For Release — Thursday, September 11, 2003
COUNCIL URGES STATE TO RECONSIDER
HOW IT SPENDS REVENUES
FROM A TAX THAT ALL ENERGY CONSUMERS PAY
ALBANYNew York State should redirect a significant portion of the $150 million "system benefit charge" on energy to upgrades to New York's transmission and distribution infrastructure, The Business Council has told state energy officials.
Business Council President Daniel B. Walsh outlined the case for redirecting some revenues away from programs of relatively limited benefit in a Sept. 11 letter to William Flynn, chairman of the New York State Public Service Commission (PSC), and Vincent A. Deloria, chairman of the New York Energy Research and Development Authority (NYSERDA).
With transmission problems in Ohio apparently at the root of the August blackout, New York should make improving its own transmission and distribution systems a priority, Walsh wrote.
"New York's failure to develop transmission facilities has produced electric-system congestionand this congestion cost New York State customers some $2.75 billion between 2000 and 2003," Walsh wrote, citing a May report from the New York Independent System Operator (ISO).
"We recommend that monies from the system benefit charge paid by industrial and commercial users be redirected to finance specific congestion-relief projects recommended by the ISO in its May report," he added.
Walsh noted that New York's transmission and distribution enterprises remain tightly regulated by the state and federal governments. As a result, these companies' returns on investment are so tightly controlled that they have little chance of recouping major investments in transmission.
SBC revenues currently support programs that are aimed in part at the commercial and industrial sector, including some Business Council members, and some SBC-funded projects have cut consumption and costs, the letter noted. To date, NYSERDA has committed 38 percent of the entire eight-year, $932 million budget for its business and industrial program. This expenditure has benefited "perhaps hundreds" of business and institutional programs.
"But if this money were invested in transmission and distribution upgrades, the resulting system efficiencies and savings created by relieving congestion would benefit hundreds of thousands of New Yorkers," the letter said.
The SBC is essentially a tax added to energy bills that the vast majority of New York energy users must pay. New York State first imposed a $78 million SBC in January 1998. Despite strong opposition to the charge from The Business Council, the state PSC in 2001 extended it through 2005-and, at the same time, nearly doubled it by raising it to $150 million.