New York independent generators call for new capacity

By the OGJ Online Staff

HOUSTON, July 2 -- Just days after federal regulators approved a controversial plan to keep power prices from spiking, New York's independent electricity generators Monday called for more generation and transmission capacity, conservation, and new pricing schemes.

Noting New York hasn't put a major new power plant on line since 1995, the Independent Power Producers of New York Inc. (IPPNY) said the state is at a crossroads and could face power shortages similar to those in California, if regulators don't move quickly to address known problems.

"We can either go down the same road as California, leading to high energy prices and debilitating shortages, or we can follow the examples of other regional energy markets so that we continue to enjoy reliable energy at competitive prices," said IPPNY Executive Director Gavin J. Donohue.

To protect consumers from price volatility, he said, New York's utilities should sign contracts and use financial risk management techniques to protect consumers against short-term price volatility. Utilities can insulate their customers from abrupt and sharp price changes by relying less on daily spot markets to set their customers' prices and instead enter into a blend of contracts with power suppliers to stabilize prices, he said.

The organization also advocated use of tiered prices with higher costs for power at mid-day when power is at peak demand than in the early morning.

The New York Independent System Operator has forecast the state needs 8,600 Mw of new generating capacity by 2005 to meet growing demand. The state urgently needs to approve new plants that are both more efficient and less polluting, according to Donohue.

New York's energy transmission system is antiquated, inefficient, and insufficient to meet the state's rising demand, the generators said. The inability to transmit power from western to eastern New York as well as inadequate power interconnects with the mid-Atlantic and New England regions inflates prices in the east and New York City, Donohue said.

He said state policymakers need to quickly determine how to build and pay for an improved transmission system that will make it cheaper, easier, and more efficient to move power around the state.

Current administrative and regulatory differences between New York, New England, and the mid-Atlantic states prevent power from flowing smoothly among them when truly needed, according to Donohue. He urged the regional ISOs to speed up plans to create a unified northeastern market.

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