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News Digest

Fortnightly Magazine - August 1998

Energy Plan to offer strategic guidance and direction to coordinate the state's energy policy over the next several years, marking a departure from prior plans on energy policy, which tended to dictate specific government actions. The draft plan aims to ensure energy choice for consumers and open access to transmission and distribution systems for suppliers, building on Governor Pataki's commitment to reduce energy costs by lowering taxes, streamlining regulations, and offering greater choice to electric and natural gas customers. It includes a draft environmental impact statement (as required under the state's Environmental Quality Review Act) and invites comments both on the EIS and the overall plan.

Electric Reliability, ISOs

NERC SUMMER ASSESSMENT. According to the North American Electric Reliability Council's 1998 Summer Assessment, parts of the Midwest, New England, Ontario, and Alberta could experience electric supply problems this summer, with transmission constraints limiting how much assistance is available. And, as if to underscore the point, spot electric prices reportedly reached $2,000 per megawatt-hour ($2 per kWh) on June 25 in ECAR (East Central Area Reliability Coordination Agreement) after a tornado took down a transmission line in Ohio and forced the Davis-Besse nuclear plant off line.

Overall, NERC predicts a 1998 summer peak demand for the U.S. some 3 percent above the peak for last summer. Over the next decade, summer peak demand in the U.S. is projected to rise at an average annual rate of 1.8 percent. (See, www.nerc.com/publications/annual.html, or the NERC's ftp site at ftp://www.nerc.com/pub/sys/all_updl/docs/pubs/ summer98.pdf.)

INDEPENDENT SYSTEM OPERATORS. At two recent regional meetings, the FERC has heard industry comments questioning some aspects of its policy favoring formation of ISOs to manage transmission assets and assure electric reliability.

In the Southeast, Florida Power & Light Co. Director of Regulatory Affairs, Sam Waters, cautioned against a "one-size-fits-all" plan, telling FERC commissioner Linda Breathitt that Florida ratepayers would pay millions of dollars in unnecessary costs if FERC were to mandate an ISO, which he said would duplicate many functions already performed by the Florida Reliability Coordinating Council. Meanwhile, in New Orleans, Entergy outlined its proposal for an ISO alternative -- a for-profit, FERC-regulated regional transmission company that would own transmission assets with management and employees independent from utility control. Voting rights in Transco stock would reside with an independent trustee, who would select a nonstakeholder board.

News Digest is completed by Lori A. Burkhart and Phillip S. Cross, contributing legal editors, and by Beth Lewis, editorial assistant

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