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 NEW YORK, Oct. 15 /PRNewswire/ -- New York Power Authority Chairman Richard M. Flynn said Friday that the Power Authority's current role is strongly influenced by "new realities" and growing competition in the electric utility business.
 "Changes in our industry have created a vastly different environment and now present us with some of the most significant challenges we have ever encountered," Flynn told a state Assembly hearing.
 "Our future, and that of our industry and its vital contribution to New York's economic health, will depend on a timely response to many of these issues and competitive pressures," he said.
 Flynn testified at a joint hearing of the Assembly Standing Committees on Energy and on Corporations, Authorities and Commissions.
 Addressing the question of whether a public entity like the Power Authority should compete with private utilities, Flynn said such competition "is healthy for both of us.
 "We directly bring benefits to the state, and we indirectly force our competitors to be cost effective as well," he said. "In turn, their competition forces efficiency on us -- a 'win-win' situation for the consumer."
 Flynn noted the Power Authority, which uses no tax dollars, doesn't have a guaranteed customer base, and that "our customers are always free to give us notice and seek other suppliers."
 While welcoming competition, Flynn noted that a number of recently established independent power producers (IPPs) benefit from contracts that require utilities to buy their power even when other available electricity is less expensive. He commended the legislators for changing the law that had made this possible, but said "we should take care not to repeat any of those mistakes as we go forward into the future."
 Flynn also pointed out that the Power Authority passes its cost advantages on to consumers in the form of low rates, while "most of our IPP competitors take any subsidies and pass them along to their stockholders and their employees."
 He said his "Power for Jobs" program supports more than 170,000 jobs throughout the state, and that since 1980, Power Authority electricity has saved consumers more than $8 billion on their electricity bills.
 Nevertheless, Flynn testified, the current competitive environment "poses some real financial and operating challenges to us.
 "We annually review the operations of our plants, their expenses and their markets," he said. "Such review recently demonstrated the need to cut $40 million annually from operating expenses, and we immediately took steps to do so." The actions have included cutting the Power Authority's work force by the equivalent of 400 full-time positions.
 The securities industry reacted very favorably to these cost-cutting measures, Flynn said. While the Power Authority's bond rating was downgraded slightly, he said, "We still maintained the highest credit rating of any New York State authority. And we sold a recent $1.2 billion bond issue at a true interest cost which was the lowest for any large public power issue in the United States since 1977."
 The savings in debt service through this refunding -- $370 million over the life of the bonds -- will be passed on to the Power Authority's customers.
 Flynn also told the committees that the Power Authority has taken strong action to resolve problems at its two nuclear power plants.
 He said that new top management, as well as extensive programs with hundreds of specific action items to improve both hardware and management, are showing results at both the Indian Point 3 Nuclear Power Plant in Buchanan, Westchester County, and the James A. FitzPatrick Nuclear Power Plant near Oswego.
 Flynn said the U.S. Nuclear Regulatory Commission (NRC) has noted improved performance at FitzPatrick, and that progress also is being made at Indian Point 3, where problems arose later. He said Indian Point 3, which has been out of service since last February to address various equipment and performance issues, won't resume operation until the work is substantially complete, the Power Authority believes the plant is ready and the NRC concurs.
 Flynn said that, at his initiative, the Power Authority has hired an outside consultant to help improve nuclear operations and an advisory committee of nuclear industry experts to advise its Board of Trustees on nuclear matters.
 For the future, he said the Power Authority intends to expand its award-winning energy conservation programs to include its industrial customers.
 "We have been a leader in developing nationally innovative programs which help save money for state and local government, as well as protecting the environment," he said.
 Other possible areas for development, Flynn said, are electrification of transportation, and decommissioning of nuclear power plants for other utilities. He noted that the Power Authority has been supervising decommissioning of the Shoreham nuclear plant for the Long Island Power Authority.
 -0- 10/15/93
 /CONTACT: Ira Fine of New York Power Authority, 212-468-6320/

CO: New York Power Authority ST: New York IN: UTI SU:

MP -- NY049 -- 2769 10/15/93 13:10 EDT
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Publication:PR Newswire
Date:Oct 15, 1993

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