On April 25, 2011, the New York Independent System Operator (“NYISO”) issued its annual review document, “Power Trends 2011: Energizing New York’s Legacy of Leadership”  (the “Report”).  In the Report, NYISO president and CEO, Stephen G. Whitley, announced: “[t]he immediate outlook for New York’s electric system is positive, but the sustained adequacy of power resources may be affected by a variety of emerging challenges.”  The Report noted that while adequacy of New York’s power resources is expected in the next 10 years, the aging generation and transmission infrastructure must be addressed.

Currently, the Report demonstrated a diverse portfolio of fuels in New York State, including hydropower, nuclear, coal, natural gas, and oil, with fossil-fuel generation dominating in high-demand downstate New York.  In order to capitalize on the energy resources in New York, the Report suggested removing barriers to trade between regional power markets, coordinating with neighboring grid operators and working with the Eastern Interconnection Planning Cooperative, which combines Eastern United States and Canadian electric system planning authorities to work on interconnection-wide planning issues.

The Report also indicated that in the near term, New York’s electric system does not face difficulties with resource adequacy.  NYISO reports that the reliability requirements for New York for Summer 2011 are 37,782 MW while the total resources available for Summer 2011 are 43,068 MW, and if demand grows according to current forecasts, it will take “at least 10 years” for capacity need to rise accordingly.  Despite current resource adequacy and forecast demand, NYISO does indicate the “sustained adequacy” could face challenges based upon several items: (1) considerable lead-time required for power infrastructure projects; (2) replacement generation for southeastern New York if nuclear power units at Indian Point are retired to avoid violating resource adequacy reliability standards; and (3) impact of impending federal and state environmental regulations on existing power plants.  Also, the reliability of New York is based on the Report’s assumption that there will not be any unexpected retirements of large units. However, the Indian Point Energy Center has faced increased debate after the Japanese nuclear facility crisis.

In addition, despite the projected adequacy of power resources for New York over the next 10 years, the Report indicated that at the end of 2010 sixty percent of power plant capacity in New York State was put in service before 1980, and eighty-five percent of high-voltage transmission facilities went into service before 1980.  In order to address this issue, the State Transmission Assessment and Reliability Study is identifying transmission projects that could support the energy needs of New York State, including “life extension and modernization” of the aging facilities.  NYISO’s Report also indicated that transmission congestion will be addressed, and 2010 brought analyses of both economic effects of congestion on the bulk power system in New York State and a wind study.  Further, the Report indicated that efforts to deal with supply and demand conditions have had results- NYISO indicated that a 2009 study by Brattle Group estimated that market-based cost savings from dynamic pricing ranged from $171 million to $579 million annually.

A copy of the Report is available at www.nyiso.com and here.