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Witness Testimony
Mr. William J. Museler
Regional Energy Reliability and Security: DOE Authority to Energize the Cross Sound Cable
Good afternoon, ladies and gentlemen. My name is William J. Museler, and I am the President and Chief Executive Officer of the New York Independent System Operator, or NYISO. I appreciate the opportunity to brief the Committee on our understanding of the impacts on New York State and Long Island of the Department of Energy's ("DOE's") rescission of its emergency order authorizing the operation of the Cross-Sound Cable. In the short time available since that rescission, we have begun to analyze those impacts and, in this testimony, I am happy to present our tentative conclusions. Immediately prior to coming to the NYISO, I was the Executive Vice President of the Transmission/Power Supply Group of the Tennessee Valley Authority, which in terms of megawatts ("MW") served, is the size of New York. Prior to that, I was Vice President of Electric Operations at Long Island Lighting Company. While serving as Vice President of Electric Operations at Long Island Lighting Company, I acquired familiarity with the electric system now operated by Long Island Power Authority ("LIPA") and its contractor, Keyspan. I currently also serve as the Chairman of the ISO/RTO Council, and have served on the North American Reliability Council ("NERC") Board of Trustees and as Chairman of the Southeast Electric Reliability Council. I am a graduate of Pratt Institute in Brooklyn, New York and Worcester Polytechnic Institute. I am a native New Yorker, born in Manhattan and raised in College Point, Queens. The NYISO was created to operate New York's bulk transmission system and administer the State's wholesale electricity markets. We are a New York not-for-profit corporation that started operation in 1999. We are not a governmental entity, but we are pervasively regulated by the Federal Energy Regulatory Commission ("FERC"). With respect to certain financing authority, the Federal Power Act and New York law provide that we are regulated by the New York State Public Service Commission. I will not address environmental or legal issues related to the operation of the Cross-Sound Cable. Those issues are well beyond the appropriate scope of the NYISO's responsibility and beyond my own expertise. Before addressing the operational and reliability issues under consideration this morning, I would like to observe that it is entirely appropriate for Congress to focus immediate attention on issues of electric reliability. Last summer, we suffered a major blackout that threatened the economies of the region and the health, safety and welfare of 50 million people in the Northeast, the Midwest and parts of Canada. The international task force that investigated the blackout determined that it was caused by a company in the Midwest that ignored well accepted, but voluntary, reliability standards. Because the Country's electric system is interconnected across state lines, only the federal government can address this problem effectively. There is legislation before you in several forms that would make compliance with electric utility industry reliability standards mandatory. I urge you to enact such legislation promptly, lest another blackout provide still another object lesson for all of us. I would now like to discuss the significance of the Cross-Sound Cable to New York and New England. Southeastern New York State is among the most congested locations in the United States in terms of electric transmission. Long Island is a densely populated area immediately to the east of New York City. Because it is an island, it presents unusual obstacles to constructing additional electric transmission. Transmission paths to Long Island
must either go through New York City, which presents extraordinary technical difficulties and involves huge expense, or they must go under the Atlantic Ocean or Long Island Sound. The Cross-Sound Cable is one of only two underwater cables connecting Long Island to Connecticut. Two other cables connect Long Island to Westchester County. The Cross-Sound Cable is a direct current, or DC, "merchant" transmission facility. Rather than being owned by regulated electric utilities, merchant transmission facilities are owned by independent, lightly regulated, entrepreneurial companies. Unlike most transmission lines, the DC characteristics of the Cross-Sound Cable permit its operator to regulate the flow of electric energy over the Cable. When operational, the Cross-Sound Cable could provide up to 23% of Long Island's summer import capability. Its existence also provides Connecticut with access to "quick start" combustion turbine capacity during reserve deficiency conditions. For both New York and New England, the Cross-Sound Cable is a two way street with respect both to reliability and economics. The adequacy of transmission capacity has both economic and reliability consequences for the areas affected. The most immediate issue, of course, is the reliability of electric supply. Insufficient transmission capacity can have reliability consequences for Long Island, Connecticut and the broader New York and New England regions. In New York, the amount of generating and other resources necessary for the State and its localities to maintain reliability must be calculated in accordance with criteria imposed by the Northeast Power Coordinating Council and the New York State Reliability Council. Prior to the DOE's rescission of its Emergency Order, the NYISO had determined that 5008 MW of generating capacity had to be physically available on Long Island to satisfy reliability criteria. The calculations assumed that the Cross-Sound Cable would be available immediately in the event of an emergency. If the Cable is not available this summer, Long Island would require additional generating capacity physically located on the Island in order to maintain the same level of reliability that existed when the Cross-Sound Cable was still in operation. Therefore, unless Long Island successfully procures additional generation for the summer, it will have a higher-than-expected risk of outages without the Cross-Sound Cable. We understand that LIPA is trying to do just that but, since LIPA is represented here today, it is more appropriate that they be the ones to describe such efforts. The Cross-Sound Cable is also available to assist Connecticut and New England for reliability purposes under emergency conditions. While New England has added more generating capacity in recent years than New York, it periodically requires imports from New York to serve its own electrical load. For example, at times last winter there was not enough natural gas available for some power plants in New England to operate. Fortunately, New England was able to draw upon generating capacity in New York to meet its needs through interties connecting the two regions. The Cross-Sound Cable provides an additional path for imports from New York into New England. In short, an important reason that regions are electrically interconnected to begin with is to buttress one another's reliability at lower cost than to achieve equivalent reliability independently of one another. For the NYISO, and other entities responsible for planning to meet accepted reliability requirements, the present uncertainty regarding the Cross-Sound Cable presents a serious problem. The Cable exists, but we don't know whether to assume that it can be operated. Absent Congressional action resolving the controversy over the Cable's operation, the New York and New England regions will continue to face uncertainty about the availability of the cable's transmission capacity for normal and emergency conditions. This uncertainty is more than a mere inconvenience. It can cause needless expense and inefficiency. Electric generation and transmission facilities take many years to plan, finance, license and construct. Continued uncertainty can either result in deferral of such planning and implementation or, even worse, unnecessary construction, if the planners are unable to await a final resolution and then guess wrong about the outcome of the controversy. In the face of what we hope is only near term uncertainty, the NYISO is planning to explore interim measures to gain access to the Cross Sound Cable's capacity under emergency conditions. The NYISO will confer with the DOE and ISO-NE to attempt to develop a standby procedure that would permit immediate operation of the cable in the event an emergency develops. While the DOE has been extremely responsive in past emergencies, the problem is that emergencies can develop in a matter of seconds or minutes, leaving insufficient time to contact DOE, explain the situation, permit DOE to verify the problem and issue an order in time to make a difference. Because of the obviously pressing nature of the reliability concerns, I have not focused today on the economic benefits of inter-regional markets and the benefits of additional transmission capacity to support cross boundary transactions. The ultimate purpose of the federal policy of restructuring the electric industry was and is to provide electric consumers with the benefits of open market competition. I would be remiss, therefore, in concluding without noting that FERC's extensive efforts to expand the regional and inter-regional scope of wholesale electricity markets is dependent on the adequacy of inter-regional transmission facilities such as the Cross-Sound Cable. We support FERC's policies and believe that expanded regional electricity markets will maximize the benefits of electric restructuring for consumers. Finally, I appreciate the attention the Congress has given to this matter. It relates to an essential element of interstate commerce and only the federal government can resolve these issues in an adequate and timely manner. Report by the New York Independent System Operator May
2004 Power Trends Related Documents |
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