The NYISO never rests. When a family shares a meal in air conditioned comfort on a sweltering summer day, the NYISO is there. When a business decides to relocate or expand in New York, we’re there.
When a visiting soldier marvels at New York City’s iconic skyline and the bright lights of Broadway, we’re there. And when a farmer installs a windmill to supplement his power supply and cut costs, we’re ther
e.
The vital predicate for all of these activities is a reliable and responsive electricity grid. A key part of the NYISO ’s mission is effective operation of the grid. It’s a serious and complex challenge, and we work to meet it 24 hours a day, every day of the year. We interact daily with power producers, transmission owners, large power users and others. But we never forget who our ultimate customers are — the family, the business, the soldier, and the farmer.
They inform our decisions and actions as we fulfill another aspect of our mission — administering the wholesale electricity markets in New York State. The execution is intricate, but the bottom line is simple: we serve as the fair, impartial administrator that maintains open, competitive access to the markets and monitors power trading transactions, thereby enabling the competitive marketplace to provide power at the lowest possible cost.
Our shared governance process, which engages market participants and other stakeholders, is a foundation of our success. The Federal Energy Regulatory Commission recently recognized the value of the NYISO’s collaborative way of working, commenting, “The Commission commends NYISO and the stakeholders for working together to resolve many issues.”
We have three watchwords in our business: reliable, economic, and responsible.
On the reliability front in 2007, we dispatched the state’s more than 335 generating units and nearly 11,000 circuit miles of transmission lines. We satisfied a record annual consumption of electric energy by New Yorkers, met the summer’s peak load, and continued to increase participation in our Demand Response Programs. Under these programs, energy-saving actions by participants help us “shave” — or decrease — peak load. This benefits all consumers, and helps avoid the need for costly, additional generation.
We received good news in the “economic” category. A 2007 cost-benefit analysis of the NYISO by the Analysis Group showed that since we began operations in 1999, our activities have saved market participants and consumers “hundreds of millions of dollars.”
From 1999, when the NYISO’s markets began, through the end of 2007, wholesale electricity transactions have totaled nearly $60 billion. Managing markets of that size in a state as diverse and demanding as New York is a significant responsibility, and we take it very seriously. We’re concerned not just with the needs of today’s consumers, but tomorrow’s, as well. We conduct a planning process that assesses the state’s electricity needs over a 10-year horizon, and evaluates the feasibility of proposed projects to meet those needs. Environmental responsibility plays an important role in this process, including the consideration of renewable energy resources. We’ve approved the feasibility of some 50 wind generation projects proposed for New York State, including how they would connect to the overall electricity grid. We’re taking steps to integrate renewable resources, including a sophisticated centralized forecasting system for wind power in New York State.
Many outside evaluators have praised how we do what we do, ranging from our “best in the nation” market software to the efficiency of our power dispatch operations. Visitors from more than 50 nations interested in electricity markets and system reliability have visited us to learn from our experience. An audit in December 2007 of our compliance with reliability standards implemented by North American Electric Reliability Corporation earlier in 2007 concluded that the “NYISO is doing an outstanding job.”
Notwithstanding the welcome commendations, we are constantly seeking to improve. We have been developing a culture of excellence within the NYISO with a goal of flawless execution of every process. Our pursuit of excellence produces positive results for the electricity grid and marketplace. Sophisticated information technology systems underlie their successful operations, and we are continually seeking to make our systems even better. In the marketplace, we deployed more than 70 software enhancements in 2007, and more are planned for 2008 and beyond. Through constant improvement, we intend to remain “the best” in this area, and give our customers every benefit of the latest technologies to enhance visibility, timeliness, and accuracy in a cost-efficient manner.
Part of being responsible involves sharing our knowledge and perspective with policymakers and others who seek to benefit consumers through informed decision-making. The NYISO is uniquely positioned to serve as an unbiased authoritative voice on matters involving energy, the environment, and the economy, and we have stepped up our efforts to share information and perspective with decision makers.
Another hallmark of responsibility involves helping our customers – and our ultimate customers – save energy and money. We do this through our Demand Response Programs and through advanced technologies supporting the transparency of our markets. Energy management systems, advanced metering, and other measures can communicate the markets’ frequently updated pricing to signal the best times for electricity use or reduction.
Financially responsible budgeting and cost-controls are a fundamental obligation of the NYISO. We have addressed that responsibility in close collaboration with our market participants and we have consistently met budget targets. In 2007, the NYISO Board approved a 2008 budget with a $3.4 million decrease from 2007, reducing the NYISO’s cost-of-operations surcharge paid by market participants to the lowest per megawatt-hour rate since 2004.
Looking forward, we have developed many key strategic initiatives to remain a leader in reliability and a leader in market design and performance over the next five years.
On the reliability front, they include championing interregional planning initiatives, and initiating studies on market conditions in adjacent regions that could affect reliability in New York. We’ll also continue to refine and enhance our comprehensive planning process to support reliability and resource adequacy in New York and facilitate the implementation of solutions to these needs. We will be enhancing the security of critical infrastructure (both information technology and physical assets) and monitoring fuel mix in the generation fleet and assess the adequacy of fuel diversity to maintain reliability.
In order to attract the necessary investment in infrastructure through market design and performance, we’ll be exploring the development of longer term mechanisms to provide sustained price certainty and evolve the financial transmission rights market. We plan to increase the NYISO’s compatibility with neighboring regional markets, and step up our actions to accommodate the market entry of new technologies (including demand-side resources and clean, renewable energy projects).
Our dedicated employees, our market participants and our Board of Directors play key roles in the NYISO’s accomplishments — past and future. Our Board is a diverse group of accomplished individuals who have broad experience in the electric industry, environmental conservation, finance, academia, technology, and communications. In late 2007, we were deeply saddened by the death of Peter A. A. Berle, who served as Vice Chair and headed the Board’s Governance Committee. In January 2008, we welcomed to the Board, James V. Mahoney, whose career in the energy industry has spanned more than three decades.
Our information technology systems are sophisticated and we operate in a complex environment of diverse market participants, generating units and transmission facilities, with programs and engineering analyses that contain the alphabet soup of acronyms that characterize the energy industry. On a daily basis, we cut through that complexity to responsibly serve our ultimate customers — New York’s 19.3 million people and thousands of vital businesses and organizations, including world centers for commerce, culture, education, and health care. Building on what we accomplished in 2007, we’ll keep striving for new levels of excellence in 2008 and beyond.
Karen Antion - Board Chair
