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March 14, 2001

Independent System Operator: New York needs new power — now

New York State should approve between 4,000 and 5,000 megawatts of new electricity generating capacity this year to avoid serious electricity shortages, according to a new report from the New York State Independent System Operator (ISO).

The report, Power Alert: New York's Energy Crossroads, also urged New York to increase its total capacity by 8,600 megawatts by 2005. Adding this energy capacity would meet New York's short-term need, sustain reliability of the state's electricity system, and ensure that there is enough supply to make energy markets fully competitive, the report said.

Adding this power capacity would also improve air quality, sustain economic growth, and contain energy prices, the report said.

The report, which was released Wednesday, also recommended streamlining New York's power-plant siting laws, upgrading the transmission structure in New York and the Northeast, and establishing more integrated electricity markets in the Northeast.

Between 2,000 and 3,000 of the new megawatts needed immediately should be located in New York City. Another 1,000 megawatts of capacity will be needed statewide within three or four years, more than half of it in New York City and Long Island, the report said.

Unless it adds this power, New York will have a less reliable electricity system, higher prices, and increased environmental degradation, the report said.

"New York is headed toward a very serious situation unless it acts immediately to get new supply sited within its borders and embarks on substantial customer choice programs," said William Museler, president and CEO of the NYISO. "This report is essentially a caution light at New York's energy crossroads."

The supply-demand gap: New York faces a growing disparity between electricity demand and supply, with increasing demand that has been fueled by strong economic growth, the report said.

Between 1995 and 2000 in New York, statewide demand for electricity rose by 2,700 megawatts, while generating capacity increased by only 1,060 megawatts.

"If this trend continues and no new generation is added in New York State, the report projects that by 2005, statewide prices could be expected to increase by 14 percent," the ISO said in a release.

How more power will cut costs: The report said adding 8,600 megawatts to the state's supply would drive prices down by 20 to 25 percent statewide, and by as much as 28 percent in New York City. Statewide savings would be approximately $1.4 billion a year by 2005.

"The NYISO is focused on developing the most advanced, efficient and reliable electricity markets in the world. These markets will accelerate the growth of New York's economy and deliver an enhanced quality of life for all New Yorkers," said Museler.

"But without enough electricity supply, New York's advanced markets are like a fancy sports car without any gas; it might be designed to perfection, but it still isn't going anywhere."

The environmental benefits: The report also projected that New York would reduce sulfur dioxide emissions by 28 percent and nitrogen oxide emissions by 43 percent if older oil and coal plants are displaced by natural gas-fired plants as the new capacity is added. These reductions total 88,000 tons of sulfur dioxide and 45,000 tons of nitrogen oxide.

Streamlining plant siting: To streamline New York's power-plant siting laws, New York should establish "single-point accountability for meeting the law's statutory deadlines. The state should take a proactive "ombudsman" approach to helping applicants complete applications. Doing so would require no lessening of New York's strict environmental standards, the report said.

The report also recommended accelerating New York's customer options programs including conservation, real-time metering and price-sensitive load programs.

The New York State Independent System Operator is a independent, not-for-profit organization funded by utilities and energy users to oversee and operate New York's wholesale energy markets and its electricity transmission grid.

For ISO's release on its report and the full report, visit http://www.nyiso.com/topics/articles.