July (pdf) - New York Power Authority

In 1999, the National Institute of Environmental Health Sciences (‘‘NIEHS’’) completed a five-year
federally supported EMF research program, concluding that the scientific evidence suggesting that power
frequency EMF exposures pose any health risk is weak. The NIEHS study, however, could not discount
the epidemiological findings showing associations observed in human populations with two forms of
cancer: childhood leukemia and chronic lymphocytic leukemia in occupationally exposed adults. In 2001, the
International Agency for Research on Cancer conducted a similar evaluation, and it classified power frequency
EMF fields as ‘‘possibly carcinogenic to humans’’ based on a statistical association of power frequency EMF
with increased risk of childhood leukemia. ‘‘Possibly carcinogenic to humans’’ is a classification used to
denote an agent for which there is limited evidence of carcinogenicity in humans and less than sufficient
evidence for carcinogenicity in experimental animals. In 2002, the California Department of Health
Services prepared a report examining the evidence regarding possible EMF risk for some 21 different
diseases. The report found that the possible risk, while potentially low, nonetheless could be of concern to
regulators. Claims for damages against electric utilities for injuries alleged to have been caused by power
frequency EMF have increased electric utilities’ attention to this issue. At this time, it is not possible to
predict the extent of the costs and other impacts, if any, which power frequency EMF may have on the
Authority and other electric utilities.
In addition to the factors affecting the electric utility industry discussed above, such factors also
include, among others: (a) effects of compliance with rapidly changing environmental (including climate
change), safety, licensing, regulatory and legislative requirements other than those described above, (b)
changes resulting from conservation and demand-side management programs on the timing and use of
electric energy, (c) effects of competition from other electric utilities (including increased competition
resulting from mergers, acquisitions, and ‘‘strategic alliances’’ of competing electric and natural gas
utilities and from competitors transmitting less expensive electricity from much greater distances over an
interconnected system) and new methods of, and new facilities for, producing low-cost electricity, (d) the role
of independent power producers and marketers, brokers and federal power marketing agencies in power
markets, (e) ‘‘self-generation’’ or ‘‘distributed generation’’ (such as microturbines and fuel cells) by industrial
and commercial customers and others, (f) effects of inflation on the operating and maintenance costs of an
electric utility and its facilities, (g) changes from projected future load requirements, (h) increases in costs
and uncertain availability of capital, (i) shifts in the availability and relative costs of different fuels
(including the cost of natural gas), (j) sudden and dramatic increases in the price of energy purchased on
the open market that may occur in times of high peak demand in an area of the country experiencing such
high peak demand, (k) inadequate risk management procedures and practices with respect to, among other
things, the purchase and sale of energy and transmission capacity, and (l) legislative changes, voter
initiatives, referenda and statewide propositions. Any of these factors (as well as other factors) could have
an adverse effect on the financial condition of any given electric utility, including the Authority, and
likely will affect individual utilities in different ways.
Effects on the Authority
Currently, the Authority is a provider of low cost power and energy in New York State. However, the
Authority cannot predict what effect any of the foregoing factors will have on the business operations and
financial condition of the Authority, but the effect could be significant. The Authority can give no assurance
that it will not lose customers in the future as a result of the restructuring of the New York State electric
utility industry and the emergence of new competitors or increased competition from existing competitors. In
addition, the Authority’s ability to market power and energy on a competitive basis is limited by provisions
of the Act, restrictions under State and federal law as to the sale and pricing of a large portion of the output
from the Niagara and St. Lawrence-FDR Projects, and restrictions on marketing arising from Federal tax
laws and regulations.
The foregoing is a brief discussion of certain factors affecting the electric utility industry. This
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