S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 2233--A

                       2015-2016 Regular Sessions

                            I N  S E N A T E

                            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:

  Section  1.  The public service law is amended by adding a new article
12 to read as follows:
                                ARTICLE 12
          PROVISIONS RELATING TO AN INDEPENDENT SYSTEM OPERATOR
SECTION 250. LEGISLATIVE STATEMENT.
        251. INDEPENDENT SYSTEM OPERATOR.
        252. POWERS OF THE COMMISSION.
  S 250. LEGISLATIVE STATEMENT. THE NEW  YORK  STATE  GOVERNMENT  ESTAB-
LISHED  THE PUBLIC SERVICE COMMISSION IN NINETEEN HUNDRED SEVEN TO REGU-
LATE THE UTILITY INDUSTRY THAT HAD BECOME A MONOPOLY.  IN  THE  NINETEEN
THIRTIES AND NINETEEN FORTIES, THE FEDERAL GOVERNMENT STRENGTHENED REGU-
LATION  OF  THE INDUSTRY IN THE AREAS OF SECURITIES, WHOLESALE RATES AND
COST ACCOUNTING.
  SINCE THE LATE NINETEEN NINETIES, THE NEW YORK ELECTRIC UTILITY INDUS-
TRY HAS CHANGED FROM AN INDUSTRY WHERE CUSTOMERS PAID ELECTRIC BILLS  AT
COST-BASED  REGULATED RATES TO A PARTIALLY DEREGULATED INDUSTRY IN WHICH
RATES FOR THE GENERATION OF ELECTRICITY ARE NO LONGER REGULATED BY STATE
GOVERNMENT.
  IN NINETEEN NINETY-SIX,  THE  PUBLIC  SERVICE  COMMISSION  DECIDED  TO
DEREGULATE THE INDUSTRY WITHOUT LEGISLATIVE APPROVAL, AND REQUIRED UTIL-
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

