stated that at The Business Council's Board of Director's meeting and at The Council's Steering Committee meeting the issue was placed as the top issue among the five being pursued by The Business Council.

  6. The 2004 Energy Legislative Program

    The committee discussed the 2004 energy program. Chairman Rose discussed the program generally and stated that any item that has been addressed and/or settled in the past year will be removed from the program. The committee concurred. He further stated that a shorter list, one that highlights the most pressing issues, should be developed by the committee for next year. The committee again concurred. The following list of priorities was adopted:

    1). The RPS, 2). Article X, 3). Article VII, 4). Continuation/preservation of energy tax reductions/cuts and, 5). the emphasis on energy infrastructure development (plants, transmission, pipelines).

    The issue of the System Benefits Charge (SBC) was discussed by the President of NYSERDA, Mr. Peter Smith. The Business Council has opposed the inclusion of an SBC in rate payers' bills and in the past has filed comments in opposition to the SBC with the Public Service Commission. The Business Council has also opposed legislatively imposed SBC charges.

    Mr. Smith stated that the SBC level is $150 million annually. He detailed some of NYSERDA's programs and its recipients. He made mention that many Business Council members participate in NYSERDA programs. Discussion was had by the committee with some members stressing the impact of the SBC on electricity rates. Mr. Smith stated that the SBC is not up for renewal next year but rather the program and the charges run through 2006 with almost 60-70% of the money and programs already encumbered or in delivery stages.

    The Energy Association offered a compromise that was supported by NYSERDA and the committee. The committee will continue its opposition to legislatively enacted SBCs. The committee will also analyze and review the PSC-enacted SBC when it is up for review. Prior to the implementation of a case at the PSC to continue the SBC and the program areas it is designed to fund, the committee will review the program and comment as the committee sees appropriate. Other program issues:

    "Power for Jobs" (PFJ) was mentioned in light of the GRT reductions. The program is not up for re-authorization this year but we want to make everyone aware of its sunset in 2005. Possible use of Corporate Franchise tax as funding mechanism to keep PFJ allowed after 2005. We need to find out if the 2% residential on GRT for the TTD portion after 2005 is enough to fund all current recipients. We have discussed this idea with Empire State Development and have been in discussions with the Power Authority on the program generally. Ken Pokalsky will be The Business Council's lead staffer on this issue.

    The committee requested staff to ask the Department of Tax and Finance to study whether or not SBC charges can be excluded from GRT (both state and local) and all sales and use taxes.

  7. Adjournment and Closing

    The committee adjourned at 3pm. The chairman stated that the committee will meet again in the spring, possibly in February or March 2004.