S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   1252
 
                        2017-2018 Regular Sessions
 
                             I N  S E N A T E
 
                              January 6, 2017
                                ___________
 
 Introduced  by  Sen.  FUNKE  -- 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 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.
   § 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
 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
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD04155-01-7

 S. 1252                             2
 
 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.
   § 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;
   (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

 S. 1252                             3
 
   (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 CORPORATION 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
 ON THE INTERESTS OF THE RESIDENTIAL, SMALL BUSINESS AND FARM ELECTRICITY
 USERS.
   § 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

 S. 1252                             4
 
 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;
   (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;

 S. 1252                             5
 
   (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 SEVENTEEN AND ANNUALLY THEREAFTER.
   § 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.
   § 3. This act shall take effect immediately.