Assembly Hearing to Examine Performance of Electricity Markets In New York State

March 3, 2009

Assemblyman Kevin Cahill, Chair of the New York State Assembly Committee on Energy, released a statement regarding Thursday’s public hearing to examine New York's electric commodity market under the stewardship of the New York Independent System Operator (NYISO).

“When the Public Service Commission began this de-regulation experiment over a decade ago, New Yorkers were paying among the most expensive utility bills in the country. It is now 2009, and virtually nothing has changed when comparing New York to the rest of the fifty states. This hearing is about examining whether the markets established by the New York Independent Systems Operator truly serve the public interest,” said Assemblyman Cahill.

In 1996, the Public Service Commission issued Opinion No. 96-12. This order for "de-regulation" called for the transition to a wholesale electricity market structure coordinated by the New York Independent System Operator (NYISO). The premise being that electricity prices would be controlled by a market-based system, promoting lower prices, efficiency and new generation. Thursday’s hearing will explore whether mechanisms, like the Uniform Clearing Price, capacity payments and transmission congestion charges currently being used by the NYISO to provide incentives to meet those goals have been effective.

“We can no longer afford to take a hands off approach to the buying and selling of electricity in New York,” said Assemblyman Cahill. “The collapse of the banking industry is a perfect example of the perils of relying on the market to police itself. The time has come to take a close look at the system to determine whether there is a plan in place to ensure that the ratepayers aren’t the ones left holding the bag in the event of a market failure.”

A number of state and national organizations have advance proposals aimed at reforming the markets and drawing down electricity costs. Assembly Members James Brennan and Richard Brodsky have each introduced legislation that approaches these issues from a number of different angles.

“First and foremost, it is our responsibility to ensure that this most basic commodity is being generated and delivered in a way that serves the greater public good,” said Assemblyman Cahill. “Should our hearing reveal that the current system is not performing up to that standard, then we will take the necessary and most appropriate steps to work towards reform.”

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