NYSERDA and NYISO Studying Interaction
of Gas and Electric Systems
Release: Immediate, September 5, 2001
Contact: Gary Davidson (NYSERDA) (518) 862-1090, ext. 3289
Carol E. Murphy (NYISO) (518) 356-7580
Steven C. Sullivan (NYISO) (518) 356-7605
Albany, NY – The New York State Energy Research and Development
Authority (NYSERDA) and the New York Independent System Operator (NYISO)
announced today that they have initiated a study to examine the impact
of increased demand for natural gas on the State's electric system
and natural gas infrastructure.
Virtually all of the 22 proposed new power plants currently applying
for permits under the State's Article X siting process are expected
to be fueled by natural gas. While not all of the proposed power plants
are likely to be approved by the State Siting Board, those that are,
will increase demand for natural gas. In addition, when gas prices
escalate, many of these proposed power facilities may switch to petroleum
fuels, impacting the market and supplies for these fuels and thus,
the system as a whole.
To conduct the study, NYSERDA and the NYISO selected Charles River
Associates, Inc. through a competitive bidding process. Charles River
Associates will develop an integrated computer modeling system of
the electric and natural gas infrastructure serving the Northeast.
This modeling system will have the capability to assess the operation
of the electric and gas systems serving New York State under a range
of varying conditions and various contingencies that could impact
service reliability or energy supplies.
"This study represents an important piece of research to
the State as we go about updating the Energy Plan and evaluating
the transition to a competitive market for electricity," said
NYSERDA President William M. Flynn. "While natural gas is clearly
the fuel of choice for new power plants in terms of providing power
with minimal environmental emissions, it is important that we understand
what implications the increased use of natural gas has on the reliability
of our energy infrastructure, as well as the adequacy and diversity
of our fuel supplies."
Some of the factors to be considered by the modeling system include
whether adequate supplies of natural gas exist to meet present demand
for heating purposes as well as for the growing demand for electricity;
what happens to the market for petroleum fuels if electric generating
facilities switch to petroleum fuels for a period of time; can the
existing natural gas infrastructure handle the increased flow of natural
gas that the proposed new power plants would require; and how does
the increased reliance on natural gas affect the diversity of fuels
used to generate power in the State as well as the ability to transition
to a more competitive electricity marketplace.
"From super-efficient, combined cycle co-gen electric plants,
right down to basic fuel cells, natural gas is the premier fuel
powering our future. It is affordable, clean burning and found in
abundance right here in our own hemisphere," said William J.
Museler, NYISO's President and CEO. "However, because natural
gas has so many attributes, demand for it is increasing significantly.
Add to this, the fact that New York State is situated toward the
end of most gas transmission pipelines and we could run into a situation
where demand begins to outpace supply. This study is intended to
assess that risk and provide us with the information we need to
effectively manage our fuel supplies long into the future."
The cost of the study is about $738,500, with NYSERDA and NYISO
each providing half the funding. NYSERDA's portion of the cost if
being provided by its New York Energy $martSM program as part of NYSERDA's focus on identifying and evaluating barriers
to a transition to a competitive electricity generation market.
NYSERDA is a public-benefit corporation established by the State
Legislature in 1975 to address the State's energy and environmental
challenges in ways that also benefit the economy. NYSERDA's New York Energy $martSM program is financed by a System Benefits Charge established by the
New York State Public Service Commission on the State's investor-owned
utilities to ensure that important research and development and energy
efficiency services continue during the utilities' transition to competition.
The NYISO is a not-for-profit corporation established in 1999 to
facilitate the restructuring of New York State's electric industry.
In addition to administering the State's wholesale energy markets,
the NYISO operates the State's high voltage electric transmission
system. Last year, the NYISO's market volume (including energy, ancillary
services, ICAP and TCC auctions) exceeded $5.2 billion, more than
all of the other Northeast markets combined. For more information
about the NYISO, visit www.nyiso.com.
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