Will Governor Paterson Repurpose the Public Service Commission to Protect Consumers?

With the unanticipated resignation of Commissioner Cheryl Buley, Governor Paterson will soon be able to pick a majority of the five-member Public Service Commission. In addition to filling the new vacancy, terms of two commissioners appointed by prior governors will expire soon, in February, 2009.

Over the last decade, traditional utilities, power producing utilities, power trading utilities, and new retail gas and electric companies enjoyed the benefits of a PSC mission to deregulate the wholesale and retail generation portion of the industry in the state. To win utility cooperation in its effort to replace regulation with markets, the PSC approved mergers and new holding company structures, and relaxed its oversight of utility costs, services, and profits under the rubric of multi-year rate case settlements and "performance regulation." See Assembly Task Force Report on Queens Outage, Part II: Improving the Accountability of Con Edison and the PSC.

Apart from stellar opportunities and revenues for some utilities, the fruit of the Commission's policies yielded new challenges, including

• Utility prices unaffordable to the poor. See Trouble Ahead: Outlook for Home Heating Costs Worsens; A Well Kept Secret: Con Edison's Low Income Rate.
• Electricity prices rising faster than in states that did not follow New York’s deregulation experiments.
• Retail prices of utilities following the PSC-preferred pricing models spike unpredictably. See Excelsior! Excelsior! Con Edison Rates Peak Again: Bills Up 30% Since May.
• A retail energy market regime lacking price transparency and consumer protection. See PSC Makes ESCO Service Comparisons Difficult;
• More than 400,000 customers have lost low income telephone lifeline assistance, worth at least $60 million per year. See Assembly Passes Bill to Expand Low-Income Telephone Lifeline Assistance.
• Lax enforcement of the Home Energy Fair Practices Act. See National Grid's "Grand Plan" May Be Gone, but its "80% Solution" Remains.
• Failure to assert jurisdiction over wireless and VoIP telephone service to protect customers from unreasonable terms and conditions. See FCC: VoIP Providers Can be Required to Support State Universal Service Fund: Where is New York?; Early Termination Fees.
• Lax enforcement of HEFPA and price cap rules applicable to landlords who resell electricity to residential tenants. See White Plains Landlord Submetering Electricity Without PSC Approval; Residential Submetering Update.
• Unnecessary telephone area code changes. See PULP Provides Further Proof That Area Code Changes Are Not Needed Now in the 315 Area.
• Reliance on flawed NYISO wholesale energy spot markets. See FERC Watched While NYISO Gamers Looted Consumers; It was the [NYISO] Market.
  
• Reliance on costly and ineffective NYISO capacity markets to meet future electricity supply needs. See Cornell Professor Gives Low Marks to NYISO Electricity Markets.

When the last PSC commissioner vacancy occurred, consumer groups urged the appointment of a new PSC Chair less devoted to market nostrums and more attuned to consumer concerns. See Governor Spitzer Asked to Name Pro-Consumer PSC Chair. Now, Governor Paterson will soon have three picks, and thus a real opportunity to repurpose the PSC. Will the Governor seize this opportunity to modify composition and direction of this body which has enormous impact on the safe provision of reasonably priced utility services essential to the public welfare and the economy of the state?