S T A T E   O F   N E W   Y O R K
       ________________________________________________________________________
                                         1955
                              2015-2016 Regular Sessions
                                 I N  A S S E M B L Y
                                   January 13, 2015
                                      ___________
       Introduced  by  M.  of A. BRENNAN, COLTON, OTIS, MOSLEY, BRINDISI, GOTT-
         FRIED, STECK, SCHIMEL -- Multi-Sponsored by -- M. of A. GLICK, MARKEY,
         SOLAGES -- read once and referred to the  Committee  on  Corporations,
         Authorities and Commissions
       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    S 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
   22  HUNDRED NINETY-NINE, A NEW  ENTITY,  CALLED  THE  NEW  YORK  INDEPENDENT
   23  SYSTEM  OPERATOR,  OR  NYISO,  WAS FORMED FOR THE PURPOSE OF CREATING AN
        EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                             [ ] is old law to be omitted.
                                                                  LBD02509-01-5
       A. 1955                             2
    1  EXCHANGE FOR THE SALE AND  PURCHASE  OF  ELECTRICITY  ON  THE  WHOLESALE
    2  MARKET.  IT  WAS  ARGUED  THAT THIS NEW SYSTEM WOULD PROMOTE AND ENHANCE
    3  COMPETITION, AND WOULD RESULT  IN  LOWER  COSTS  TO  NEW  YORK'S  RETAIL
    4  CUSTOMERS.  UNFORTUNATELY,  NEW  YORKERS TODAY CONTINUE TO PAY AMONG THE
    5  HIGHEST ELECTRIC BILLS IN THE COUNTRY.
    6    THE LEGISLATURE IS CONCERNED THAT THESE HIGH ELECTRIC BILLS  NOT  ONLY
    7  PLACE  A  FINANCIAL  BURDEN  ON NEW YORKERS DURING THIS TIME OF ECONOMIC
    8  SLOWDOWN BUT ALSO DISCOURAGE BUSINESSES FROM FORMING OR COMING INTO THIS
    9  STATE. THE LEGISLATURE  BELIEVES  THAT  THE  PUBLIC  SERVICE  COMMISSION
   10  SHOULD  BE  EMPOWERED  TO OVERSEE AND MONITOR THE OPERATIONS OF NYISO TO
   11  ENSURE THAT ITS ACTIONS AND DECISIONS ARE IN THE BEST  INTEREST  OF  ALL
   12  NEW YORKERS.
   13    S  251.  INDEPENDENT  SYSTEM  OPERATOR.  1.  THERE IS HEREBY CREATED A
   14  CORPORATE ENTITY TO BE KNOWN AS THE "NEW YORK INDEPENDENT SYSTEM  OPERA-
   15  TOR"  OR  "NYISO".  THE  ENTITY  SHALL  BE A BODY CORPORATE AND SHALL BE
   16  FORMED AS A NOT-FOR-PROFIT CORPORATION  AND  SHALL  BE  SUBJECT  TO  THE
   17  PROVISIONS  OF  THIS  ARTICLE AND OF THE NOT-FOR-PROFIT CORPORATION LAW.
   18  SUCH ENTITY SHALL BE APPROVED BY THE FEDERAL ENERGY  REGULATORY  COMMIS-
   19  SION  TO MONITOR, MANAGE AND ADMINISTER THE WHOLESALE ELECTRICITY MARKET
   20  IN THIS STATE.
   21    2. THE INTERNAL OPERATIONS OF THE INDEPENDENT SYSTEM OPERATOR SHALL BE
   22  GOVERNED AND OPERATED IN ACCORDANCE WITH THE BYLAWS OF THE  CORPORATION,
   23  WHICH  SHALL  BE  SUBJECT  TO THE APPROVAL OF THE COMMISSION. THE BYLAWS
   24  SHALL SPECIFY THE PROCESS BY WHICH THE APPROPRIATE STAKEHOLDERS  OF  THE
   25  CORPORATION  ELECT  ITS  DIRECTORS AND PRESCRIBE PROFESSIONAL QUALIFICA-
   26  TIONS FOR SELECTION AS A DIRECTOR. THE GOVERNING  BOARD  OF  THE  CORPO-
   27  RATION  SHALL  CONSIST OF AT LEAST SEVEN MEMBERS, SUBJECT TO THE FOLLOW-
   28  ING:
   29    (A) THE CHAIR OF THE COMMISSION  SHALL  BE  AN  EX-OFFICIO  NON-VOTING
   30  MEMBER;
   31    (B)  ALL  DIRECTORS SHALL POSSESS SUFFICIENT AND RELEVANT KNOWLEDGE OR
   32  EXPERIENCE  IN  THE  ELECTRIC  INDUSTRY,  SUCH  AS  ELECTRIC  REGULATORY
   33  AFFAIRS,  UTILITY MANAGEMENT, BULK POWER SYSTEMS, POWER POOL OPERATIONS,
   34  CORPORATE FINANCE, CONSUMER ADVOCACY OR ENVIRONMENTAL AFFAIRS;
   35    (C) THE CHAIR OF THE GOVERNING BOARD SHALL NOT BE AN EMPLOYEE  OF  THE
   36  INDEPENDENT SYSTEM OPERATOR; AND
   37    (D) ALL DIRECTORS SHALL BE RESIDENTS OF THE STATE.