HUNDRED NINETY-NINE, A NEW  ENTITY,  CALLED  THE  NEW  YORK  INDEPENDENT
SYSTEM  OPERATOR,  OR  NYISO,  WAS FORMED FOR THE PURPOSE OF CREATING AN
EXCHANGE FOR THE SALE AND  PURCHASE  OF  ELECTRICITY  ON  THE  WHOLESALE
MARKET.  IT  WAS  ARGUED  THAT THIS NEW SYSTEM WOULD PROMOTE AND ENHANCE
COMPETITION, AND WOULD RESULT  IN  LOWER  COSTS  TO  NEW  YORK'S  RETAIL
CUSTOMERS.  UNFORTUNATELY,  NEW  YORKERS TODAY CONTINUE TO PAY AMONG THE
HIGHEST ELECTRIC BILLS IN THE COUNTRY.
  THE LEGISLATURE IS CONCERNED THAT THESE HIGH ELECTRIC BILLS  NOT  ONLY
PLACE  A  FINANCIAL  BURDEN  ON NEW YORKERS DURING THIS TIME OF ECONOMIC
SLOWDOWN BUT ALSO DISCOURAGE BUSINESSES FROM FORMING OR COMING INTO THIS
STATE. THE LEGISLATURE  BELIEVES  THAT  THE  PUBLIC  SERVICE  COMMISSION
SHOULD  BE  EMPOWERED  TO OVERSEE AND MONITOR THE OPERATIONS OF NYISO TO
ENSURE THAT ITS ACTIONS AND DECISIONS ARE IN THE BEST  INTEREST  OF  ALL
NEW YORKERS.
  S  251.  INDEPENDENT  SYSTEM  OPERATOR.  1.  THERE IS HEREBY CREATED A
CORPORATE ENTITY TO BE KNOWN AS THE "NEW YORK INDEPENDENT SYSTEM  OPERA-
TOR"  OR  "NYISO".  THE  ENTITY  SHALL  BE A BODY CORPORATE AND SHALL BE
FORMED AS A NOT-FOR-PROFIT CORPORATION  AND  SHALL  BE  SUBJECT  TO  THE
PROVISIONS  OF  THIS  ARTICLE AND OF THE NOT-FOR-PROFIT CORPORATION LAW.
SUCH ENTITY SHALL BE APPROVED BY THE FEDERAL ENERGY  REGULATORY  COMMIS-
SION  TO MONITOR, MANAGE AND ADMINISTER THE WHOLESALE ELECTRICITY MARKET
IN THIS STATE.
  2. THE INTERNAL OPERATIONS OF THE INDEPENDENT SYSTEM OPERATOR SHALL BE
GOVERNED AND OPERATED IN ACCORDANCE WITH THE BYLAWS OF THE  CORPORATION,
WHICH  SHALL  BE  SUBJECT  TO THE APPROVAL OF THE COMMISSION. THE BYLAWS
SHALL SPECIFY THE PROCESS BY WHICH THE APPROPRIATE STAKEHOLDERS  OF  THE
CORPORATION  ELECT  ITS  DIRECTORS AND PRESCRIBE PROFESSIONAL QUALIFICA-
TIONS FOR SELECTION AS A DIRECTOR. THE GOVERNING  BOARD  OF  THE  CORPO-
RATION  SHALL  CONSIST OF AT LEAST SEVEN MEMBERS, SUBJECT TO THE FOLLOW-
ING:
  (A) THE CHAIR OF THE COMMISSION  SHALL  BE  AN  EX-OFFICIO  NON-VOTING
MEMBER;
  (B)  ALL  DIRECTORS SHALL POSSESS SUFFICIENT AND RELEVANT KNOWLEDGE OR
EXPERIENCE  IN  THE  ELECTRIC  INDUSTRY,  SUCH  AS  ELECTRIC  REGULATORY
AFFAIRS,  UTILITY MANAGEMENT, BULK POWER SYSTEMS, POWER POOL OPERATIONS,
CORPORATE FINANCE, CONSUMER ADVOCACY OR ENVIRONMENTAL AFFAIRS;
  (C) THE CHAIR OF THE GOVERNING BOARD SHALL NOT BE AN EMPLOYEE  OF  THE
INDEPENDENT SYSTEM OPERATOR; AND
  (D) ALL DIRECTORS SHALL BE RESIDENTS OF THE STATE.
  3.  THE  INDEPENDENT  SYSTEM  OPERATOR  SHALL  CONDUCT  ITS OPERATIONS
CONSISTENT WITH APPLICABLE STATE AND FEDERAL LAWS  AND  CONSISTENT  WITH
THE INTERESTS OF THE PEOPLE OF THE STATE.  THE INDEPENDENT SYSTEM OPERA-
TOR  SHALL  MANAGE THE TRANSMISSION GRID AND RELATED ENERGY MARKETS IN A
MANNER THAT IS CONSISTENT WITH ALL OF THE FOLLOWING:
  (A)  OPERATING  OPEN,  FAIR  AND  COMPETITIVE  WHOLESALE   ELECTRICITY
MARKETS;
  (B)  REDUCING,  TO  THE  EXTENT POSSIBLE, OVERALL ECONOMIC COST TO THE
STATE'S CONSUMERS;
  (C) ADOPTING INSPECTION, MAINTENANCE  AND  REPAIR  STANDARDS  FOR  THE
TRANSMISSION  FACILITIES UNDER ITS CONTROL. SUCH STANDARDS SHALL PROVIDE
FOR HIGH QUALITY, SAFE AND RELIABLE SERVICE;
  (D) COMPLYING WITH APPLICABLE  STATE  LAWS  INTENDED  TO  PROTECT  THE
PUBLIC'S HEALTH, SAFETY AND WELFARE;
  (E)  MAXIMIZING AVAILABILITY OF EXISTING ELECTRIC GENERATION RESOURCES
NECESSARY TO MEET THE NEEDS OF THE STATE'S ELECTRICITY CUSTOMERS;

