S02233 Summary:

BILL NO    S02233 

SAME AS A01955




Add Art 12 SS250 - 252, Pub Serv L

Creates a New York independent system operator.
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S02233 Memo:

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S02233 Text:

                STATE OF NEW YORK
                               2015-2016 Regular Sessions
                    IN SENATE
                                    January 22, 2015
        Introduced  by  Sen.  FUNKE  -- read twice and ordered printed, and when
          printed to be committed to the Committee on  Energy  and  Telecommuni-
        AN  ACT  to  amend the public service law, in relation to creating a New
          York independent system operator
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
     1    Section  1.  The public service law is amended by adding a new article
     2  12 to read as follows:
     3                                  ARTICLE 12
     5  Section 250. Legislative statement.
     6          251. Independent system operator.
     7          252. Powers of the commission.
     8    § 250. Legislative statement. The New  York  state  government  estab-
     9  lished  the public service commission in nineteen hundred seven to regu-
    10  late the utility industry that had become a monopoly.  In  the  nineteen
    11  thirties and nineteen forties, the federal government strengthened regu-
    12  lation  of  the industry in the areas of securities, wholesale rates and
    13  cost accounting.
    14    Since the late nineteen nineties, the New York electric utility indus-
    15  try has changed from an industry where customers paid electric bills  at
    16  cost-based  regulated rates to a partially deregulated industry in which
    17  rates for the generation of electricity are no longer regulated by state
    18  government.
    19    In nineteen ninety-six,  the  public  service  commission  decided  to
    20  deregulate the industry without legislative approval, and required util-
    21  ities  to  divest themselves of their generation facilities. In nineteen
    22  hundred ninety-nine, a new  entity,  called  the  New  York  independent
    23  system  operator,  or  NYISO,  was formed for the purpose of creating an
    24  exchange for the sale and  purchase  of  electricity  on  the  wholesale
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.

        S. 2233                             2
     1  market.  It  was  argued  that this new system would promote and enhance
     2  competition, and would result  in  lower  costs  to  New  York's  retail
     3  customers.  Unfortunately,  New  Yorkers today continue to pay among the
     4  highest electric bills in the country.
     5    The  legislature  is concerned that these high electric bills not only
     6  place a financial burden on New Yorkers during  this  time  of  economic
     7  slowdown but also discourage businesses from forming or coming into this
     8  state.  The  legislature  believes  that  the  public service commission
     9  should be empowered to oversee and monitor the operations  of  NYISO  to
    10  ensure  that  its  actions and decisions are in the best interest of all
    11  New Yorkers.
    12    § 251. Independent system operator.  1.  There  is  hereby  created  a
    13  corporate  entity to be known as the "New York independent system opera-
    14  tor" or "NYISO". The entity shall be  a  body  corporate  and  shall  be
    15  formed  as  a  not-for-profit  corporation  and  shall be subject to the
    16  provisions of this article and of the  not-for-profit  corporation  law.
    17  Such  entity  shall be approved by the federal energy regulatory commis-
    18  sion to monitor, manage and administer the wholesale electricity  market
    19  in this state.
    20    2. The internal operations of the independent system operator shall be
    21  governed  and operated in accordance with the bylaws of the corporation,
    22  which shall be subject to the approval of  the  commission.  The  bylaws
    23  shall  specify  the process by which the appropriate stakeholders of the
    24  corporation elect its directors and  prescribe  professional  qualifica-
    25  tions  for  selection  as  a director. The governing board of the corpo-
    26  ration shall consist of at least seven members, subject to  the  follow-
    27  ing:
    28    (a)  the  chair  of  the  commission shall be an ex-officio non-voting
    29  member;
    30    (b) all directors shall possess sufficient and relevant  knowledge  or
    31  experience  in  the  electric  industry,  such  as  electric  regulatory
    32  affairs, utility management, bulk power systems, power pool  operations,
    33  corporate finance, consumer advocacy or environmental affairs;
    34    (c)  the  chair of the governing board shall not be an employee of the
    35  independent system operator; and
    36    (d) all directors shall be residents of the state.
    37    3. The  independent  system  operator  shall  conduct  its  operations
    38  consistent  with  applicable  state and federal laws and consistent with
    39  the interests of the people of the state.  The independent system opera-
    40  tor shall manage the transmission grid and related energy markets  in  a
    41  manner that is consistent with all of the following:
    42    (a)   operating  open,  fair  and  competitive  wholesale  electricity
    43  markets;
    44    (b) reducing, to the extent possible, overall  economic  cost  to  the
    45  state's consumers;
    46    (c)  adopting  inspection,  maintenance  and  repair standards for the
    47  transmission facilities under its control. Such standards shall  provide
    48  for high quality, safe and reliable service;
    49    (d)  complying  with  applicable  state  laws  intended to protect the
    50  public's health, safety and welfare;
    51    (e) maximizing availability of existing electric generation  resources
    52  necessary to meet the needs of the state's electricity customers;
    53    (f)  ensuring  access to the transmission and distribution systems for
    54  all buyers and sellers of electricity on nondiscriminatory terms;
    55    (g) maintaining and enhancing the  reliability  and  adequacy  of  the
    56  regional electrical network; and

