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November 12, 1998 

Industrial power costs hit 17-year low in 1997; New York's costs were still high
Containing costs remains Council's priority; competitive exchange coming to Albany

Industrial customers nationwide in 1997 paid the lowest prices for electricity in 17 years, according to figures released Nov. 3 by the Energy Information Administration of the U.S. Department of Energy (DOE).

However, New York State in 1997 still ranked as one of the three most expensive states in the union for electricity, according to the report. That year, only Hawaii and New Hampshire had energy costs that were higher than New York's.

This report does not include data for 1998 and therefore does not take into account the state's new Power for Jobs program or the still-emerging effects of utility deregulation in New York, which will promote competitive pricing and ultimately bring down electric costs, noted Kevin Lanahan, The Business Council's specialist in energy-related issues.

Containing the cost of power in New York remains a Council priority. For example, The Council strongly supported the state's year-old Power for Jobs program, under which employers can receive reduced-rate power if they pledge to use it to create or retain jobs.

The Council has also urged lawmakers to cut the gross receipts tax on utilities and to eliminate taxes on the resale of electricity and on the transfer of assets between a utility holding company and its subsidiaries - unintended taxes created by the state-mandated deregulation of utilities.

The country's average cost per kilowatt hour for 1997 was 6.85 cents. New York's average price per kilowatt hour for 1997 was 11.13 cents. New Hampshire's average cost per kilowatt hour was 11.66 cents and Hawaii paid 12.49 cents.

The nation's lowest average price per kilowatt hour in 1997 was in Idaho, where the average price for all electricity customers was 3.87 cents.

In contrast to the drop in industrial electricity prices, the DOE says residential prices for the country went up slightly in 1997.

New York has moved to contain the cost of power by deregulating its seven investor-owned utilities and introducing competition to the market for power.

One indicator of the emerging competitive market for power came late in October when the Automated Power Exchange (APX), which already operates in California, announced plans to create an electricity exchange in New York State.

Edward Cazalet, CEO of APX, made the announcement in Albany after addressing the Independent Power Producers fall conference. The market for the competitive sale of electric power is scheduled to open in 1999.

He cited a number of advantages to operating in New York, including: availability of pricing information prior to when trades are actually made; elimination of credit risks for buyers and sellers; annual, monthly, daily, and real-time products; and the ability to submit product orders 24 hours a day.

APX plans to start market trials for the new system in January and, through a four-step process, complete testing with the goal of opening a true market exchange when full competition begins in New York in April of 1999.

Until then, the APX will conduct hypothetical trades within the 25,000-megawatt New York Power Pool.

Initially, the APX will offer an hourly market up to a week ahead of time in daily peak and off-peak blocks.