S. 2233--A                          3

  (F) ENSURING ACCESS TO THE TRANSMISSION AND DISTRIBUTION  SYSTEMS  FOR
ALL BUYERS AND SELLERS OF ELECTRICITY ON NONDISCRIMINATORY TERMS;
  (G)  MAINTAINING  AND  ENHANCING  THE  RELIABILITY AND ADEQUACY OF THE
REGIONAL ELECTRICAL NETWORK; AND
  (H) CONDUCTING INTERNAL OPERATIONS IN A  MANNER  THAT  MINIMIZES  COST
IMPACT  ON  RATEPAYERS TO THE EXTENT PRACTICABLE AND CONSISTENT WITH THE
PROVISIONS OF THIS ARTICLE.
  4. THE INDEPENDENT SYSTEM OPERATOR SHALL ALSO DO ALL OF THE FOLLOWING:
  (A) CONSULT AND COORDINATE WITH APPROPRIATE STATE AND  LOCAL  AGENCIES
TO  ENSURE  THAT THE INDEPENDENT SYSTEM OPERATOR OPERATES IN FURTHERANCE
OF STATE LAW REGARDING CONSUMER AND ENVIRONMENTAL PROTECTION;
  (B) ENSURE THAT THE PURPOSES AND FUNCTIONS OF THE  INDEPENDENT  SYSTEM
OPERATOR  ARE CONSISTENT WITH THE PURPOSES AND FUNCTIONS OF NOT-FOR-PRO-
FIT  CORPORATIONS  IN  THE  STATE,  INCLUDING   DUTIES   OF   CARE   AND
CONFLICT-OF-INTEREST  STANDARDS  FOR  OFFICERS AND DIRECTORS OF A CORPO-
RATION REQUIRED UNDER THE NOT-FOR-PROFIT CORPORATION LAW; AND
  (C) COMPLY WITH THE PROVISIONS OF ARTICLES SIX AND SEVEN OF THE PUBLIC
OFFICERS LAW.
  5. (A) THE INDEPENDENT  SYSTEM  OPERATOR  SHALL  DISCLOSE  PRICE  DATA
RELATED  TO  ITS  WHOLESALE MARKET OPERATIONS INCLUDING, BUT NOT LIMITED
TO, INFORMATION ON REAL-TIME, HOUR-AHEAD AND DAY-AHEAD BIDS IN THE INDE-
PENDENT SYSTEM OPERATOR'S WHOLESALE ELECTRICITY MARKET AUCTIONS,  TRANS-
MISSION  CONGESTION  CONTRACT  AUCTIONS  AND  INSTALLED  CAPACITY MARKET
AUCTIONS WITH NO MORE THAN A THREE  MONTH  DELAY.  SUCH  DATA  SHALL  BE
PROVIDED IN AGGREGATE HOURLY, DAILY, MONTHLY, ANNUAL AND HISTORICAL DATA
SETS  FOR  COMPARISON  PURPOSES AND SHALL ALSO REFLECT SEASONAL AND PEAK
LOAD VARIATIONS AND AVERAGES.
  (B) THE INDEPENDENT SYSTEM OPERATOR SHALL PREPARE  AND  ISSUE  TO  THE
GOVERNOR  AND  THE  STATE LEGISLATURE A MONTHLY REPORT SHOWING THE PRICE
TRANSACTIONS BETWEEN THE WHOLESALE GENERATOR OR POWER PRODUCER  AND  THE
INDEPENDENT SYSTEM OPERATOR, AND BETWEEN THE INDEPENDENT SYSTEM OPERATOR
AND  ENTITIES THAT DISTRIBUTE THE ELECTRICITY. THE REPORT SHALL BE BASED
ON TRANSACTIONS OCCURRING THREE MONTHS PRIOR TO THE DATE OF  THE  REPORT
OR  ANALYSIS,  BROKEN DOWN BY MARKET ZONES, AND SHALL INCLUDE AT A MINI-
MUM:
  (I) THE QUANTITY OF ELECTRICITY PURCHASED AND SOLD;
  (II) THE PRICE PAID FOR THE ELECTRICITY; AND
  (III) THE SELLERS AND PURCHASERS OF THE WHOLESALE ELECTRICITY.
  (C) THE INDEPENDENT SYSTEM OPERATOR SHALL DISCLOSE THE  NAMES  OF  ANY
PERSON  OR ENTITY THAT SUBMITS A BID IN ANY OF THE AUCTIONS DESCRIBED IN
PARAGRAPH (A) OF THIS SUBDIVISION AND THE AMOUNT OF THE BID. SUCH INFOR-
MATION SHALL BE MADE IN A FORMAT READILY AVAILABLE AND ACCESSIBLE TO THE
PUBLIC.
  6. THE INDEPENDENT SYSTEM OPERATOR SHALL APPOINT AN EMPLOYEE TO  SERVE
AS CONSUMER LIAISON, WHOSE PRIMARY DUTY SHALL BE TO INTERACT WITH RETAIL
CUSTOMERS OR OTHER END-USERS FOR THE PURPOSES OF:
  (A)  KEEPING  RETAIL  CUSTOMERS  INFORMED  ABOUT DEVELOPMENTS THAT MAY
AFFECT THEIR INTERESTS;
  (B) EXPLAINING THE ISSUES AND PROPOSALS UNDER DISCUSSION AND  PROPOSED
FOR  CONSIDERATION  BY  THE COMMITTEES OF THE CORPORATION AS WELL AS THE
RAMIFICATIONS OF ANY SUCH ISSUES OR PROPOSALS ON RESIDENTIAL  AND  OTHER
CUSTOMERS;
  (C) RESPONDING TO THE QUESTIONS AND CONCERNS OF RETAIL CUSTOMERS; AND
  (D)  SERVING  AS  THE  LIAISON  BETWEEN  THE  RETAIL CUSTOMERS AND THE
MEMBERS OF THE GOVERNING BOARD WHO ARE DESIGNATED OR ASSIGNED  TO  FOCUS

