aNYCA, New York Control Area; Zone G, Hudson Valley; Zone H, Northern Westchester County; Zone I, rest of Westchester County.
SOURCE: Adapted from NYISO (2005a), p. 26.
posed projects. Natural gas is discussed further in Chapter 3. If these supplies do not materialize, prices will rise and electricity costs will follow.
Even if the costs of production can be defined well, the wholesale price is a function of the auctions that NYISO conducts to procure supplies, as discussed in Chapters 1, 4, and 5. Price can be either above or below historic levels, depending on how many bidders are participating. The long-term impact of the New York process on prices to consumers is still uncertain.
Overall, if the price decline projected to start in 2006 does not occur, demand will be lower.
NYISO’s new capacity-forecasting program is more rigorous than in the past, but even the best demand forecasts are not destiny. They are simply estimates, based on guesses about a host of parameters, which may prove to be too high or too low. Price increases, economic downturns, changes in fuel prices and availability, policy changes, and technological advance have all contributed to surprises in years past. Both in the 1970s and in late 1980s, serious power shortages were forecast for New York unless particular power plants