FOR IMMEDIATE RELEASE
Contact: Paul Steidler
917-612-3594 or 212-683-1203
steidler@area-alliance.org

Blackout Prevention Experts:
New York Business, Labor, and Energy Leaders Discuss Likelihood of a Major New Outage, Prevention and Supply Issues

Two years after historic outage, tight supply gap and state inaction on power plant siting are major concerns; good news:  federal reliability standards passed

New York, NY/August 9, 2005 – Two years after a historic blackout that cost the New York metropolitan area over $1 billion in lost inventories and economic activity, New York has taken two steps back, and one step forward when it comes to addressing its electricity supply and reliability challenges.

That’s the bottom line conclusion of the New York Affordable Reliable Electricity Alliance, a.k.a. New York AREA, a group formed in late 2003 to make sure the lights not only stay on, but that the metropolitan New York area has the energy it needs to be a dynamic place to live and do business. It was one year ago, shortly after its formation, that New York AREA called on federal and state officials to take decisive action to stave off future blackouts and better enable continued growth in the region.

The good news is that newly enacted federal electric reliability standards decrease the chance of out-of-state events causing a major blackout like that which occurred in 2003. Of concern, however, is that electricity demand is rising sharply, especially in New York City and Long Island. Even more disconcerting is that no new major power plants can be proposed in the state because the Article X power plant siting statute has now been expired since December 31, 2002.

New York AREA members, who include business and labor leaders as well as independent energy experts, are available to discuss these matters, particularly on the blackout anniversary and in these record heat days of August.

Blackout Risk Remains Unacceptable
“New York continues to face a heightened risk of a major blackout because for more than 950 days the state legislature has failed to renew Article X of the Public Service Act, which governs how new power plants can be built,” said Arthur “Jerry” Kremer, Chairman of the Advisory Board of New York AREA. Mr. Kremer is a former Chairman of the Assembly Ways & Means Committee and played a central role in authoring prior versions of Article X.

Article X provides a centralized, expedited review process of new power plant proposals. It has long been the only practical way for major new facilities to achieve streamlined review and approval in New York State.

“For all intents and purposes, it takes five years from the time that a business comes up with a proposal to have it approved, constructed, and then operational. The gap that we have created in New York’s power pipeline because of more than 900 days of inaction is disturbing. Even if Article X were renewed tomorrow, we would not have new sources of energy online as a result of this action until 2010,” said Mr. Kremer.

“With energy demand rising, particularly in New York City and Long Island, Article X is needed now. Without it, companies will not make proposals for new plants, workers will not have highly skilled and well-paying jobs in building and operating these facilities, and investors will not commit any resources to strengthening New York’s infrastructure. Right now, New York’s energy supply policy is inadequate and does not meet a world-class standard, which is what consumers, employers, and employees have come to expect of the greatest state in America,” said Mr. Kremer.

Blackouts Have Major Immediate and Longer-Term Costs
According to the New York City Comptroller, the cost of the 2003 blackout, in lost economic activity and perishable goods to New York City alone, was $1 billion. As was the case in California in 2001 blackouts can have a chilling effect on a state’s economy because of the actual disruption and uncertainty that they create, especially for commerce and capital investments in the technology age.

“Companies considering expanding or re-locating in New York want to make sure that the region has the energy it needs to meet demand today, and that we have established the critical path to ensuring a robust supply in the future,” said Kathryn S. Wylde, President of the Partnership for New York City, a New York AREA member.

“The current uncertainty, particularly given that the Mayor’s Task Force on Energy last year projected that the City will need 2,600 additional megawatts of new electricity by 2008, makes it imperative that Article X be renewed – and soon,” said Ms. Wylde.

New York Congressional Delegation Must Scrutinize Federal Electric Reliability Standards
Congress recently passed a federal energy bill, signed into law on August 8, 2005, which contains important provisions to establish and enforce federal electric reliability standards that will prevent “cascading” blackouts such as that which occurred in 2003.

The legislation creates the Electric Reliability Organization (ERO). ERO will be able to enforce previously voluntary electric reliability standards, promulgated by the North American Electric Reliability Council, that were strongly endorsed in April 2004 by the U.S.-Canada Power System Outage Task Force. The ERO should be able to enforce standards so that blackouts are less likely to occur because of such factors as unrestrained tree growth over power lines, poor operator training, and failure to notify other states and utilities immediately of power problems that occur.

As with any new bureaucracy, execution is imperative if its mission is to be successful. New York AREA calls on the New York Congressional delegation to carefully oversee and monitor the ERO’s operations to ensure that states that have traditionally had lower reliability standards than New York do not cause another major power outage in the Empire State.

“This is a perfect example where an ounce of prevention is worth a pound of cure,” said David Rosensweig, President of the Fire Alarm Dispatchers Benevolent Association, a New York AREA member. “Our members valiantly worked with New Yorkers on August 14, 2003 to prevent major problems. But it is not something we want or should have to go through again,” said Rosensweig.

Fact Sheets and Additional Information
The following fact sheets from New York AREA provide additional information about the downstate energy situation:

• The Growing Demand for Electricity in New York
• Article X: A Primer on the Expired Power Plant Siting Law
• Federal Electric Reliability Standards: A Positive Development for New York
• Blackouts: The Economic Costs and Ramifications

Founded in November 2003, the New York Affordable Reliable Electricity Alliance (New York AREA) is a diverse group of more than 60 business, labor, and community groups whose mission and purpose is to ensure that New York State and the New York metropolitan area has an ample and reliable electricity supply, and economic prosperity for years to come. New York AREA helps to educate policy makers, businesses, and the general public regarding the necessity for safe, reliable energy and the importance of low-cost, reliable, clean electricity. For additional information visit: www.area-alliance.org.