        S. 2233                             3
     1    (h)  conducting  internal  operations  in a manner that minimizes cost
     2  impact on ratepayers to the extent practicable and consistent  with  the
     3  provisions of this article.
     4    4. The independent system operator shall also do all of the following:
     5    (a)  consult  and coordinate with appropriate state and local agencies
     6  to ensure that the independent system operator operates  in  furtherance
     7  of state law regarding consumer and environmental protection;
     8    (b)  ensure  that the purposes and functions of the independent system
     9  operator are consistent with the purposes and functions of  not-for-pro-
    10  fit corporations in the state, including duties of care and conflict-of-
    11  interest  standards for officers and directors of a corporation required
    12  under the not-for-profit corporation law; and
    13    (c) comply with the provisions of articles six and seven of the public
    14  officers law.
    15    5. (a) The independent  system  operator  shall  disclose  price  data
    16  related  to  its  wholesale market operations including, but not limited
    17  to, information on real-time, hour-ahead and day-ahead bids in the inde-
    18  pendent system operator's wholesale electricity market auctions,  trans-
    19  mission  congestion  contract  auctions  and  installed  capacity market
    20  auctions with no more than a three  month  delay.  Such  data  shall  be
    21  provided in aggregate hourly, daily, monthly, annual and historical data
    22  sets  for  comparison  purposes and shall also reflect seasonal and peak
    23  load variations and averages.
    24    (b) The independent system operator shall prepare  and  issue  to  the
    25  governor  and  the  state legislature a monthly report showing the price
    26  transactions between the wholesale generator or power producer  and  the
    27  independent system operator, and between the independent system operator
    28  and  entities that distribute the electricity. The report shall be based
    29  on transactions occurring three months prior to the date of  the  report
    30  or  analysis,  broken down by market zones, and shall include at a mini-
    31  mum:
    32    (i) the quantity of electricity purchased and sold;
    33    (ii) the price paid for the electricity; and
    34    (iii) the sellers and purchasers of the wholesale electricity.
    35    (c) The independent system operator shall disclose the  names  of  any
    36  person  or entity that submits a bid in any of the auctions described in
    37  paragraph (a) of this subdivision and the amount of the bid. Such infor-
    38  mation shall be made in a format readily available and accessible to the
    39  public.
    40    6. The independent system operator shall appoint an employee to  serve
    41  as consumer liaison, whose primary duty shall be to interact with retail
    42  customers or other end-users for the purposes of:
    43    (a)  keeping  retail  customers  informed  about developments that may
    44  affect their interests;
    45    (b) explaining the issues and proposals under discussion and  proposed
    46  for  consideration  by  the committees of the corporation as well as the
    47  ramifications of any such issues or proposals on residential  and  other
    48  customers;
    49    (c) responding to the questions and concerns of retail customers; and
    50    (d)  serving  as  the  liaison  between  the  retail customers and the
    51  members of the governing board who are designated or assigned  to  focus
    52  on the interests of the residential, small business and farm electricity
    53  users.
    54    § 252. Powers of the commission. 1. The independent system operator is
    55  directly  responsible  and  accountable to the commission as provided in
    56  this section. The commission  has  complete  authority  to  oversee  and

