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August 2002

Heat re-focused attention on New York's need for more electricity

A stretch of typical mid-summer heat has brought renewed attention to concerns that New York State must increase its electricity-generating capacity.

For example, early on July 30, New York's Independent System Operator, which oversees the energy grid, predicted that the state could break the previous record for one-day peak electricity demand.

Only emergency action, including steps to force reduction in demand and to retain power that had been promised to other states, enabled the state to get through that day without blackouts or brownouts.

With the demand reductions, electric consumption hit a peak of 29,352 megawatts on July 30. The record, set last Aug. 9, was 30,983 megawatts. Peak demand in New York cannot go above 30,500 without cutting into the state's reliability reserve margins.

The Business Council has long argued that New York State risks serious economic damage unless it moves urgently to add generating capacity.

In a widely publicized February 2002 report, The Power to Grow, the Public Policy Institute showed that New York needs at least a dozen new power plants with at least 9,200 megawatts of additional generating capacity within the next five years.

The Institute, The Business Council's research affiliate, said the new capacity is needed to ensure reliability, and to foster the robust competition that is needed to drive prices down-both factors that are critical to the state's long-term economic health.

The Council and The Institute have been emphasizing the same message in reports, testimony, advocacy efforts, and media materials for several years.

Other organizations, including the ISO, the state Public Service Commission, the Independent Power Producers of New York State, and the Energy Association of New York State, have been delivering the same message.

In a July 24 release, the Public Service Commission said the summer heat reinforced the importance of conservation, demand-reduction programs for times of high demand, and "the need for new, state-of-the-art electric generation facilities, particularly in New York City."

And in a July 30 release, The Energy Association restated the case for adding new generating plants to increase capacity, and argued, as The Council and others have, that conservation efforts cannot take the place of increased generating capacity.

The Public Policy Institute's paper, The Power to Grow, is at www.ppinys.org/reports/2002/powertogrow.pdf.