BY STEPHEN G. WHITLEY
Fifteen years ago, New York restructured its electricity industry by embracing one fundamental belief: Competition, not monopolies, would create a more efficient electric system and provide real benefits for consumers.
The move was controversial, but the facts are incontrovertible: The decision was wise.
New York”™s fair, open wholesale markets provide competitively priced electricity that meets consumer demands. These markets have also produced billions in savings; cleaner, more efficient power plants; and the integration of significant new wind energy.
The New York Independent System Operator, which manages New York”™s electric grid and the competitive markets that power it, has managed this market transformation. An independent, neutral and not-for-profit organization, the NYISO recently analyzed and quantified the under-publicized benefits of 15 years of open competition.
Increased fuel efficiency. Competition has reduced the amount of fuel used to produce electricity, cutting costs by $6.4 billion. New York”™s electric system improved its fuel efficiency at a pace three times the national average.
Reduced reserve requirements. New York saved another $540 million as its markets helped reduce electricity needed above peak demand levels. Competition-based incentives for generators helped shrink this reserve margin from 22 to 17 percent.
Competitively priced commodity costs. Market prices fluctuate, but New York”™s wholesale electricity costs (independent of delivery costs, taxes and surcharges) in 2013 were only 2 percent higher than electricity commodity costs in 2000, while inflation grew by more than 35 percent.
Reduced carbon emissions. Fuel efficiency improvements spurred by competitive markets have contributed to environmental quality. Nearly 25 million tons of carbon emissions were avoided in 2013 compared to 1999 ”” a 41 percent reduction equivalent to taking 4.8 million passenger vehicles off the road.
Increased green power. Competition is helping to cultivate renewable energy. Between 2003 and 2013, New York added enough wind generation to power 490,000 homes.
Investments in new generation. From 2000 to 2014, power suppliers added over 10,400 megawatts of generation ”” 80 percent of it in high-demand areas. The additions represent 27 percent of New York”™s electricity requirements.
This success has been made possible by policymakers who envisioned a better way as well as market participants, regulators and other stakeholders who constantly sharpen that vision.
The NYISO contributes in many ways.
For example, we maintain reliable, cost-effective operation of the bulk electric system by conducting real-time, competitive auctions of wholesale electricity ”” every five minutes, 365 days a year.
We meet the nation”™s strictest reliability standards, including nearly 1,000 requirements for safe, secure electric service. We are proud of our record of sustained grid reliability.
We conduct independent, unbiased research and analysis that generates information needed to plan for New York”™s future power needs.
And we invest in state-of-the-art tools and technology that are making possible a new, smarter grid.
Competitive electricity markets have worked ”” for New York and its homes, for its businesses and government entities. The NYISO will sustain its commitment to reliable, responsible electric service as it powers New York responsibly.
Stephen G. Whitley is the president and CEO of the New York Independent System Operator, the organization that operates New York”™s high-voltage power grid. Contact the organization at nyiso.com.