S. 2233--A                          4

ON THE INTERESTS OF THE RESIDENTIAL, SMALL BUSINESS AND FARM ELECTRICITY
USERS.
  S 252. POWERS OF THE COMMISSION. 1. THE INDEPENDENT SYSTEM OPERATOR IS
DIRECTLY  RESPONSIBLE  AND  ACCOUNTABLE TO THE COMMISSION AS PROVIDED IN
THIS SECTION. THE COMMISSION  HAS  COMPLETE  AUTHORITY  TO  OVERSEE  AND
INVESTIGATE  SUCH  OPERATOR'S FINANCES, BUDGET, AND OPERATIONS AS NECES-
SARY TO ENSURE THAT THE OPERATOR HAS PERFORMED ITS FUNCTIONS AND  DUTIES
IN ACCORDANCE WITH ALL APPLICABLE FEDERAL AND STATE LAWS OR REGULATIONS.
  2.  THE  COMMISSION SHALL PROVIDE OVERSIGHT AND MONITOR THE MARKET AND
CORPORATE OPERATIONS OF THE INDEPENDENT SYSTEM OPERATOR,  INCLUDING  BUT
NOT LIMITED TO, THE EXTENT TO WHICH IT:
  (A)  SERVES THE NEEDS OF ALL CUSTOMER CLASSES AND OPERATES IN A MANNER
THAT IS IN THE BEST INTEREST OF THE PUBLIC;
  (B) ENSURES RELIABILITY, QUALITY AND MAINTENANCE OF  THE  TRANSMISSION
SYSTEM; AND
  (C)  CONTRIBUTES  TO  THE  ACHIEVEMENT  OF  ENERGY EFFICIENCY AND FUEL
DIVERSITY GOALS OF THE STATE.
  3. THE COMMISSION SHALL ALSO BE AUTHORIZED TO:
  (A) REQUIRE THE INDEPENDENT SYSTEM OPERATOR  TO  PROVIDE  REPORTS  AND
INFORMATION  RELATING  TO THE CORPORATION'S REVENUES, EXPENSES AND OTHER
FINANCIAL MATTERS; AND RELATING TO THE CORPORATION'S PERFORMANCE OF  THE
FUNCTIONS  PRESCRIBED  BY ALL APPLICABLE FEDERAL OR STATE LAWS OR AS SET
FORTH IN ITS AGREEMENTS WITH ELECTRIC AND  GAS  CORPORATIONS  AND  OTHER
UTILITIES;
  (B)  PRESCRIBE  A SYSTEM OF ACCOUNTS FOR THE INDEPENDENT SYSTEM OPERA-
TOR;
  (C) REVIEW THE BIDDING AUCTIONS USED BY THE INDEPENDENT SYSTEM  OPERA-
TOR,  INCLUDING  THE  UNIFORM  PRICE  AUCTION, TO DETERMINE WHETHER SUCH
AUCTIONS ARE IN THE BEST INTEREST OF THIS STATE'S RETAIL  CUSTOMERS  AND
TO  ENSURE  THAT  THEY  ARE  FAIR  AND  OBJECTIVE, FREE OF COLLUSION AND
CONFLICTS OF INTEREST;
  (D) CONDUCT AUDITS OF THE REPORTS AND INFORMATION ISSUED OR  SUBMITTED
PURSUANT TO PARAGRAPH (A) OF THIS SUBDIVISION. THE COMMISSION MAY RETAIN
OR  CONTRACT  WITH  AN  INDEPENDENT FIRM OR ORGANIZATION TO CONDUCT SUCH
AUDIT;
  (E) INSPECT THE INDEPENDENT SYSTEM OPERATOR'S FACILITIES, RECORDS  AND
ACCOUNTS  DURING  REASONABLE  HOURS  AND  AFTER REASONABLE NOTICE TO THE
INDEPENDENT ORGANIZATION;
  (F) ASSESS ADMINISTRATIVE PENALTIES  AGAINST  THE  INDEPENDENT  SYSTEM
OPERATOR FOR VIOLATING ANY PROVISION OF THIS ARTICLE, OR A RULE OR ORDER
ADOPTED  BY THE COMMISSION. AT THE REQUEST OF THE COMMISSION, THE ATTOR-
NEY GENERAL MAY APPLY FOR A  COURT  ORDER  TO  REQUIRE  THE  INDEPENDENT
SYSTEM OPERATOR TO COMPLY WITH COMMISSION RULES AND ORDERS; AND
  (G)  RESOLVE  DISPUTES BETWEEN RETAIL CUSTOMERS OR OTHER END-USERS AND
THE INDEPENDENT SYSTEM OPERATOR, AND ADOPT PROCEDURES FOR THE  EFFICIENT
RESOLUTION OF SUCH DISPUTES.
  4.  (A)  THE  COMMISSION  SHALL  ANNUALLY  ISSUE A REPORT RELATING THE
MARKET AND CORPORATE OPERATIONS OF THE INDEPENDENT SYSTEM OPERATOR. SUCH
REPORTS SHALL INCLUDE, BUT NOT BE LIMITED TO:
  (I) ANALYSES  BY  THE  INDEPENDENT  SYSTEM  OPERATOR  AND  OTHER  DATA
COLLECTED  AND  ANALYZED  BY THE COMMISSION ON REAL-TIME, HOUR-AHEAD AND
DAY-AHEAD MARKET BIDS AND BIDDERS IN THE INDEPENDENT  SYSTEM  OPERATOR'S
WHOLESALE  ELECTRICITY MARKET AUCTIONS, TRANSMISSION CONGESTION CONTRACT
AUCTIONS AND INSTALLED MARKET AUCTIONS;
  (II) A DETERMINATION OF WHETHER OR NOT ALL CUSTOMER CLASSES ARE  BEING
ADEQUATELY SERVED BY COMPETITIVE ENERGY MARKETS;

