This was originally published by The Albany Times Union on August 07, 2010.
Give N.Y.‘s energy a closer look
Call this The $2 billion Question, and with that much money at stake, it should be answered carefully. Very carefully, since that money comes out of just about every New Yorker’s pocket.
The question is whether New York’s electricity customers are better off or worse off as a result of the state’s creation of The New York Independent System Operator. The North Greenbush-based nonprofit runs the state’s wholesale electricity market.
That question has been hanging out there for years, but all of a sudden it’s getting real attention. It would be comforting to know both that the issue will outlive this year’s election, and that it will be dealt with outside the frenzy and conflicts of New York politics.
Raising the issue most forcefully is Assemblyman Richard Brodsky, who chairs the Corporations Committee and is also vying for the Democratic nomination for attorney general. Mr. Brodsky says the NYISO costs consumers more money—some $2.2 billion extra a year—because of the way it runs the market.
Mr. Brodsky argues that the NYISO’s auctions essentially guarantee higher prices. Under its system, power suppliers bid daily to supply wholesale power to the market. They continue bidding until the demand at any particular moment is satisfied. All the bidders up to that point get the top price, no matter how low their original bid was.
Advocates of the system, which is considered an industry model, say it’s reliable, transparent, efficient and competitive, and that it produces low prices for consumers. The NYISO maintains that since its creation in 1999, it has lowered costs by $2 billion, and attracted $10 billion in power plant investment.
Critics, including some former NYISO employees, say it’s too secretive, that suppliers game the system, and that it produces inflated priced, not to mention bonuses for the NYISO’s executives on top of their six-figure salaries.
What was supposed to be a more competitive deregulated market, says Mr. Brodsky, has resulted in the nation’s fourth-highest energy prices. He says that as attorney general, he’d use the power of the office to expose the abuse and reform the market.
Mr. Brodsky’s commitment to the issue is commendable, and clearly a fresh look at this system is in order. Just as clearly, the state Legislature can’t be relied on to tackle this task, not as long as it can’t fix the patently self-serving ethics rules and laws on campaign contributions that leave it all too susceptible to the influence of an immensely wealthy industry. It’s hard, too, to be confident in a Legislature that’ tries to hide fees and taxes in our energy bills.
Rather than one official deciding this, however, a better approach is closer to one offered by Attorney General and gubernatorial hopeful Andrew Cuomo—an independent look by experts who don’t have a vested interest in the industry or preconceptions about the system.
Complex as the issue is, the question is simple: Are we better off than we were a decade ago, and is there a better way? Our next state leaders—whoever they are—should devote some immediate energy to answering that question.