   38    3.  THE  INDEPENDENT  SYSTEM  OPERATOR  SHALL  CONDUCT  ITS OPERATIONS
   39  CONSISTENT WITH APPLICABLE STATE AND FEDERAL LAWS  AND  CONSISTENT  WITH
   40  THE INTERESTS OF THE PEOPLE OF THE STATE.  THE INDEPENDENT SYSTEM OPERA-
   41  TOR  SHALL  MANAGE THE TRANSMISSION GRID AND RELATED ENERGY MARKETS IN A
   42  MANNER THAT IS CONSISTENT WITH ALL OF THE FOLLOWING:
   43    (A)  OPERATING  OPEN,  FAIR  AND  COMPETITIVE  WHOLESALE   ELECTRICITY
   44  MARKETS;
   45    (B)  REDUCING,  TO  THE  EXTENT POSSIBLE, OVERALL ECONOMIC COST TO THE
   46  STATE'S CONSUMERS;
   47    (C) ADOPTING INSPECTION, MAINTENANCE  AND  REPAIR  STANDARDS  FOR  THE
   48  TRANSMISSION  FACILITIES UNDER ITS CONTROL. SUCH STANDARDS SHALL PROVIDE
   49  FOR HIGH QUALITY, SAFE AND RELIABLE SERVICE;
   50    (D) COMPLYING WITH APPLICABLE  STATE  LAWS  INTENDED  TO  PROTECT  THE
   51  PUBLIC'S HEALTH, SAFETY AND WELFARE;
   52    (E)  MAXIMIZING AVAILABILITY OF EXISTING ELECTRIC GENERATION RESOURCES
   53  NECESSARY TO MEET THE NEEDS OF THE STATE'S ELECTRICITY CUSTOMERS;
   54    (F) ENSURING ACCESS TO THE TRANSMISSION AND DISTRIBUTION  SYSTEMS  FOR
   55  ALL BUYERS AND SELLERS OF ELECTRICITY ON NONDISCRIMINATORY TERMS;
       A. 1955                             3
    1    (G)  MAINTAINING  AND  ENHANCING  THE  RELIABILITY AND ADEQUACY OF THE
    2  REGIONAL ELECTRICAL NETWORK; AND
    3    (H)  CONDUCTING  INTERNAL  OPERATIONS  IN A MANNER THAT MINIMIZES COST
    4  IMPACT ON RATEPAYERS TO THE EXTENT PRACTICABLE AND CONSISTENT  WITH  THE
    5  PROVISIONS OF THIS ARTICLE.
    6    4. THE INDEPENDENT SYSTEM OPERATOR SHALL ALSO DO ALL OF THE FOLLOWING:
