A new law could help New York utilities reduce electric rates
and improve their balance sheets.
Legislation recommended by Gov. Pataki on June 1, 1996, seeks to provide the New York Public Service Commission (PSC) with a new financial tool to address possible stranded costs as the state moves toward a competitive retail electric market.
The proposed legislation, the Electric Ratepayers Relief Act of 1996, would allow electric utilities to obtain highly secure, lower-cost financing for intangible expenditures using a statutory credit mechanism similar to that used by Puget Sound Power and Light Co. (Puget Power) in June 1995 (see sidebar). After successfully lobbying for specific legislation in Washington State, Puget Power was able to "securitize" over $200 million in expenditures for demand-side management (DSM) at a triple-A rating (as compared to an underlying utility rating of A-A3).
While the New York bill has gained approval from a broad range of constituents (see sidebar) and has passed the state Senate by an overwhelming margin, the state Assembly did not act on it before summer recess. The Governor hopes the Assembly will pass the bill when it returns later this year, as many expect it will. As a transition tool, the Act would "sunset" by December 31, 2000.
Policy Issues for the PSC
Over the past 24 months, the PSC has pursued its Competitive Opportunities Proceeding as a collaborative forum for industry participants to discuss and shape the roadmap for the deregulation of New York State's electric markets. It issued its major policy decision in May 1996.1 In that order, the PSC laid out a timetable for the state's utilities to file plans, which must include details on:
s Setting protocols for a statewide independent system operator