S. 2233--A                          5

  (III)  A  DETERMINATION  OF  THE  COMPETITIVENESS  OF  ENERGY MARKETS;
INCLUDING A DETERMINATION  WHETHER  OR  NOT  THE  ELECTRIC  INDUSTRY  IS
PROVIDING  CONSUMERS  WITH  THE LOWEST PRICES POSSIBLE WITHIN A RESTRUC-
TURED, COMPETITIVE MARKETPLACE;
  (IV)  A  DETERMINATION  OF  THE EXTENT TO WHICH THE ENERGY MARKETS ARE
ACHIEVING THE ENERGY EFFICIENCY AND FUEL DIVERSITY GOALS OF THE STATE;
  (V) THE INDEPENDENT SYSTEM OPERATOR'S FINANCIAL INFORMATION;
  (VI) A COST ANALYSIS COMPARING THE AVERAGE MONTHLY COST  OF  A  RETAIL
CUSTOMER  UNDER  THE CURRENT FEDERALLY REGULATED MARKET WITH THE AVERAGE
MONTHLY COSTS TO THE SAME OR SIMILAR CUSTOMER IF THE  MARKET  WAS  REGU-
LATED  BY  THE COMMISSION. SUCH ANALYSIS SHALL BE BROKEN DOWN INTO SEPA-
RATE CATEGORIES INCLUDING, BUT NOT LIMITED TO,  UTILITY  SERVICE  AREAS;
CUSTOMER  TYPES,  SUCH  AS  RESIDENTIAL, COMMERCIAL, INDUSTRIAL; AND ANY
OTHER CATEGORY DETERMINED BY THE COMMISSION; AND
  (VII) RECOMMENDATIONS FOR IMPROVING ANY DEFICIENCIES SO IDENTIFIED  IN
ELECTRICITY  ENERGY  MARKETS,  INCLUDING  NON-COMPETITIVE  PRICING SITU-
ATIONS.
  (B) THE COMMISSION SHALL SUBMIT  SUCH  REPORT  TO  THE  GOVERNOR,  THE
TEMPORARY  PRESIDENT OF THE SENATE, THE SPEAKER OF THE ASSEMBLY, AND THE
CHAIRS OF THE ENERGY AND THE CORPORATIONS, AUTHORITIES  AND  COMMISSIONS
COMMITTEES OF THE SENATE AND THE ASSEMBLY, NO LATER THAN DECEMBER FIRST,
TWO THOUSAND SIXTEEN AND ANNUALLY THEREAFTER.
  S 2. Severability. If any clause, sentence, paragraph, section or part
of  this act shall be adjudged by any court of competent jurisdiction to
be invalid, the judgment shall not affect,  impair,  or  invalidate  the
remainder thereof, but shall be confined in its operation to the clause,
sentence,  paragraph,  section  or part thereof directly involved in the
controversy in which the judgment shall have been rendered.
  S 3. This act shall take effect immediately.