HOUSTON (Reuters) - Coal and nuclear power plant retirements in New York state could lead to transmission and generation problems, increasing the risk of power outages in the next few years, the electric grid operator said in a report on Wednesday.

Potential problems identified in the Reliability Needs Assessment from the New York Independent System Operator (NYISO) emerged since the 2010 report as the agency evaluated scenarios that include the hotly debated shutdown of the Indian Point nuclear plant, 40 miles from Manhattan; possible reduction of coal-fired generation in the state due to stricter environmental rules and varying response to programs that curtail power use.

The assessment reviews the reliability of New York's bulk power system over a 10-year period, from 2013-2022, to give market players and regulators time to resolve potential problems.

"Long-term system planning to ensure we identify and address reliability needs is one of our most important responsibilities," said NYISO President Stephen Whitley in a statement.

Beginning in 2020, the report warns that the available generation may not keep pace with electric demand in the Hudson Valley and down state regions, depending on plant retirements and the success of programs to curb demand.

The review evaluated five scenarios that could impact system reliability, the ISO said.

One scenario included the retirement of the two nuclear reactors at Entergy Corp's Indian Point Energy Center before 2016, which would lead to both supply and transmission problems, the report said.

Entergy is working to extend the licenses for its Indian Point reactors for another 20 years beyond the current expiration dates in 2013 and 2015, but New York Governor Andrew Cuomo wants the nuclear plant shut due to its proximity to the New York metropolitan area, which is home to 19 million people.

One New York industry group said the report made "a compelling case" for keeping Indian Point running.

"The report is clear: the proposed loss of Indian Point would lead to serious reliability violations and degrade New York's bulk power system," said Matthew Cordaro, an advisory board member of the New York Affordable Reliable Electricity Alliance, a group of 150 business, labor and community groups, including Entergy.

"The grid operator warns it will be forced to take extreme measures if Indian Point were to close," Cordaro said in a statement.

Indian Point supplies about one-quarter of the power used in New York City and Westchester, but earlier this month the New York Power Authority said it would allow its contract for power from Indian Point to expire next year.

Other scenarios evaluated generation adequacy based on several demand projections and the hypothetical retirement of some or all coal-fired generation in New York by 2015.

The report also cites potential problems related to the transmission system's ability to withstand disturbances, such as electric short circuits, that could interrupt power service to customers. The transmission problems could occur as early as 2013 in three areas of the state - the Genesee, Central and Hudson Valley zones, according to the report.

Utilities serving those zones — Rochester Gas & Electric, National Grid Plc and Orange & Rockland — must provide solutions to address the needs, the report said. The ISO assessment will be followed by requests for market-based and regulated solutions. The ISO will develop a comprehensive reliability plan to determine the best way to resolve the reliability needs.

NYISO will monitor and evaluate the progress of new generation connecting to the system, development of local transmission facilities, the status of existing and mothballed power plants, the state's energy efficiency and demand response programs and the impact of new environmental regulations on the existing generation fleet.

(Reporting by Eileen O'Grady in Houston; Editing by Leslie Gevirtz and Andre Grenon)