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The Business Council of New York State, Inc., the state's leading voice for business and industry, has reviewed the aforementioned legislation and opposes its enactment into law. The legislation would have detrimental effects on the siting of new generating facilities, and by extension, the overall electricity market.
The Business Council, a strong proponent for increasing generating capacity in order to support New York's economy, likewise supports a continuation of the Article X process for the siting of new generation. However, the renewal of Article X of the Public Service Law, which governs the building of major electricity generating facilities, should not be altered and amended in ways that would adversely impact New York's electricity markets. This legislation would have this adverse effect on New York State and those proposing power plants.
The need to site and build new electrical generation in New York State has been documented by many of the state's leading energy-related organizations including the New York Independent System Operator (ISO), the Energy Association and the Independent Power Producers of New York State. In 2001, The Business Council published The Power to Grow, a report detailing the adverse impact of a failure to site and build more generation in New York State. If we fail to site more generating plants, New York's residential, commercial and industrial consumers will face shortages, higher prices and risk having demand exceed supply. We have monitored the power markets over the last four years and have reaffirmed the need for more in-state generation. In its May, 2004 report, Power Trends, the ISO specifies that although approximately 3,000 MW of power have been installed in New York since 2001, several thousand more megawatts are needed to maintain reliability of the electric system.
The Business Council has been an active advocate for increased electric generation, especially in regions of the state that are bound by transmission constraints. In the restructured electricity market, it is the independent power producers and developers, not the vertically integrated and regulated utilities, that site, build and provide generation. This legislative proposal, despite the clear need for more generating capacity as documented by the above referenced industry segments, discourages private investment in New York's electricity markets. The legislation adds new impediments for developers including: lowering the threshold from 80 megawatts (under the lapsed Article X law) to 30 megawatts; increasing intervener funding; and adding several new studies that would slow the process thus creating longer time frames for completion.
The Article X process, as determined by this legislation, would result in fewer power plants being sited. It would discourage private developers from entering the market place and would elongate the process for those that enter the process and attempt to site projects. The resulting scarcity of new generation as demand increases (as outlined by the such organizations as the ISO) would lead to the possibility of price spikes, irregularity of supply, and the probability of brownouts and blackouts.
Over the last few years, New York has experienced some of its highest demands for electricity, breaking previous usage demands time and again. With New York struggling to provide more electricity and build additional generation, this proposal sends a clear and distinct regulatory message -- New York is not a favorable place to build a power plant. Replacing the lapsed and very stringent Article X law with this proposal would seriously undermine private investment in new generation and jeopardize the operation of the electricity markets despite New York's need for more infrastructure.
For the reasons articulated above, we oppose the enactment of A.5865.
This legislation will be included as one of the scoring measurements of The Business Council's “Vote for Jobs Index 2005.” This is The Business Council's annual assessment of legislator's action on key issues of concern to the state's business community.