The New York Public Service Commission (PSC) has issued a framework of goals and strategies for restructuring the electric industry in the state. The PSC directs all electric utilities in the state that have not yet initiated restructuring to file plans that will open the retail generation and energy-service markets to competition for all customer classes.
Market Structure (em PoolCo Model. The PSC adopted a "flexible retail PoolCo" model to ensure an orderly transition to retail competition. Restructuring begins with wholesale competition, including formation of a centrally dispatched, voluntary, spot-market power pool with an independent system operator (ISO) to ensure fairness in market transactions and guarantee system reliability. The pool will accommodate both "contracts for differences" and, eventually, individual retail "physical bilateral contracts."
Deregulation and Market Power. Once a competitive market is established, the PSC expects generation to be largely deregulated. Although it expects to limit market power by mandating utility divestiture of generating assets and energy service operations, the PSC has asked utilities to propose their own changes in corporate structure and to explain how market power will be alleviated. In addition, utilities must identify "load pockets" (em i.e., areas where transmission system limitations dictate the location of generation units to maintain reliable service. According to the PSC, the load pockets could create horizontal market-power concerns in an open market where competing generators set the price for energy production.