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Date: Mon, 27 Nov 2000 00:22:00 -0800 (PST)
From: owner-nyiso_tech_exchange@lists.thebiz.net
To: mdy@slater-consulting.com, nyiso_tech_exchange@global2000.net
Subject: Re: Environmental Concerns about Emergency Programs
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Mark, Thanks very much for your observations in response to my environmenta=
l =20
memo. I think I understand some of your concerns about the role of the ISO=
=20
in  general and, in particular, with regard to conservation programs. There=
=20
are  several ways in which I think the NYISO is inextricably involved with=
=20
energy  efficiency:=20

The current competitive market the NYISO is overseeing is quite simply not =
=20
working when it comes to demand or load responding to prices. Supply or =20
generators are responding to price=01*imperfectly, but there is significant=
 =20
response. So we have "half a market." We should be seeking to put demand on=
=20
a  par with supply=01*treating load equally with generation. We are moving =
in=20
the  direction of facilitating that, but with basically all consumers on fl=
at=20
or  average rates, and with almost all LSEs (the regulated distribution=20
companies)  able to pass along their energy costs, there is little basis fo=
r=20
responding to  high prices even when we have the software mechanisms in pla=
ce=20
to do so.  Someone needs to find a way to have consumers confronting real=
=20
prices=01*or at  least paying a risk premium for not having to do so. Someo=
ne=20
needs to find a  way to have LSEs have a financial incentive to keep prices=
=20
down=01*they don=01,t  now. One way LSEs could do so would be to encourage =
their=20
(fixed price)  customers, through incentives, to reduce their use when pric=
es=20
are high.  Environmentally, there is a lot at stake in getting the market t=
o=20
work right,  and the ISO plays a major role in that, even when it is not it=
s=20
immediate  responsibility.=20
The emergency measures the ISO is considering have very significant =20
environmental impacts. Small diesel generators may be needed to avoid the =
=20
significant social costs of outages. One environmental concern here is that=
 =20
such generators be restricted to emergency conditions, and not become a new=
 =20
breed of economic peak clippers. And also, it seems reasonable that the =20
emergency program "clean up after itself" by having offsets or mitigation =
=20
associated with it. Actual demand reductions are a preferable alternative =
=20
since they do not have health and environmental impacts=01*and help lower=
=20
market  prices at the same time.=20

I don=01,t mean to suggest that the NYISO is responsible for all of the iss=
ues =20
raised here=01*clearly the PSC, DEC, NYSERDA and others have very important=
=20
roles.  I think the NYISO needs to work with these other agencies to get=20
competition to  work more or less right, and pull down prices and protect t=
he=20
environment at the  same time.=20

Sorry if I have fallen into the trap of repeating myself=01(at length. Than=
ks =20
for your comments.

Larry