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May 10, 2001

NYSEG report warns that electricity shortfall could be greater than forecast

The New York State Electric & Gas Corp. (NYSEG) estimates that New York's potential electric supply shortfall in the years ahead is even larger than previously suggested, saying this "adds urgency for real solutions."

The New York Independent System Operator (NYISO), which operates the state's electric grid, recently called on the state to permit the siting of 8,600 megawatts of new generating capacity by 2005.

That's the minimum needed, the NYISO said, to insure enough reserves against system problems, and to provide a small surplus to ensure that generators compete against each other to drive down prices.

But NYSEG, in a report published last month, says growth in demand, and the amount of generating capacity needed to ensure robust competition to hold down prices, are both likely to be higher than forecast by the NYISO.

In addition, NYSEG says, there is little chance that even 8,600 megawatts can be brought on line by 2005.

The NYSEG report also argues that other factors-including excessive reliance on natural gas for new generating capacity, problems in the natural gas pipeline system, and bottlenecks in the statewide electric transmission system-all make it unlikely that a drive focused solely on adding new capacity can avert electric shortages and price spikes.

The report, "New York State's Electric Energy Crisis and New York State Electric & Gas Corporation's Comprehensive Solution," says the best solution for NYSEG customers is the utility's own six-point "NYSEGPlan" to freeze electric rates in its territory through 2008.

"The problems facing the wholesale electric energy market will require at least seven years to be resolved, even if we act now," said NYSEG President Ralph Tedesco.

In addition to the rate freeze, NYSEG calls for expedited siting of new plants, additions to the state's transmission capacity, and improvements in the natural gas supply infrastructure.

For more information, go to http://www.nyseg.com/nysegweb/ObjLib1.nsf/Lookup/camanv/$File/camanv4.pdf.