IPPNY Letter - Establishing Blue Ribbon Commission on Residential Affordability Through Energy Savings (RATES) (Subpart A of Part TT of A.10008-B); Utility Ownership of New Generation Should Continue to Be Prohibited.
Dear Governor Hochul, Leader Stewart-Cousins, and Speaker Heastie,
Subpart A of Part TT of A.10008-B would establish a RATES Commission to study the causes of rising utility rates to residential customers and recommend actions to reduce such rates. The RATES Commission would be required to examine and make recommendations on certain matters, such as overturning the Public Service Commission’s (PSC) long-standing policy prohibiting investor-owned utility ownership of generation, that, paradoxically, if recommended and adopted, would cause electricity rates to increase. Instead, to prevent electricity costs from rising, the Legislature should add a provision, as recommended by IPPNY within our attached amendment to Subpart A of Part TT of A.10008-B, to continue to prohibit utilities from owning new, or acquiring existing, generation.
Over 25 years ago, the PSC determined that competition in the supply of electricity was the most effective way to reduce costs to consumers. To support competition, the PSC required utilities to sell their generation to independent power producers (IPPs), which would own and operate this, and all new, generation in the New York Independent System Operator’s (NYISO) newly formed competitive wholesale electricity market. If utilities were to own generation, energy costs would unnecessarily rise further since the costs and risks of power plants, which are currently borne by IPPs, would revert to utility ratepayers at a time when the State urgently is working to address energy affordability.
“The Competitive Power Benefits for New Yorkers” report, completed in 2025 by FTI Consulting, found that, comparing the five years before utility-owned generation was banned to the most recent five years studied in the report, 2019-2023, power supply costs decreased by over 35%. Additionally, meeting New York’s clean energy goals affordably will require unprecedented investments in the electric grid. Diverting resources from the utilities’ transmission and distribution duties to generation development will overextend utilities, delay critical transmission projects, and increase costs for ratepayers.
Furthermore, the competitive markets have resulted in robust private investment, as evidenced by over 92 projects electing to the next stage of the NYISO’s Interconnection Queue just this year. 14,000 MW of clean energy projects have made it through the Queue since 2019.
Despite the obvious costs to ratepayers and the urgent efforts of the State to control utility costs, the PSC is continuing to evaluate utility ownership of new renewable generation. Prohibiting new utility-owned generation legislatively would protect ratepayers from increased costs and provide certainty to private independent investors that New York remains committed to competition in the electric industry. Preserving competition is the best way to meet the Climate Leadership and Community Protection Act’s targets in the most affordable way for energy consumers.
Under the Assembly’s Budget Bill language, the RATES Commission would also evaluate and make recommendations regarding, among other things, re-regulation of generation, the NYISO’s uniform clearing price market model, and the NYISO’s governance structure and powers. However, the legislative findings in the bill focus upon concerns with monopoly investor-owned utilities and their retail service to residential ratepayers. The findings do not raise any concerns with the provision of wholesale service by IPPs, whose rates are regulated by the Federal Energy Regulatory Commission (FERC), not the PSC. IPPs do not serve residential customers at retail, and it is inappropriate to include IPPs in the RATES Commission’s study because the State is preempted by the Federal Power Act and FERC’s regulations from enacting conflicting state laws that affect wholesale rates or unilaterally change the NYISO’s governance and powers. Court cases have affirmed this type of pre-emption, and IPPNY is available to provide additional information.
The uniform clearing price mechanism is universally accepted in the United States as the most economically efficient design for competitive wholesale power markets. Moreover, unilateral action by New York State on wholesale power markets would affect interstate commerce, which the Commerce Clause of the U.S. Constitution reserves to the United States Congress alone.
Additionally, there is no need for the RATES Commission to study changes to the NYISO’s competitive markets to reduce rates as the NYISO, assisted by an independent market monitor, polices the competitive wholesale electricity market to avoid market manipulation that could unfairly raise electricity prices to consumers. The NYISO’s Market Mitigation and Analysis Department and its Market Monitoring Unit are already responsible for making sure that bids do not exceed the costs, which are legally allowed to be bid. Unlike most free markets, the expenses, which are permitted to be included in bid prices, are highly regulated.
As a member of the Climate Action Council, I strongly support helping our state have affordable, reliable, and clean electricity. If you have any questions or need additional information, please contact me. Thank you for your consideration.
Enclosure: Amendment to Subpart A of Part TT of A.10008-B
Sincerely,
Gavin J. Donohue
President & CEO
