State Power Agency To Help Generators

NEW YORK -- The New York Independent System Operator, which runs the state power grid, is expected to approve a pricing change in the wholesale electric markets aimed at providing more revenue to struggling power generators.

Opponents, led by consumer groups and utilities like Consolidated Edison, say the move will lead to higher electric prices.

Though critics originally argued that the price rise would be eight per cent a year, they now say the annual hike would probably be around 2.5 per cent for retail bills. That amounts to an estimated $160 million for city users. Plant operators say the change is needed to spur construction of new plants and phase out older, dirtier ones. They say that need would become particularly acute if Indian Point is forced to close or if some upstate plants, which are struggling financially, go bankrupt.

The change involves putting a floor and a ceiling on the price for installed capacity, which is factored into the price of wholesale electricity. By putting in a floor, generators would be guaranteed a certain amount of money for their installed capacity, giving them a financial boost and making it easier for them to get loans from the capital market to build new plants. The NYISO first turned down the plan late last year. But insiders say Gov. Pataki has thrown his weight behind it and that was enough to turn the tide at the NYISO.

Source: New York Business (Crain)