Watt a Tight Supply:
The Growing Demand for Electricity in New York

• “As the high temperatures continued into July (2005), power use soared, with an all-time peak-demand record of 12,551 megawatts set on July 26. In addition, four of the top 10 electric peak loads of all time have been reached so far this summer, including a new record for the greatest electricity demand ever on a June day.” Con Edison website, Public Issues section.
  
• “The City has adequate energy resources for its electricity needs today, but the margins necessary for reliability are extremely thin ... To ensure reliability, to promote economic growth, and to address environmental issues, the Task Force concludes that the City needs 2,600 megawatts of new electricity by 2008.” New York City Energy Policy: An Electricity Resource Roadmap, report prepared by the New York City Energy Policy Task Force, January 2004. Note: 2,600 megawatts is approximately 30 percent more power than is generated by the Hoover Dam.
  
• “…New York could be facing a supply deficiency between 2008 and 2011. In New York City and Long Island, there may well be needs prior to that time period.” Power Trends 2005, report of the New York Independent System Operator (NYISO), p. 5.
  
• “Peak demand for the summer of 2005 is expected to be approximately 31,960 MW.” Power Trends 2005 report, p. 14.
  
• “Between 4 and 5 p.m. today, the NYISO recorded an hourly average peak load of 32,075 megawatts (MW), which broke last week’s record of 31,741 MW…” NYISO, July 26, 2005 news release.
  
• “The developer of a proposed [1,000 megawatt] power-transmission line for New York City has terminated the project, a setback that casts doubt on whether independent electric-transmission companies can make a go of it and build new lines needed to bring the cheapest power to the places that need it most.” “New York Power Project is Scrapped,” The Wall Street Journal, November 22, 2004, p. B-2.

Article X: A Primer on the Expired Power Plant Siting Law

Key Provisions (statute that expired December 31, 2002):

• Applications are decided upon by the seven member New York State Board on Electric Generation Siting and the Environment (Siting Board)
• Process guarantees opportunities for public involvement. Under Article X, an applicant must communicate with the public early in the pre-application process through the use of various means such as media coverage, direct mailings, fliers, or newsletters.
• Applicant must submit a fee of $1,000 per megawatt of capacity, up to $300,000, for an intervenor fund.
• Expedited process sets the goal of decisions on new power plant proposals within 14 months of when an application is filed.
• Pertains to 80 megawatt and larger projects.
• Determines whether the construction and operation of the facility is in the public interest, without giving control of this decision to NIMBY activists.
  

What Energy Experts and Leaders are Saying:

“We encourage the Legislature to act promptly on this important legislation. Failure to do so will result in emptying the pipeline of new generating projects that will be needed in the near future, increasing a potential generation shortage.” Power Trends 2005, New York Independent System Operator, p. 6

“With the fierce competition for investment dollars in deregulated energy markets, it is important to send a strong message to the financial world that New York is committed to developing new, efficient sources of electric generation. New York State needs to re-authorize Article X now.” Gavin Donohue, President & CEO of the Independent Power Producers of New York (IPPNY) in a June 7, 2005, IPPNY news release.

“Suppose you went to the village hall to apply for a permit to build a new house and were told to come back in three years because no permits are being issued? This simple example sums up the frustration of power plant builders who have been waiting since December 2002 for the New York State legislature to pass an extension of Article X of the Public Service Law.” Arthur “Jerry” Kremer, Chairman to the Advisory Board of New York AREA and an author of a prior Article X statute.

Federal Electric Reliability Standards:
A Positive Development for New York

• New York’s electric reliability standards have exceeded those of most other states. Yet, problems in Ohio in 2003 led to a cascading blackout effect which dramatically impacted New York.
• Federal electric reliability standards are included in the energy bill passed by both Houses of Congress in July 2005, and signed by President Bush.
• Standards, promulgated by the North American Electric Reliability Council had widespread support from policy makers and energy experts as early as April 2004, when the U.S.-Canada Power System Outage Task Force issued its final report on the 2003 blackout.
• Energy bill legislation creates an independent, industry-based Electric Reliability Organization (ERO) that will be able to enforce standards on such matters as tree growth by power lines, operator training, prompt notification of other states about power outages, and voltage control practices.
• It is imperative that New York’s Congressional Delegation monitor the ERO and the Federal Energy Regulatory Commission, which has jurisdiction over the ERO, so there is effective execution of the strategic promises of the energy bill to increase electric reliability.

Blackouts: The Economic Costs and Ramifications

• Companies regularly evaluate electricity costs and the reliability of future supply when considering whether to re-locate or expand in an area.
• Continued blackouts in New York will harm the state’s business reputation, and put it in the same position as California was in 2001 when it experienced period blackouts.
• As CNET.com reported in 2001, “The state’s well publicized energy crisis, marked by rolling blackouts during peak demand periods throughout the past year, has been blood in the water for states and counties angling to snatch California’ tech companies. From Minnesota to Tennessee, eager politicians and leaders of chambers of commerce are circling Silicon Valley executives, enticing them with offers of cheap electricity … if they ditch the Golden State.”
• According to the New York City Comptroller’s Office, the historic August 14, 2003 blackout was a $1 billion hit to the New York City economy. Losses were incurred from spoiled food, lost retail and tourism income, lost wages, and in many other areas.
• What could New Yorkers have done with $1 billion?

  - Every man, woman, and child who lives in the City could have gotten a check for approximately $124.87.
  
  - Four million New York City commuters could ride the subway free of charge, to and from work, from today to end of November.
  
  - More than 7,000 students could have four years of tuition paid for at New York University.
  
  - 78 water quality improvement projects could be funded and administered in New York City.
  
  - Ten million people could get orchestra seats to see a prominent Broadway show of their choosing.