What is the capacity zone?

Posted: May 15, 2014

The new capacity zone will encourage investments in power plants in the Lower Hudson Valley and New York City. This is essential to ensure reliable and competitively priced electricity for today and tomorrow.

Over the past 15 years, very few new power plants or new electric transmission projects have come online in the Lower Hudson Valley and New York City, even as demand has grown. In order to make sure there is sufficient and reliable power in the near future, New York’s Independent System Operator, the non-profit responsible for electric reliability, proposed a new capacity zone. The process began seven years ago. The Federal Energy Regulatory Commission (FERC) approved the new capacity zone and it took effect on May 1.

Many opponents argue that electricity bills will rise. The New York Public Service Commission has estimated this increase at 5 to 10 percent. Yet, the generation component of consumers’ bills, which will be impacted by this measure, has generally held steady over the past five to ten years. Today, more than 60 percent of consumers’ bills is for transmission costs and taxes, both of which have risen dramatically in the past five years.

The Public Policy Institute of New York has documented that energy taxes comprise approximately 26 percent of the typical consumers’ bill. Scaling back these taxes, surcharges and fees immediately should be the top energy policy of our elected officials so that consumers get a much needed break. More information on the capacity zone is available at the links below.

New capacity zone will lead to cheaper electricity
Poughkeepsie Journal

Getting it right on energy price incentives
Transmission & Distribution World

Electric Power Market overview – FERC