Mark Matienzo
Period 4

Regulation of the Electric Utility Industry in New York State

Recently, the New York State Public Service Commission (PSC), as well as 
the Federal Energy Regulatory Commission (FERC) have decided that the 
electric utility industry should be restructured. Six of the twelve 
major New York utility companies are a mong the 25 most expensive 
utilities in the nation. Therefore, the PSC determined that there should 
be more competition between electric companies in order to save 
customers' money. 

The PSC is taking action by considering  two competition models. The 
first, wholesale competition, is where an independent generators would 
sell to a power "pool" and the where pool would sell electricity to 
utilities, municipal systems, and other w holesale customers. The second 
is retail competition, where the retail customers, such as residences, 
would have a choice of utility companies from which they would buy their 
power.

The first article ("Utility battle") stated the PSC's course of action, 
which started last December with an administrative law judge who 
recommended deregulation of wholesale power generation. If this 
occurred, it would be likely that direct retail competition would result. 

All sides involved in this matter -- the utilities, the PSC, and some 
customers -- generally support competition. However, consumer groups 
such as the Citizens' Utility Board (CUB) feel that residences would not 
benefit completely, since they would assume some of the cost given as a 
discount to large, industrial users. Robert Ceisler, executive director 
of the CUB, said this in the article: "Retail access is largely going to 
benefit industrial customers, and not residential customers. Deregulat n 
is not really the answer for high utility rates." Utilities completely 
support competition but do not confirm that it will lower prices. New 
York State Electric and Gas (NYSEG) spokesman Clayton Ellis said that 
"If competition is brought to the ele ctric utility industry, we don't 
know how that would affect price.

The second article, "Speakers demand cheaper electricity," regards a PSC 
public hearing mentioned at the end of the first article. The speakers 
at the meeting were concerned with the cost of electricity, which could 
be driven up by deregulation. Joseph Joyner, a Deposit resident, stated 
that "When you deregulate, you're going to drive the cost of generating 
down, but you're going to drive up the cost of transmitting to make up 
for it." The criticism of the PSC's role in protecting consumers was
noticeable. Joyner was also quoted as saying "I think the Public Service 
Commission has done a very poor job and ought to offer their 
resignations."

The next article, "What restructuring the electric utility could mean to 
you," is from ENERGYLines newsletter that is included in all NYSEG 
customers' bill envelopes. The article simply explains what effect 
restructuring the industry would have on c ustomers. Electricity prices 
will not fall immediately, the article continues, but they will 
gradually decrease due to increased efficiency and, obviously, 
competition. NYSEG also states some of the other costs that could be 
reduced in order to estab lish lower rates, including New York state 
utility taxes and the cost of the power required to be purchased from 
nonutility generators. 

"Rules target electric rates" is one of the most vital articles in this 
group. The FERC has decided to require public electric utilities to open 
their transmission lines for use by other companies and to share 
information about their transmission ca city. Competition, according to 
FERC figures, should save customers from $3.8 billion to $5.4 billion 
per year. The customers' concerns were aptly stated by Mark Cooper, the 
research director for the Consumer Federation of America: "The big 
industria l guys . . . (will) take care of themselves. The question is 
who is going to bargain that residential rate-payer benefit."

The fourth article, "Utility: New rules no surprise," contains NYSEG's 
point of view on the rules laid forth by the FERC. The ruling addresses 
the issue of stranded costs, one of NYSEG's chief concerns. Stranded 
costs are those associated with facil ities that become unused when a 
customer switches utility companies. The ruling provides a plan for the 
recovery of stranded costs that the utility companies are left with. The 
departing customers would pay a series of fees, much like when customers 
choose to switch their long-distance telephone companies. 

The sharing of information on transmission capacity is both beneficial 
and harmful to companies. Denis Wickman, NYSEG vice president of 
electric resource planning, stated that "[information sharing] makes 
more information available to all the player s (including NYSEG) to sell 
and buy at better prices. If you had certain intelligence about a 
(transmission system) that gave you an advantage, you lose that 
advantage." The end of this article also states that the Town of Union 
is considering a prop osal to form a municipal power company.

