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BILL NUMBER:S206

TITLE OF BILL:  An act to amend the public service law, in relation to abolishing the market clearing price

PURPOSE:    To  abolish the use of a market clearing price relating to the buying of electricity at an auction held by the Independent System Operator.

SUMMARY OF PROVISIONS:  Section 1. Amends Section  66  of  the  Public Service  Law  by  adding  three  new  subdivisions  29, 30 and 31. 29. Requires the PSC to review rates  at  least  every  three  years.  30. Prohibits  a  market  clearing price 31.  Requires the PSC to exercise its fullest jurisdiction over the ISO and bans the PSC from  requiring electric   utility   companies   from  divesting  itself  of  electric generating facilities.

JUSTIFICATION:  The health, welfare, and prosperity of  all  New  York residents  require  the  provision  of  adequate, efficient, reliable, environmentally sound, and lowest-cost electric service at  affordable prices.  New York's electric prices have risen significantly impacting the economic well being, health, and safety of the  residents  of  and the  commerce  and  industry  in  the  state.  The  auction  system is monitored and administered by the independent system operator  and  is used to distribute energy.

BILL HISTORY:  S.8558 of 2008; Referred to Rules Committee S.1371/A.1563 of 2009-2010; Referred to Energy and Telecommunications

FISCAL IMPLICATIONS: None.

EFFECTIVE DATE:  This act shall take effect immediately.

Text

STATE OF NEW YORK
________________________________________________________________________

206

2011-2012 Regular Sessions

IN SENATE

(PREFILED)

January 5, 2011
___________

Introduced  by  Sen. MAZIARZ -- 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 abolishing the
  market clearing price

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.  Section 66 of the public service law is amended by adding
three new subdivisions 29, 30 and 31 to read as follows:
  29. REVIEW THE RATES  OF  ANY  PUBLIC  UTILITY  ON  AN  ANNUAL  BASIS,
PROVIDED  HOWEVER  THAT  UPON A DETERMINATION BY THE COMMISSION THAT THE
PUBLIC INTEREST DOES NOT REQUIRE SUCH ANNUAL RATE REVIEW,  A  REVIEW  OF
RATES MAY BE UNDERTAKEN AT NO MORE THAN THREE YEAR INTERVALS.
  30.  (A) USE THE FULLEST EXTENT OF ITS POWERS TO REGULATE THE DISTRIB-
UTION OF RETAIL ELECTRIC ENERGY TO RETAIL CUSTOMERS IN THE STATE AND, TO
THE EXTENT NOT PROHIBITED BY FEDERAL LAW, THE TRANSMISSION  OF  ELECTRIC
ENERGY IN THE STATE.
  (B)  A MARKET CLEARING PRICE MECHANISM FOR THE PURCHASE OF POWER SHALL
BE FORBIDDEN FOR PURCHASES MADE THROUGH THE WHOLESALE MARKET VIA  A  BID
PROCUREMENT  OR  AUCTION PROCESS HELD BY THE INDEPENDENT SYSTEM OPERATOR
("ISO") OF NEW YORK, OR ANY SUCCESSOR IN LAW AND FUNCTION TO SUCH  ENTI-
TY.
  (C)  SUCH  AUCTION OR BID PROCUREMENT PROCESS SHALL BE OVERSEEN BY THE
COMMISSION, WHICH SHALL REQUIRE A DESCENDING CLOCK,  PAY-AS-BID  AUCTION
IN WHICH BID AMOUNTS WILL CONTINUE TO FALL UNTIL NO BIDDER IS WILLING TO
SUPPLY  ELECTRICITY  AT  A LOWER PRICE. FOR THE PURPOSES OF THIS ARTICLE
"DESCENDING CLOCK AUCTION" SHALL BE DEFINED AS AN AUCTION IN  WHICH  THE
PRICES  DROP  THROUGHOUT  AN  AUCTION OF TIME-LIMITED DURATION; STARTING
HIGH AND BEING REDUCED GRADUALLY UNTIL THE SUPPLY BID IS JUST SUFFICIENT
TO MEET THE ELECTRICAL LOAD TO BE PROCURED. PRICES THAT TICK DOWN  IN  A

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD01310-01-1
S. 206                              2

ROUND DECREASE BY A DECREMENT; WHICH IS A GIVEN PERCENTAGE OF THE PREVI-
OUS  PRICE.  BIDDERS  HOLDING THE FINAL BIDS WHEN THE AUCTION CLOSES ARE
THE WINNERS.
  (D)  BIDDERS  WILL  BE FORBIDDEN FROM KNOWING WHEN THE AMOUNT OF ELEC-
TRICITY SUPPLY FILLS REQUIREMENTS.
  (E) THE COMMISSION SHALL APPOINT  AN  INDEPENDENT  MARKET  ADVISOR  TO
REVIEW  MARKET  PRACTICES  AND  BEHAVIOR; THAT WILL RECOMMEND TO THE ISO
ACTIONS THAT CAN BE TAKEN TO MITIGATE  OR  CORRECT  BEHAVIOR  BY  MARKET
PARTICIPANTS  THAT  WAS  REASONABLY  CALCULATED TO, OR HAD THE EFFECT OF
AFFECTING THE FUNCTION OF THE AUCTION PROCESS SO THAT THE WINNING BIDDER
WAS NOT THE LOWEST PRICE BIDDER.
  (F) UTILITIES MAY BUY POWER FROM MARKETS OTHER THAN THE  ISO,  OR  VIA
CONTRACTS  WITH  INDIVIDUALS  OR GROUPS OF GENERATING ENTITIES, PROVIDED
THAT SUCH ELECTRICAL ENERGY MUST BE OFFERED TO  CUSTOMERS  AT  JUST  AND
REASONABLE RATES.
  31.  (A)  THE COMMISSION SHALL EXERCISE ITS FULL JURISDICTION OVER THE
ISO OF NEW YORK.
  (B) THE COMMISSION SHALL REGULATE THE RELIABILITY, QUALITY AND MAINTE-
NANCE BY TRANSMITTERS AND DISTRIBUTORS OF THEIR TRANSMISSION AND  RETAIL
DISTRIBUTION SYSTEMS.
  (C)  THE  COMMISSION  SHALL REGULATE THE RELIABILITY, QUALITY, MAINTE-
NANCE, AND PRICE OF GENERATORS.
  (D) THE COMMISSION SHALL NOT REQUIRE ANY INCUMBENT ELECTRIC UTILITY TO
DIVEST ITSELF OF ANY GENERATION,  TRANSMISSION  OR  DISTRIBUTION  ASSETS
PURSUANT  TO  ANY PROVISION OF THIS CHAPTER WITHOUT SPECIFIC AUTHORIZING
LEGISLATION FOR SUCH PURPOSE.
  (E) THE COMMISSION  SHALL  DEVELOP  CODES  OF  CONDUCT  GOVERNING  THE
CONDUCT  OF INCUMBENT ELECTRIC UTILITIES AND AFFILIATES THEREOF WHEN ANY
SUCH AFFILIATES PROVIDE, OR CONTROL ANY  ENTITY  THAT  PROVIDES,  GENER-
ATION, DISTRIBUTION, OR TRANSMISSION SERVICES TO THE EXTENT NECESSARY TO
PREVENT IMPAIRMENT OF COMPETITION. NOTHING IN THIS CHAPTER SHALL PREVENT
AN  INCUMBENT  ELECTRIC  UTILITY  FROM  OFFERING METERING OPTIONS TO ITS
CUSTOMERS.
  S 2. This act shall take effect immediately.