    7    (A)  CONSULT  AND COORDINATE WITH APPROPRIATE STATE AND LOCAL AGENCIES
    8  TO ENSURE THAT THE INDEPENDENT SYSTEM OPERATOR OPERATES  IN  FURTHERANCE
    9  OF STATE LAW REGARDING CONSUMER AND ENVIRONMENTAL PROTECTION;
   10    (B)  ENSURE  THAT THE PURPOSES AND FUNCTIONS OF THE INDEPENDENT SYSTEM
   11  OPERATOR ARE CONSISTENT WITH THE PURPOSES AND FUNCTIONS OF  NOT-FOR-PRO-
   12  FIT   CORPORATIONS   IN   THE   STATE,  INCLUDING  DUTIES  OF  CARE  AND
   13  CONFLICT-OF-INTEREST STANDARDS FOR OFFICERS AND DIRECTORS  OF  A  CORPO-
   14  RATION REQUIRED UNDER THE NOT-FOR-PROFIT CORPORATION LAW; AND
   15    (C) COMPLY WITH THE PROVISIONS OF ARTICLES SIX AND SEVEN OF THE PUBLIC
   16  OFFICERS LAW.
   17    5.  (A)  THE  INDEPENDENT  SYSTEM  OPERATOR  SHALL DISCLOSE PRICE DATA
   18  RELATED TO ITS WHOLESALE MARKET OPERATIONS INCLUDING,  BUT  NOT  LIMITED
   19  TO, INFORMATION ON REAL-TIME, HOUR-AHEAD AND DAY-AHEAD BIDS IN THE INDE-
   20  PENDENT  SYSTEM OPERATOR'S WHOLESALE ELECTRICITY MARKET AUCTIONS, TRANS-
   21  MISSION CONGESTION  CONTRACT  AUCTIONS  AND  INSTALLED  CAPACITY  MARKET
   22  AUCTIONS  WITH  NO  MORE  THAN  A  THREE MONTH DELAY. SUCH DATA SHALL BE
   23  PROVIDED IN AGGREGATE HOURLY, DAILY, MONTHLY, ANNUAL AND HISTORICAL DATA
   24  SETS FOR COMPARISON PURPOSES AND SHALL ALSO REFLECT  SEASONAL  AND  PEAK
   25  LOAD VARIATIONS AND AVERAGES.
   26    (B)  THE  INDEPENDENT  SYSTEM  OPERATOR SHALL PREPARE AND ISSUE TO THE
   27  GOVERNOR AND THE STATE LEGISLATURE A MONTHLY REPORT  SHOWING  THE  PRICE
   28  TRANSACTIONS  BETWEEN  THE WHOLESALE GENERATOR OR POWER PRODUCER AND THE
   29  INDEPENDENT SYSTEM OPERATOR, AND BETWEEN THE INDEPENDENT SYSTEM OPERATOR
   30  AND ENTITIES THAT DISTRIBUTE THE ELECTRICITY. THE REPORT SHALL BE  BASED
   31  ON  TRANSACTIONS  OCCURRING THREE MONTHS PRIOR TO THE DATE OF THE REPORT
   32  OR ANALYSIS, BROKEN DOWN BY MARKET ZONES, AND SHALL INCLUDE AT  A  MINI-
   33  MUM:
   34    (I) THE QUANTITY OF ELECTRICITY PURCHASED AND SOLD;
   35    (II) THE PRICE PAID FOR THE ELECTRICITY; AND
   36    (III) THE SELLERS AND PURCHASERS OF THE WHOLESALE ELECTRICITY.
