Relates to clarifying the regulatory authority of the New York power authority over any municipality that owns and operates an electric distribution system

BILL NUMBER:S2397

Title of bill

An act to amend the public authorities law and the general municipal law, in relation to clarifying the regulatory authority of the New York power authority

Purpose

This act would clarify that the New York Power Authority retains regulatory jurisdiction over all municipal electric utilities with certain exceptions.

Summary of provisions

Section 1 amends section 1014 of the public authorities law to clarify that municipal electric utilities who purchase and distribute power from the New York Power Authority shall be regulated by the Authority and not by the Public Service Commission.

Section 2 amends section 364 of the general municipal law to exempt from regulation by the Public Service commission those municipalities who distribute power from the New York Power Authority but do not generate power for distribution.

Section 3 sets forth the effective date of this Act.

Existing law

Currently, Public Authorities Law section 1014 states that entities whose power is generated exclusively by the New York Power Authority shall be regulated by the Authority and not the Public Service Commission. General Municipal Law section 364 provides that municipal electric utilities shall be subject to the jurisdiction of the Public Service Commission.

Justification

Small municipalities across the state provide electric service to their residents through electric distribution systems run by the municipalities themselves. Pursuant to state and federal law, these municipalities receive an allocation of low-cost hydropower from the Niagara Power Project and through the New York Power Authority. Before the deregulation of the power industry, these municipalities purchased all of their power through the power Authority. After deregulation, most municipalities now purchase a percentage of their power on the open market.

As the law is written, this brings them under the regulatory jurisdiction of the Public Service Commission. Accordingly, whenever a municipality needs to change its rates, it must: expend hundreds of thousands of dollars to hire experts and participate in a relatively adversarial race-making process before the PSC. The PSC was created to regulate the behavior of large, investor owned, for-profit utility

companies, and to hold them accountable to the public. Small municipal utilities are already directly accountable to the public through local elections. It is for this reason that similarly situated utilities, such as rural cooperative electric utilities and municipal water utilities, are not subjected to the PSC's regulatory authority in this manner.

This legislation would restore the former state of affairs, where NYPA regulated all the municipal electric utilities. NYPA already works extensively with the municipal utilities because the vast majority of their power comes from NYPA. Moreover, NYPA already regulates several of the municipalities who still receive all of their power from NYPA. However, this would have no effect on the Public Service Commission's approval authority in regards to municipal utilities seeking to exercise franchise rights to serve areas outside of their corporate boundaries pursuant to section 68 of the Public Service law.

Prior legislative history

S7890-B of 2010 -Rules Committee

Effective date

January 1, 2012.