Bill S1980-2011

Expands the scope of management and operations audits of gas and electric corporations conducted by the public service commission

Expands the scope of management and operations audits of gas and electric corporations conducted by the public service commission; requires copies of such audits to be provided to the governor and various legislative leaders.






TITLE OF BILL: An act to amend the public service law, in relation to the management and operations audits of certain utilities

PURPOSE OR GENERAL IDEA OF BILL: In its January 2007 report, the Assembly Queens power outage Task Force recommended several measures to improve oversight of utilities and prevent future blackouts. This bill strengthens the requirements for management and operations audits of gas and electric corporations, in order to ensure timely awareness of areas where improvements in utility operations may be needed.

SUMMARY OF PROVISIONS: Bill §1 amends subdivision 19 of §66 of the Public Service Law to make the following revisions to the statutorily required process for management and operations audits of electric and gas corporations:

* the audit schedule - currently at least once every 5 years - could be accelerated by the Public Service Commission (PSC);

* audits would be expanded to include not only construction program planning, but also "maintenance operations";

* upon completion, copies of audits must be provided to the Governor and Legislature; and

* auditors shall independently verify information provided by the utility.

EFFECTS OF PRESENT LAW WHICH THIS BILL WOULD ALTER: This bill makes several augmentations to the current statutorily required audit process, as detailed above.

JUSTIFICATION: Last summer, the western part of Queens suffered a massive power outage that lasted 9 days. The Assembly Queens Power outage Task Force studied the outage's causes and the inadequate responses by the company responsible for the transmission and distribution system, Consolidated Edison, and by the Public Service Commission. One underlying cause of this debacle was found to be the reliance by New York's utility regulators on antiquated laws, regulations and policies that let companies engaged in energy transmission and distribution operate without effective oversight.

The Task Force found that the legislatively-required schedule for PSC audits of the management and operations of certain utilities was not being met. This bill strengthens the current audit provisions by including review of a utility's maintenance and security programs and independent verification of information provided by the company,

allows the PSC to order audits more frequently than every 5 years, and requires copies of completed audits to be filed with the Governor and Legislature.



EFFECTIVE DATE: The 120th day after becoming law; provided, however, that the Public Service Commission is authorized to promulgate any rules and regulations and take any other actions necessary for implementation in advance of such date.


STATE OF NEW YORK ________________________________________________________________________ 1980 2011-2012 Regular Sessions IN SENATE January 14, 2011 ___________
Introduced by Sen. GIANARIS -- read twice and ordered printed, and when printed to be committed to the Committee on Energy and Telecommuni- cations AN ACT to amend the public service law, in relation to the management and operations audits of certain utilities THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Subdivision 19 of section 66 of the public service law, as added by chapter 556 of the laws of 1976 and the closing paragraph as added by chapter 586 of the laws of 1986, is amended to read as follows: 19. The commission shall have power to provide for management and operations audits of gas corporations and electric corporations. Such audits shall be performed AT SUCH TIMES AS THE COMMISSION SHALL DIRECT, BUT AN AUDIT SHALL BE PERFORMED at least once every [five years] YEAR for combination gas and electric companies, as well as for straight gas corporations having annual gross revenues in excess of two hundred million dollars. WHEN ANY SUCH CORPORATION ALSO OPERATES A STEAM CORPO- RATION PURSUANT TO ARTICLE FOUR-A OF THIS CHAPTER, THE COMMISSION SHALL PROVIDE FOR A MANAGEMENT AND OPERATIONS AUDIT OF THE STEAM CORPORATION IN THE TIME AND MANNER SPECIFIED IN THIS SECTION. The audit shall include, but not be limited to, an investigation of the company's construction program, planning [in relation], SECURITY AND MAINTENANCE OPERATIONS AS THEY RELATE to the needs of its customers for reliable service and an evaluation of the efficiency of the company's operations. THE AUDIT SHALL INCLUDE INDEPENDENT VERIFICATION OF THE INFORMATION PROVIDED BY THE COMPANY. The commission shall have discretion to have such audits performed by its staff, or by independent auditors. UPON COMPLETION, COPIES OF THE AUDITS SHALL BE PROVIDED TO THE GOVERNOR, SPEAKER OF THE ASSEMBLY, THE TEMPORARY PRESIDENT OF THE SENATE, THE CHAIR OF THE SENATE FINANCE COMMITTEE, THE CHAIR OF THE ASSEMBLY WAYS
AND MEANS COMMITTEE, THE CHAIR OF THE ASSEMBLY ENERGY COMMITTEE AND THE CHAIR OF THE SENATE ENERGY AND TELECOMMUNICATIONS COMMITTEE. In every case in which the commission chooses to have the audit provided for in this subdivision performed by independent auditors, it shall have authority to select the auditors, and to require the company being audited to enter into a contract with the auditors providing for their payment by the company. Such contract shall provide further that the auditors shall work for and under the direction of the commission according to such terms as the commission may determine are necessary and reasonable. The commission shall have authority to direct the company to implement any recommendations resulting from such audits that it finds to be necessary and reasonable. Upon the application of a gas or electric corporation for a major change in rates as defined in subdivision twelve of this section OR OF A STEAM CORPORATION FOR A MAJOR CHANGE IN RATES AS DEFINED IN SUBDIVISION TEN OF SECTION EIGHTY OF THIS CHAPTER, the commission shall review that corporation's compliance with the directions and recommendations made previously by the commission, as a result of the most recently completed management and operations audit. The commission shall incorporate the findings of such review in its opinion or order. S 2. This act shall take effect on the one hundred twentieth day after it shall have become a law. Provided, that the public service commission is immediately authorized and directed to take any and all actions, including but not limited to the promulgation of any necessary rules, necessary to fully implement the provisions of this act on its effective date.


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