   37    (C)  THE  INDEPENDENT  SYSTEM OPERATOR SHALL DISCLOSE THE NAMES OF ANY
   38  PERSON OR ENTITY THAT SUBMITS A BID IN ANY OF THE AUCTIONS DESCRIBED  IN
   39  PARAGRAPH (A) OF THIS SUBDIVISION AND THE AMOUNT OF THE BID. SUCH INFOR-
   40  MATION SHALL BE MADE IN A FORMAT READILY AVAILABLE AND ACCESSIBLE TO THE
   41  PUBLIC.
   42    6.  THE INDEPENDENT SYSTEM OPERATOR SHALL APPOINT AN EMPLOYEE TO SERVE
   43  AS CONSUMER LIAISON, WHOSE PRIMARY DUTY SHALL BE TO INTERACT WITH RETAIL
   44  CUSTOMERS OR OTHER END-USERS FOR THE PURPOSES OF:
   45    (A) KEEPING RETAIL CUSTOMERS  INFORMED  ABOUT  DEVELOPMENTS  THAT  MAY
   46  AFFECT THEIR INTERESTS;
   47    (B)  EXPLAINING THE ISSUES AND PROPOSALS UNDER DISCUSSION AND PROPOSED
   48  FOR CONSIDERATION BY THE COMMITTEES OF THE CORPORATION AS  WELL  AS  THE
   49  RAMIFICATIONS  OF  ANY SUCH ISSUES OR PROPOSALS ON RESIDENTIAL AND OTHER
   50  CUSTOMERS;
   51    (C) RESPONDING TO THE QUESTIONS AND CONCERNS OF RETAIL CUSTOMERS; AND
   52    (D) SERVING AS THE  LIAISON  BETWEEN  THE  RETAIL  CUSTOMERS  AND  THE
   53  MEMBERS  OF  THE GOVERNING BOARD WHO ARE DESIGNATED OR ASSIGNED TO FOCUS
   54  ON THE INTERESTS OF THE RESIDENTIAL, SMALL BUSINESS AND FARM ELECTRICITY
   55  USERS.
       A. 1955                             4
    1    S 252. POWERS OF THE COMMISSION. 1. THE INDEPENDENT SYSTEM OPERATOR IS
    2  DIRECTLY RESPONSIBLE AND ACCOUNTABLE TO THE COMMISSION  AS  PROVIDED  IN
    3  THIS  SECTION.  THE  COMMISSION  HAS  COMPLETE  AUTHORITY TO OVERSEE AND
    4  INVESTIGATE SUCH OPERATOR'S FINANCES, BUDGET, AND OPERATIONS  AS  NECES-
    5  SARY  TO ENSURE THAT THE OPERATOR HAS PERFORMED ITS FUNCTIONS AND DUTIES
    6  IN ACCORDANCE WITH ALL APPLICABLE FEDERAL AND STATE LAWS OR REGULATIONS.
    7    2. THE COMMISSION SHALL PROVIDE OVERSIGHT AND MONITOR THE  MARKET  AND
    8  CORPORATE  OPERATIONS  OF THE INDEPENDENT SYSTEM OPERATOR, INCLUDING BUT
    9  NOT LIMITED TO, THE EXTENT TO WHICH IT:
   10    (A) SERVES THE NEEDS OF ALL CUSTOMER CLASSES AND OPERATES IN A  MANNER
   11  THAT IS IN THE BEST INTEREST OF THE PUBLIC;
   12    (B)  ENSURES  RELIABILITY, QUALITY AND MAINTENANCE OF THE TRANSMISSION
   13  SYSTEM; AND
   14    (C) CONTRIBUTES TO THE  ACHIEVEMENT  OF  ENERGY  EFFICIENCY  AND  FUEL
   15  DIVERSITY GOALS OF THE STATE.
   16    3. THE COMMISSION SHALL ALSO BE AUTHORIZED TO:
