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PRESS RELEASES

For Immediate Release
February 9, 2000

Contact:
Richard J. Bolbrock
(516) 719-9833

New York Approves Lower Reserve Margins

February 9, 2000 ­ Uniondale, NY -- The New York State Reliability Council, LLC (NYSRC), the entity responsible for the reliability standards to be used for electric power supply throughout the State of New York, has established a new, lower required statewide installed reserve margin (IRM) for electric generating capacity during the coming year. The decision was based on a comprehensive New York State generation and transmission reliability study conducted by the Council. The new statewide IRM replaces the current 22% requirement. It is believed the change will result in lower electricity prices for consumers, at a level of power supply reliability equivalent to that provided in the past.

In approving the change, the Council's Executive Committee acknowledged that reliable electric service is critical to the economic and social welfare of the millions of residents and businesses in the State of New York, and that the reliable and efficient operation of the New York State power system is fundamental to achieving and maintaining reliability of power supply. According to Richard J. Bolbrock, Chairman of the NYSRC, "the new installed reserve margin is consistent with both North America Electric Reliability Council (NERC) and Northeast Power Coordinating Council (NPCC) standards, and will maintain both the reliability and economic efficiency of the New York State power system."

The Study was conducted by the NYSRC's Installed Capacity (ICAP) Working Group. The Working Group considered such factors as transmission capabilities, load forecast uncertainty, installed capacity conditions in neighboring systems, emergency assistance available from neighbors, projected availability rates of generating units in New York, and New York Independent System Operator (NYISO) emergency operating procedures. The technical results of this Multi-Area Reliability Simulation (MARS) study show that the required New York Control Area's (NYCA) IRM for the May 1, 2000 through April 30, 2001 capability year is 15.5% under base case conditions. The IRM could vary from 11.8% to 17.0%, depending on a number of possible variations or sensitivities of the value of several key assumptions, with a 99% confidence limit of +/-0.5%. William H. Clagett, former Chairman of NERC and current Vice-Chairman of the NYSRC, observed "that over the many years that I was involved with NERC, I was exposed to many similar studies conducted by various regional councils, and find that this study ranks with the best of those studies."

The Reliability Council considered it prudent to take into account a number of subjective factors when establishing the new statewide IRM requirement, including changing dispatch protocols as New York moves toward full implementation of the NYISO, a process being mirrored in neighboring states. To recognize these subjective factors, as well as the ICAP Working Group's sensitivity testing results, the Council decided to increase the MARS base case IRM study results by 2.5 percentage points, to 18%. The current 22% statewide IRM requirement, although based on similar studies performed in past years by the New York Power Pool (NYPP), had assumed the operation of generally larger generating units with higher forced outage rates than those now in service in New York State.

With today's deregulated electric supply policies, the NYPP has been replaced by the NYISO and the NYSRC. The NYISO is responsible for maintaining the reliability and integrity of the New York State power system along with the commercial aspects of the electric supply in New York State. The NYSRC's principal mission is to establish Reliability Rules for use by the NYISO to maintain the integrity and reliability of the power system. The NYISO is responsible for converting the statewide IRM requirement into local IRM requirements throughout the state. As a part of this charge the NYSRC is responsible for determining the statewide IRM requirements. Both the NYSRC and NYISO include representation from the various market participants in the deregulated electric power supply market.

The purpose of the NYSRC, LLC, is to promote and preserve the reliability of the New York State power system by developing, maintaining and, from time to time, updating the reliability rules which must be complied with by the NYISO and all entities engaging in electric power transactions on the New York State power system. The NYSRC carries out its purpose to the benefit of the entire electric service industry, including consumers, with no intent to advantage or disadvantage any member or any market participant's commercial interest. The NYSRC is a not-for-profit entity.