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Government Affairs Albany Update - February 28, 2003

BUSINESS COUNCIL BUDGET TESTIMONY
Staff Contact: Ken Pokalsky

In his testimony this week before joint Senate and Assembly budget hearing on economic development issues, Dan Walsh urged the legislature to hold the line on spending, reject major insurance tax increases proposed in the Executive Budget, maintain existing tax cuts, and continue to reduce key cost-of-doing-business factors such as health care costs. The Business Council also endorsed several specific pro-growth proposals, including the adoption of a "single sales factor" approach to assessing the corporate franchise tax, and the expansion of the Empire Zone program.

Dan also refuted recent arguments that the state's business community wasn't paying its "fair share" of taxes, providing data that showed businesses shouldering nearly 30 percent of state imposed taxes.

Council Testifies at NYC Council Hearing on Indian Point

The Business Council of New York State, Inc. submitted testimony on February 28th to the New York City Council's Environmental Protection Committee regarding the operation of Indian Point Energy Center. In testimony The Business Council stressed strong support for the continued operation of the Indian Point Energy Center in Westchester County. Simply stated, the electricity that Indian Point produces is absolutely vital to sustain the current power needs of New York City. Closing Indian Point would eliminate an essential supply of power, doing irreversible harm to efforts to restore the city's and state's economy. Indian Point Energy Center supplies nearly 2,000 megawatts to the grid, approximately 20 percent of the electricity used in the New York City area. Closing Indian Point would have a disastrous impact on downstate regions and the costs to business from interrupted power supplies would be incalculable. There is a growing and dangerous gap between the energy we have and what we need. A study in early 2002 by our research affiliate, The Public Policy Institute, concluded that New York State must add at least a dozen new power plants with at least 9,200 megawatts of generating capacity within the next five years to avoid the risk of serious economic damage from power shortages. Likewise, the New York Independent System Operator, which is responsible for assuring reliable supplies of electricity for the state, reached similar conclusions, saying New York City alone needs as much as 3,000 megawatts of new generating capacity by 2005. Other business and energy-related groups have concurred with these projections.

The recently released draft James Lee Witt report on Indian Point has also been used to whip up opposition to the operators of the plant without recourse to a thorough review of all the facts. The Business Council has submitted testimony to the James Lee Witt Associates stating that Entergy Nuclear Northeast has done everything in its power to assure the security and safety at the plant and they are complying with state and federal mandates. They have welcomed the opportunity to discuss the Witt report and it should be noted that the report itself, as a principle conclusion, states that emergency plans for the Indian Point facilities currently meet all Nuclear Regulatory Commission and Federal Emergency Management Agency requirements.

ISO Announces Summer Forecast - Thin Margin Exists

The New York Independent System Operator (ISO), the entity charged with operating the state's bulk electric system and wholesale electricity markets, released its peak load forecast and capacity outlook for the summer of 2003. Forecasted demands for the three areas are as follows: New York State, 31,430 MWs; New York City, 11,020 MWs; Long Island, 4,849 MWs. The statewide installed capacity requirements for the months of May through October is 37,087 megawatts (MWs). The installed capacity forecast refers to the total amount of electricity suppliers commit to bidding into the New York markets. Under the rules established by the New York State Reliability Council (NYSRC), the New York Control Area (i.e. New York State) must have an 18% margin in order to insure reliability. This figure was recently reconfirmed by the NYSRC in late January. The ISO operates the markets under the figure established by the NYSRC.

Currently, there exists 36,527 MWs of installed capacity from in-state resources. The figure is raised to 37,087 MWs when anticipated new generation, out-of-state capacity and demand response programs are factored into the total. The NYISO forecasts adequate power suppliers by factoring in improvements to existing facilities, modest amounts of new generation and demand response programs during periods of peak consumption.

The load pocket areas of New York City and Long Island have slim margins in meeting the reserve requirements. The New York City area locational installed capacity requirements for May-October is 8,816 MWs however, the City's installed capacity is currently 8,749 MWs. Capacity available under demand response programs brings the total capacity to 8,816 MWs which meets the required 80% of the forecast demand of 11,020 MWs for New York City. Long Island has an on-island capacity requirement of 4,607 MWs and currently meets the locational requirements with an available supply of 4,983 MWs. The on-island requirements for Long Island was recently increased to 95% from the previous level of 93%.

Overall, the ISO stated that while New York meets the forecast for the summer, the state needs to continue to focus on getting new generation sited and built in order to keep up with demand. ISO President/CEO Bill Museler stated that "unless significant generating capacity is added to the system -- and soon -- demand is going to overwhelm supply and reliability is at risk." The ISO also listed the possibility of 1,231 MWs of new generation that may come on-line in the summer of 2003 but was not factored into its projections. The figure represents 1080 MWs at the Athens, Greene County project as well as three small units on Long Island in Far Rockaway (52 MWs), Greenport (52 MWs) and Stonybrook (47 MWs).