   17    (A)  REQUIRE  THE  INDEPENDENT  SYSTEM OPERATOR TO PROVIDE REPORTS AND
   18  INFORMATION RELATING TO THE CORPORATION'S REVENUES, EXPENSES  AND  OTHER
   19  FINANCIAL  MATTERS; AND RELATING TO THE CORPORATION'S PERFORMANCE OF THE
   20  FUNCTIONS PRESCRIBED BY ALL APPLICABLE FEDERAL OR STATE LAWS OR  AS  SET
   21  FORTH  IN  ITS  AGREEMENTS  WITH ELECTRIC AND GAS CORPORATIONS AND OTHER
   22  UTILITIES;
   23    (B) PRESCRIBE A SYSTEM OF ACCOUNTS FOR THE INDEPENDENT  SYSTEM  OPERA-
   24  TOR;
   25    (C)  REVIEW THE BIDDING AUCTIONS USED BY THE INDEPENDENT SYSTEM OPERA-
   26  TOR, INCLUDING THE UNIFORM PRICE  AUCTION,  TO  DETERMINE  WHETHER  SUCH
   27  AUCTIONS  ARE  IN THE BEST INTEREST OF THIS STATE'S RETAIL CUSTOMERS AND
   28  TO ENSURE THAT THEY ARE  FAIR  AND  OBJECTIVE,  FREE  OF  COLLUSION  AND
   29  CONFLICTS OF INTEREST;
   30    (D)  CONDUCT AUDITS OF THE REPORTS AND INFORMATION ISSUED OR SUBMITTED
   31  PURSUANT TO PARAGRAPH (A) OF THIS SUBDIVISION. THE COMMISSION MAY RETAIN
   32  OR CONTRACT WITH AN INDEPENDENT FIRM OR  ORGANIZATION  TO  CONDUCT  SUCH
   33  AUDIT;
   34    (E)  INSPECT THE INDEPENDENT SYSTEM OPERATOR'S FACILITIES, RECORDS AND
   35  ACCOUNTS DURING REASONABLE HOURS AND  AFTER  REASONABLE  NOTICE  TO  THE
   36  INDEPENDENT ORGANIZATION;
   37    (F)  ASSESS  ADMINISTRATIVE  PENALTIES  AGAINST THE INDEPENDENT SYSTEM
   38  OPERATOR FOR VIOLATING ANY PROVISION OF THIS ARTICLE, OR A RULE OR ORDER
   39  ADOPTED BY THE COMMISSION. AT THE REQUEST OF THE COMMISSION, THE  ATTOR-
   40  NEY  GENERAL  MAY  APPLY  FOR  A  COURT ORDER TO REQUIRE THE INDEPENDENT
   41  SYSTEM OPERATOR TO COMPLY WITH COMMISSION RULES AND ORDERS; AND
   42    (G) RESOLVE DISPUTES BETWEEN RETAIL CUSTOMERS OR OTHER  END-USERS  AND
   43  THE  INDEPENDENT SYSTEM OPERATOR, AND ADOPT PROCEDURES FOR THE EFFICIENT
   44  RESOLUTION OF SUCH DISPUTES.
   45    4. (A) THE COMMISSION SHALL  ANNUALLY  ISSUE  A  REPORT  RELATING  THE
   46  MARKET AND CORPORATE OPERATIONS OF THE INDEPENDENT SYSTEM OPERATOR. SUCH
   47  REPORTS SHALL INCLUDE, BUT NOT BE LIMITED TO:
   48    (I)  ANALYSES  BY  THE  INDEPENDENT  SYSTEM  OPERATOR  AND  OTHER DATA
   49  COLLECTED AND ANALYZED BY THE COMMISSION ON  REAL-TIME,  HOUR-AHEAD  AND
   50  DAY-AHEAD  MARKET  BIDS AND BIDDERS IN THE INDEPENDENT SYSTEM OPERATOR'S
   51  WHOLESALE ELECTRICITY MARKET AUCTIONS, TRANSMISSION CONGESTION  CONTRACT
   52  AUCTIONS AND INSTALLED MARKET AUCTIONS;
   53    (II)  A DETERMINATION OF WHETHER OR NOT ALL CUSTOMER CLASSES ARE BEING
   54  ADEQUATELY SERVED BY COMPETITIVE ENERGY MARKETS;
   55    (III) A  DETERMINATION  OF  THE  COMPETITIVENESS  OF  ENERGY  MARKETS;
   56  INCLUDING  A  DETERMINATION  WHETHER  OR  NOT  THE  ELECTRIC INDUSTRY IS
       A. 1955                             5
    1  PROVIDING CONSUMERS WITH THE LOWEST PRICES POSSIBLE  WITHIN  A  RESTRUC-
    2  TURED, COMPETITIVE MARKETPLACE;
    3    (IV)  A  DETERMINATION  OF  THE EXTENT TO WHICH THE ENERGY MARKETS ARE
    4  ACHIEVING THE ENERGY EFFICIENCY AND FUEL DIVERSITY GOALS OF THE STATE;
    5    (V) THE INDEPENDENT SYSTEM OPERATOR'S FINANCIAL INFORMATION;
    6    (VI) A COST ANALYSIS COMPARING THE AVERAGE MONTHLY COST  OF  A  RETAIL
    7  CUSTOMER  UNDER  THE CURRENT FEDERALLY REGULATED MARKET WITH THE AVERAGE
    8  MONTHLY COSTS TO THE SAME OR SIMILAR CUSTOMER IF THE  MARKET  WAS  REGU-
    9  LATED  BY  THE COMMISSION. SUCH ANALYSIS SHALL BE BROKEN DOWN INTO SEPA-
   10  RATE CATEGORIES INCLUDING, BUT NOT LIMITED TO,  UTILITY  SERVICE  AREAS;
   11  CUSTOMER  TYPES,  SUCH  AS  RESIDENTIAL, COMMERCIAL, INDUSTRIAL; AND ANY
   12  OTHER CATEGORY DETERMINED BY THE COMMISSION; AND
   13    (VII) RECOMMENDATIONS FOR IMPROVING ANY DEFICIENCIES SO IDENTIFIED  IN
   14  ELECTRICITY  ENERGY  MARKETS,  INCLUDING  NON-COMPETITIVE  PRICING SITU-
   15  ATIONS.
   16    (B) THE COMMISSION SHALL SUBMIT  SUCH  REPORT  TO  THE  GOVERNOR,  THE
   17  TEMPORARY  PRESIDENT OF THE SENATE, THE SPEAKER OF THE ASSEMBLY, AND THE
   18  CHAIRS OF THE ENERGY AND THE CORPORATIONS, AUTHORITIES  AND  COMMISSIONS
   19  COMMITTEES OF THE SENATE AND THE ASSEMBLY, NO LATER THAN DECEMBER FIRST,
   20  TWO THOUSAND FIFTEEN AND ANNUALLY THEREAFTER.
   21    S 2. Severability. If any clause, sentence, paragraph, section or part
   22  of  this act shall be adjudged by any court of competent jurisdiction to
   23  be invalid, the judgment shall not affect,  impair,  or  invalidate  the
   24  remainder thereof, but shall be confined in its operation to the clause,
   25  sentence,  paragraph,  section  or part thereof directly involved in the
   26  controversy in which the judgment shall have been rendered.
   27    S 3. This act shall take effect immediately.