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S02233 Summary:

Add Art 12 250 - 252, Pub Serv L
Creates a New York independent system operator.
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S02233 Memo:

Memo not available
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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-
          cations  --  recommitted  to  the Committee on Energy and Telecommuni-
          cations in  accordance  with  Senate  Rule  6,  sec.  8  --  committee
          discharged, bill amended, ordered reprinted as amended and recommitted
          to said committee
        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
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.

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

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

        S. 2233--A                          4
     1  on the interests of the residential, small business and farm electricity
     2  users.
     3    § 252. Powers of the commission. 1. The independent system operator is
     4  directly  responsible  and  accountable to the commission as provided in
     5  this section. The commission  has  complete  authority  to  oversee  and
     6  investigate  such  operator's finances, budget, and operations as neces-
     7  sary to ensure that the operator has performed its functions and  duties
     8  in accordance with all applicable federal and state laws or regulations.
     9    2.  The  commission shall provide oversight and monitor the market and
    10  corporate operations of the independent system operator,  including  but
    11  not limited to, the extent to which it:
    12    (a)  serves the needs of all customer classes and operates in a manner
    13  that is in the best interest of the public;
    14    (b) ensures reliability, quality and maintenance of  the  transmission
    15  system; and
    16    (c)  contributes  to  the  achievement  of  energy efficiency and fuel
    17  diversity goals of the state.
    18    3. The commission shall also be authorized to:
    19    (a) require the independent system operator  to  provide  reports  and
    20  information  relating  to the corporation's revenues, expenses and other
    21  financial matters; and relating to the corporation's performance of  the
    22  functions  prescribed  by all applicable federal or state laws or as set
    23  forth in its agreements with electric and  gas  corporations  and  other
    24  utilities;
    25    (b)  prescribe  a system of accounts for the independent system opera-
    26  tor;
    27    (c) review the bidding auctions used by the independent system  opera-
    28  tor,  including  the  uniform  price  auction, to determine whether such
    29  auctions are in the best interest of this state's retail  customers  and
    30  to  ensure  that  they  are  fair  and  objective, free of collusion and
    31  conflicts of interest;
    32    (d) conduct audits of the reports and information issued or  submitted
    33  pursuant to paragraph (a) of this subdivision. The commission may retain
    34  or  contract  with  an  independent firm or organization to conduct such
    35  audit;
    36    (e) inspect the independent system operator's facilities, records  and
    37  accounts  during  reasonable  hours  and  after reasonable notice to the
    38  independent organization;
    39    (f) assess administrative penalties  against  the  independent  system
    40  operator for violating any provision of this article, or a rule or order
    41  adopted  by the commission. At the request of the commission, the attor-
    42  ney general may apply for a  court  order  to  require  the  independent
    43  system operator to comply with commission rules and orders; and
    44    (g)  resolve  disputes between retail customers or other end-users and
    45  the independent system operator, and adopt procedures for the  efficient
    46  resolution of such disputes.
    47    4.  (a)  The  commission  shall  annually  issue a report relating the
    48  market and corporate operations of the independent system operator. Such
    49  reports shall include, but not be limited to:
    50    (i) analyses  by  the  independent  system  operator  and  other  data
    51  collected  and  analyzed  by the commission on real-time, hour-ahead and
    52  day-ahead market bids and bidders in the independent  system  operator's
    53  wholesale  electricity market auctions, transmission congestion contract
    54  auctions and installed market auctions;
    55    (ii) a determination of whether or not all customer classes are  being
    56  adequately served by competitive energy markets;

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