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N.Y. Bill Would Require Utilities To Engage in Portfolio Management for Default Service, Require PSC to "Reward" Utilities Which Reduce Volatility

February 4, 2015

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Copyright 2010-15 EnergyChoiceMatters.com
Reporting by Karen Abbott • kabbott@energychoicematters.com

A bill (A04323) has been filed in the New York State Assembly which would require the electric utilities to utilize portfolio management for default service supplies, and would require the PSC to establish rewards available to utilities for reducing customer bills and price volatility.

Similar bills have passed the Assembly in the past, but not the Senate

A04323 would provide that electric utilities, in procuring default service supply, "shall consider all reasonably available supply-side and demand-side resources, and shall select the source or sources which best serve the public interest, taking into consideration such factors as ratepayer impacts, system reliability, environmental impacts, conservation of energy resources, preservation or creation of economic opportunities, fuel efficiency, fuel availability and diversity, and public health and welfare."

"Each electric utility corporation shall provide portfolio management services to all electric customers within its service territory who do not choose to receive electric capacity and power service from another provider. For purposes of this section, 'portfolio management service' shall mean the provision of reliable electric capacity and power services derived from a mix of supply-side resources, including long-term contracts, for supply delivery dates greater than one year, short-term contracts, for supply delivery dates within one year, and purchases on the day-ahead and spot wholesale markets; demand-side resources; and other mechanisms which collectively reduce the volatility of wholesale electricity prices and minimize customer bills," the bill provides

The bill notably would require the PSC to take public comment on utilities' portfolio management plans filed with the Commission.

The bill also provides that the PSC, "shall establish, after public comment and evidentiary hearings, regulations for performance-based rewards and penalties that reflect the extent to which the portfolio management service plan provided by each electric utility minimizes customer electric bills and the volatility of electricity prices."

A memo included with the bill states, "Market events, both within New York State and in other states, indicate that requiring customers to pay for fluctuations in the wholesale market may result in rates that are unjust and unreasonable during the next three years. While this risk persists, the public interest requires action to ensure that a basic level of electric service is available at prices that are not subject to fluctuations in the wholesale market."

The bill is sponsored by Assemblymember James Brennan

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