Statement By Attorney General Eliot Spitzer Regarding The Need For Immediate Action To Avoid Energy Price Spikes In New York
The Federal Energy Regulatory Commission (FERC) yesterday approved a new plan to mitigate the prices of wholesale electricity for California and ten other western states. The new order will take effect this week and remain in place until 2002. This action was an appropriate intervention by the federal government into the western energy markets.
Three weeks ago, my office requested that FERC approve a market mitigation plan for New York, proposed by the New York Independent System Operator (NYISO). At that time, my office urged that, with the summer cooling system underway, New York needed further protection against unwarranted price spikes during times of peak demand and tight supply.
The NYISO asked FERC to approve its "circuit breaker" by June 15. However, FERC has not yet taken any action on it. Given yesterday's ruling, I am submitting a supplemental filing today requesting immediate attention be given to New York's need to be protected against extreme and unfair price spikes.
The ability of power generators to exercise undue market influence can be particularly acute when supply is tight and demand is peaking during hot summer days. The "circuit breaker" mechanism we have called for would help detect electric power bids that reflect an unfair exercise of market power by generators and would help ensure that electric power prices in New York are just and reasonable.
As FERC indicated in addressing the California situation, the development of robust competition will be best served by ensuring that uncompetitive prices are not permitted. The "circuit breaker" proposal, if approved, will help eliminate that possibility in New York.
This move is a necessary bridge until the time when we have a fully competitive and functioning power market in New York.