STATE OF NEW YORK
________________________________________________________________________
2233--A
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
4 PROVISIONS RELATING TO AN INDEPENDENT SYSTEM OPERATOR
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.
LBD02509-02-6
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.
