Morelle Calls for Review of State’s Public Service Regulatory Agencies

June 19, 2008

State Assemblyman Joseph D. Morelle (D-Irondequoit) said today that he is preparing legislation that would require the state Legislature to work with the Governor to re-evaluate the regulatory roles of the state Public Service Commission (PSC) and the state Department of Public Service (DPS).

Morelle said his new call for regulatory reform in Albany was prompted in part by a current case, the effort of Iberdrola S.A. to acquire Energy East Corp., owner of Rochester Gas and Electric.

DPS staff is the main source of opposition to this transaction, which has won broad bipartisan support from elected officials and groups representing business, labor, economic development, and environmental protection.

"Tuesday, in commenting in the Iberdrola case, Senate Majority Leader Joseph Bruno said that the PSC and the DPS are ‘the most ponderous, difficult bureaucratic agencies in this state’,” Morelle said. “I agree with that statement and with Senator Bruno's suggestion that we pass legislation to reevaluate the roles of these agencies."

Morelle noted that the structure and functions of the PSC and the DPS have not been revisited in state legislation in more than three decades, which was before the energy crisis of the 1970s.

"Over the last 12 years, New York's energy industry has gone through a massive and unprecedented restructuring designed by bureaucrats without a single legislative act." Morelle said. "Electricity is now traded on a centralized wholesale market and significant components of the industry are now unregulated or lightly regulated. These changes have had a major impact on consumers."

Morelle also noted that the energy sector, like telecommunications, has undergone significant technological and market changes since the last time the Legislature considered how this industry should be regulated.

Morelle said the Legislature and the Executive Branch must fully review and carefully define the scope of authority delegated to the agency in light of these technological and market changes.

Specifically, he said, legislators and the Governor should consider if the PSC and DPS should be reorganized to meet the demands of quickly evolving industries, and if accountability mechanisms should be created to evaluate the performance of the PSC and DPS.

The proposed $4.5 billion Iberdrola-Energy East transaction, which the PSC is expected to consider at its July meeting, is supported by Governor Paterson, Senate Majority Leader Joseph Bruno, Morelle, other Assembly members and Senators on both sides of the aisle, as well as business, labor, and economic development groups including the Natural Resources Defense Council, Empire State Development, the state Department of Environmental Conservation, and major universities and employers.

Iberdrola has announced a business plan that calls for investments in wind energy projects of up to $2 billion in New York State.

The main opposition to the transaction, which has won regulatory approval in all other affected states and from the Federal Energy Regulatory Commission (FERC), has come from DPS staff, and a recommended decision issued Monday by an administrative law judge relied mainly on DPS opposition to urge the PSC to reject the proposed acquisition or impose unreasonable conditions.

The corporate leadership of Iberdrola has said that Iberdrola will reconsider this transaction and seek other options in the United States if the final PSC ruling imposes unreasonable conditions on the transaction.