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     1  investigate  such  operator's finances, budget, and operations as neces-
     2  sary to ensure that the operator has performed its functions and  duties
     3  in accordance with all applicable federal and state laws or regulations.
     4    2.  The  commission shall provide oversight and monitor the market and
     5  corporate operations of the independent system operator,  including  but
     6  not limited to, the extent to which it:
     7    (a)  serves the needs of all customer classes and operates in a manner
     8  that is in the best interest of the public;
     9    (b) ensures reliability, quality and maintenance of  the  transmission
    10  system; and
    11    (c)  contributes  to  the  achievement  of  energy efficiency and fuel
    12  diversity goals of the state.
    13    3. The commission shall also be authorized to:
    14    (a) require the independent system operator  to  provide  reports  and
    15  information  relating  to the corporation's revenues, expenses and other
    16  financial matters; and relating to the corporation's performance of  the
    17  functions  prescribed  by all applicable federal or state laws or as set
    18  forth in its agreements with electric and  gas  corporations  and  other
    19  utilities;
    20    (b)  prescribe  a system of accounts for the independent system opera-
    21  tor;
    22    (c) review the bidding auctions used by the independent system  opera-
    23  tor,  including  the  uniform  price  auction, to determine whether such
    24  auctions are in the best interest of this state's retail  customers  and
    25  to  ensure  that  they  are  fair  and  objective, free of collusion and
    26  conflicts of interest;
    27    (d) conduct audits of the reports and information issued or  submitted
    28  pursuant to paragraph (a) of this subdivision. The commission may retain
    29  or  contract  with  an  independent firm or organization to conduct such
    30  audit;
    31    (e) inspect the independent system operator's facilities, records  and
    32  accounts  during  reasonable  hours  and  after reasonable notice to the
    33  independent organization;
    34    (f) assess administrative penalties  against  the  independent  system
    35  operator for violating any provision of this article, or a rule or order
    36  adopted  by the commission. At the request of the commission, the attor-
    37  ney general may apply for a  court  order  to  require  the  independent
    38  system operator to comply with commission rules and orders; and
    39    (g)  resolve  disputes between retail customers or other end-users and
    40  the independent system operator, and adopt procedures for the  efficient
    41  resolution of such disputes.
    42    4.  (a)  The  commission  shall  annually  issue a report relating the
    43  market and corporate operations of the independent system operator. Such
    44  reports shall include, but not be limited to:
    45    (i) analyses  by  the  independent  system  operator  and  other  data
    46  collected  and  analyzed  by the commission on real-time, hour-ahead and
    47  day-ahead market bids and bidders in the independent  system  operator's
    48  wholesale  electricity market auctions, transmission congestion contract
    49  auctions and installed market auctions;
    50    (ii) a determination of whether or not all customer classes are  being
    51  adequately served by competitive energy markets;
    52    (iii)  a  determination  of  the  competitiveness  of  energy markets;
    53  including a determination  whether  or  not  the  electric  industry  is
    54  providing  consumers  with  the lowest prices possible within a restruc-
    55  tured, competitive marketplace;

        S. 2233                             5
     1    (iv) a determination of the extent to which  the  energy  markets  are
     2  achieving the energy efficiency and fuel diversity goals of the state;
     3    (v) the independent system operator's financial information;
     4    (vi)  a  cost  analysis comparing the average monthly cost of a retail
     5  customer under the current federally regulated market with  the  average
     6  monthly  costs  to  the same or similar customer if the market was regu-
     7  lated by the commission. Such analysis shall be broken down  into  sepa-
     8  rate  categories  including,  but not limited to, utility service areas;
     9  customer types, such as residential,  commercial,  industrial;  and  any
    10  other category determined by the commission; and
    11    (vii)  recommendations for improving any deficiencies so identified in
    12  electricity energy  markets,  including  non-competitive  pricing  situ-
    13  ations.
    14    (b)  The  commission  shall  submit  such  report to the governor, the
    15  temporary president of the senate, the speaker of the assembly, and  the
    16  chairs  of  the energy and the corporations, authorities and commissions
    17  committees of the senate and the assembly, no later than December first,
    18  two thousand fifteen and annually thereafter.
    19    § 2. Severability. If any clause, sentence, paragraph, section or part
    20  of this act shall be adjudged by any court of competent jurisdiction  to
    21  be  invalid,  the  judgment  shall not affect, impair, or invalidate the
    22  remainder thereof, but shall be confined in its operation to the clause,
    23  sentence, paragraph, section or part thereof directly  involved  in  the
    24  controversy in which the judgment shall have been rendered.
    25    § 3. This act shall take effect immediately.
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