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
(NYISO), 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
2000-2014, 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.
Whitley is the president and chief executive
officer of the New York Independent System
Operator, the organization that operates New
York’s high-voltage power grid.
Photo Courtesy New York Independent System Operator