With questions continuing to arise about electric reliability inNew York City this summer, the New York Public Service Commission(NYPSC) is actively seeking remedies to ensure the lights stay on.The commission approved several electric “demand response” programsto be implemented by Consolidated Edison Co. of New York that aredesigned to reduce demand for electricity during peak periods.

The approved programs also are expected to improve the overallreliability and efficiency of the electric system in New York City.In conjunction with the approved programs, the commission directedall of the state’s investor-owned utilities to submit plans toimplement a special customer incentive program to reduce peakdemand, expand the available supply of electricity and moderatepricing of wholesale electricity in the state.

“The Con Edison programs approved today will improve thereliability of our energy supplies in New York City by reducingpeak demand for electricity this summer,” said Maureen Helmer,NYPSC chairman. “In doing so, these programs will also helpmoderate wholesale electric prices and reduce customer costs untilsignificant amounts of new generation can be permanently sited.These programs demonstrate our commitment to respond quickly tochanging market conditions during the transition to competition.”

The programs include to following: real time pricing rates forlarge electricity customers that voluntarily shift their usage tooff-peak hours; incentives for large customers to quickly reduceusage during emergency periods; discounts to customers that installinterval meters, which are necessary to participate in thereal-time and emergency programs; and special steamair-conditioning rates to increase the use of steam in place ofelectricity.

The NYPSC also reminded Con Edison customers that their billswill be reduced by $208 million starting April 1. Residential andsmall and mid-size commercial customers will benefit from an annualreduction in delivery rates of approximately 9.8%, and largercommercial customers’ bills will be reduced by about 6.2%, thecommission said.

The April 1 decreases follow $170 million (6.8%) in reductionsto Con Edison’s distribution rates that took effect for allcustomers on January 1, 2001. The NYPSC said the January and Aprilreductions would remain in effect through March 31, 2005, and arepart of a commission-approved rate plan that will save Con Edisoncustomers approximately $1.4 billion. Cumulative rate reductionsand cost savings for Con Edison customers are expected to totalabout $2.9 billion over the eight years through 2005.

The commission also approved details of Phase 4 of Con Edison’sRetail Electricity Choice program that is scheduled to take effecton May 1. All customers have been eligible to shop for electricitysince November 2000.

During Phase 4 Con Edison’s competitors will be able toincorporate into their market strategy a certain amount of money,identified as a fraction of a cent per kilowatt hour (4/ kWh) percustomer, that represents costs Con Edison avoids when a customerpurchases electricity from a competitor. The NYPSC said this amountwill be “backed out” of the utility’s total bill for customerschoosing competitive suppliers and can be combined with any othersavings a competitor realizes in offering its services tocustomers. The commission believes that the “avoided costs”identified for use in Phase 4 will serve as a further incentive toattract competitors into the retail electricity market in ConEdison’s territory. The commission said it will consider at a laterdate the process for determining a more complete avoided costfigure for future use by competitors.

Con Edison will also continue to provide a one-time incentivepayment of $65 to an alternative supplier of electricity for eachnew residential and small commercial/ industrial customer who signsup for retail access for the first time and remains with thatsupplier for three consecutive billing cycles. The commission saidthe payment is designed to approximate the costs that ultimatelywill be avoided by the utility and to help further the developmentof the residential and small commercial customer retail electricitymarket.

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