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FERC Gives Nod to New York ISO

FERC Gives Nod to New York ISO

FERC last week gave New York utilities a conditional go-ahead to create the New York Independent System Operator (NYISO), making it the fourth ISO that the Commission has approved so far.

"From a market perspective...this is hopefully the beginning of the evolution of the bulk power environment in that state and in the Northeast," said Chairman James Hoecker. The order "moves the competitive flag further up the poll..."

He noted the proposal for the ISO was in "many respects" preliminary, and that the ISO wouldn't begin operation immediately. Moreover, Hoecker pointed out that it was a single-state ISO, which carried with it "inherent problems" and certain "limitations" because it had the potential to favor in-state market participants.

The proposal by the New York utilities called for the formation of two additional entities: a New York State Reliability Council (NYSRC) to develop bulk power reliability standards and a New York Power Exchange [ER97-1523].

Commissioner William Massey voted in favor of the order, but cited concerns over the issue of the proposed structure of the NYSRC. "I continue to have some concern that there is potential for the transmission owners to dominate this council and perhaps the ISO as well."

He said he supported the order for three reasons: 1) the New York ISO is headed by a board of directors that is independent of any industry segment; 2) the board of directors has the authority to immediately suspend the effectiveness of any reliability rules that it objects to; and 3) any disputes involving the NYSRC and the New York ISO that affect matters subject to FERC jurisdiction under the Federal Power Act must be brought to the Commission.

Still, Massey noted, "I would prefer an order that encouraged the parties to consider either expanding the membership or making the membership more diverse." He believes the council should work toward a "more balanced structure."

Susan Parker

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