[BETA] Fortnightly

DOES IT MATTER THAT NEW YORK'S PROPOSED RELIAbility Council won't be truly independent, even though its distinctly separate independent system operator now plans to require pristine board membership?

Both organizations begin operating as early as July. On paper, any conflict between market needs (i.e. generation) and reliability issues (largely transmission and distribution) will head to the state public service commission or FERC. But reality may force that hand in the effort to restructure New York's wholesale market.

On Dec. 19 last year, New York adjusted its ISO design and makeup of its 28-member, industry-heavy, board. The proposal pending before federal regulators (Docket Nos. er97-1523-000, oa97-470-000, er97-4234-000) now calls for a 10-member, fully independent body, similar to that of ISO New England.

Unlike ISO-NE, however, which absorbed the reliability functions of the New England Power Pool (under its interim ISO agreement), any reliability obligations for the old New York Power Pool would be doled out to the ISO and a new, 13-member executive committee. Eight committee members for the new New York State Reliability Council would be transmission owners or providers.

Splitting Hairs

The NYSRC and the ISO will function as two separate and distinct entities. However, they must work cooperatively, according to their agreement.

Paul L. Gioia, NY ISO's lead counsel, insists the ISO's fundamental responsibility is reliability, notably short-term reliability. The ISO will control the system, its congestion and maintenance and won't be subject to NYSRC directives. The ISO will do almost everything that the former power pool had done.

"The reliability council, if you want to make an analogy, is more analogous to NERC than to the ISO," says Gioia, of the LeBoeuf, Lamb law firm.

However, the agreements fail to stipulate that the eight transmission providers on the NYSRC must divest themselves of generation, prompting concerns that the council could manipulate commerce.

"The question implies there's some need to divest generation to be on the reliability council," Gioia says. "But again, what I would suggest to you is that the reliability council is not affecting the commercial market. The rules the reliability council will establish initially are existing rules."

The attorney notes that state-level settlement agreements include plans for divestiture, perhaps occurring substantially over the next few years.

Any number of market participants might take issue with the lack of NYSRC divestiture.

Power marketers and industrial users already have protested that NERC tagging rules interfere with commercial markets. NERC feels tagging is needed to prevent duplicate transactions by a single seller but marketers say tagging rules interfere with privacy.

Algird F. White, of Couch White and general counsel to Multiple Intervenors, a 65-member industrial-commercial group in New York, says his group is somewhat concerned over the reliability council's makeup.

"We are concerned about it, but we are not as concerned about it as we were in the first iteration when we didn't have an independent [ISO] board," he says. "With an independent board and with a voice on a reliability council for the large consumers¼ I think that we're better off."

He says investor-owned utilities, independent power producers and