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April 19, 2001

Another expert says New York needs more power

Yet another energy expert has warned that New York State must add significant new electricity generating capacity soon to avoid skyrocketing electricity prices and setbacks to competitiveness in energy markets.

David B. Patton, the independent market advisor of the New York State Independent System Operator (ISO), issued a market assessment April 17 at a meeting of the ISO board. The independent market advisor is an economist and consultant to the board of the ISO charged with monitoring and analyzing the competitiveness and function of New York's energy markets and issuing twice-yearly reports on his conclusions.

In his analysis, Patton concluded that New York's energy markets are functioning competitively and have produced real benefits over the regulated market system that New York State had until it deregulated energy markets beginning in 1996.

"The incentives provided by the competitive markets have resulted in increases in supplies offered to the market of 5 to 10 percent compared to the regulated system," the ISO said in a release on Patton's report. "In essence, the restructured competitive market is delivering more power than the regulated system did with the same facilities."

But markets will remain vulnerable to price fluctuations unless new sources of power are added to the system soon, Patton said.

Patton said price increases in 2000 were primarily caused by much higher prices for natural gas and oil and by the outage of the Indian Point 2 nuclear plant.

The report echoes another ISO report released in March. That report, Power Alert: New York's Energy Crossroads, concluded that New York should approve between 4,000 and 5,000 megawatts of new electricity generating capacity this year to avoid serious electricity shortages.

The IDO is a not-for-profit organization funded by utilities and energy users to oversee and operate New York's electricity transmission grid - the wires, cables, transformers, and towers needed to move electricity from generators to consumers. The ISO's overriding concern is the long-term reliability of the grid. This grid is owned by utilities, but overseen by the ISO. The ISO also maintains and operates New York State's wholesale electricity markets; for this reason, it tracks the transmission of all electricity in New York State.

For ISO news releases on its new report and its March report, visit www.nyiso.com/topics/articles/index.html#news_releases. For the complete text of the new report, visit www.nyiso.com.