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Government Affairs Albany Update

March 12, 2004

Energy Committee

The committee has a number of items to discuss that day including our on-going legislative and regulatory program. We will hear staff briefings on "Power for Jobs", current energy legislation and the Renewable Portfolio Standard (RPS) case (03-E-0188) currently being deliberated at the DPS. The Business Council has been an active participant in the RPS process, submitting numerous comments, interrogatories, and motions in the case. On March 8th a hearing on the Phase 1 Reliability study prepared by GE/NYSERDA was held on the report. The study stated that almost 3300mws could be absorbed by the system. As we have stated in previous statements, the reliability study did not take into account many of the costs associated with such an undertaking and Phase 2 of the study should concentrate on these issues. Phase 2 is not due out until this fall. A cost study hearing in the case will be held on March 17th in Albany to discuss the recently released DPS Cost Study Phase 2, parts A and B. The Business Council and many of its members companies have submitted motions and comments on the cost study and the hearing process. We will continue to push for a full vetting of the studies prior to a recommended decision and will discuss the case, its status, and next steps at the March 29th Energy Committee meeting.

Federal Nuclear Regulators Give Indian Point High Grades

The Nuclear Regulatory Commission (NRC), the federal regulatory committee that oversees nuclear power, has declared the nuclear reactors at Indian Point 2 and 3 "fit," and changed the plant's level of oversight from "heightened" to "standard." The Committee said safety issues at the plant concerning faulty construction had been resolved, and the plant was now eligible for the NRC's highest rating.

Entergy Nuclear Northeast, which owns and operates Indian Point, spent millions on improvements at the Westchester plant. The Business Council has argued the plant is necessary to help meet the state's energy needs. The Business Council stated in a May 2002 letter to New York City leaders that the plant's power is needed to fuel the City. Likewise, The Business Council testified before the New York City Council in February 2003 that the plant is capable of supplying nearly 20% of the load in New York City.

A February, 2002 report by The Public Policy Institute warned that New York already faces a dangerous energy gap. In that report, The Power to Grow, The Institute concluded that New York must add at least a dozen new power plants with capacity totaling at least 9,200 megawatts in the next five years. Other organizations, including the New York Independent System Operator (ISO), have reached similar conclusions about New York's capacity shortfall. The ISO has said that the city alone will need as much as 3,000 megawatts of new generating capacity by 2005. The Business Council restated its finding in testimony submitted to the New York City Council in February 2004.

Senate, Assembly offer Economic Development Plans

Both houses released broad economic development plans this week. The Business Council welcomed these initiatives, but warned that any development plan must address business's main priority: cutting New York's high job-creation costs, including the cost of health care insurance, workers' compensation, energy and other factors.

The Senate plan, "Excell-NY", was based on the work of its "NextGen" Task Force chaired by Senator Skelos, and focused on further promotion of high technology industries. Specific provision would:

The Senate said that the plan would cost $7 million in 2004-05, with costs growing to $50 million when the program is fully effective, the Senate release said. Tax relief would be about $40 million next year, and would grow to $283 million when fully effective.

The Assembly's "NY@Work" plan includes $525 million in new and expanded programs. Specifics include:

Action on "Offshoring" Study Bill

The first "offshoring" bill to be brought up for committee action this year is S.6338 (Velella), which is on his Senate Labor Committee agenda for next Tuesday, March 16. The bill has no co-sponsors, and has yet to be introduced in the Assembly.

The bill directs the Commissioner of Labor to issue a report on "issues relating to offshore outsourcing of information technology jobs and the future of New York state's job market." Specific requirements of the study include:

The Business Council's position on this bill is that:

Empire Zone Program "Audit"

Staff Contact: Ken Pokalsky
State Comptroller Alan Hevesi released an audit of eight Empire Zones, which claimed that, while many firms create jobs, most don't meet goals but still receive tax breaks, and that inadequate program oversight means that total program costs and benefits cannot be calculated. The press release and audit can be downloaded at: www.osc.state.ny.us/press/releases/mar04/030904.htm

The eight zones reviewed in the audit were located in Binghamton, Buffalo, Friendship (Allegany County), Islip, Rochester, Syracuse, Tonawanda and Yonkers.

Among its findings:

The Comptroller said that this report is part of a comprehensive study of Empire Zones around the State. Additional audits will be released when they are completed.

An initial review of the audit report raises several significant questions:

The Business Council will continue to review the Comptroller's audit findings and recommendations regarding program reforms, as we also continue to respond to the various Empire Zone reform bills introduced this year. We look forward to receiving any comments on the audit from Business Council members as part of this effort.