ALBANY — A candidate for attorney general said Monday the office has the power to investigate and reform how wholesale electricity rates are set in New York, a process that he said now costs consumers $2.2 billion a year too much.
Richard Brodsky, an assemblyman long critical of utility deregulation, said the so-called “market clearing price” set by the New York Independent System Operator has pushed New York’s electric rates to the fourth highest in the nation.
Consumer groups have long questioned the industry-created ISO’s practice of setting the price at the highest bidder’s, rather than lowest, in a complex formula for setting rates.
“Every day New Yorkers pay tens of millions of extra dollars because of this one organization,” Brodsky said. “It seems to me we have this gigantic rip-off going on with the attorney general uniquely postured to go after the problem.”
The Westchester County Democrat, whose Assembly committee reported last year that the system allows power plant operators to reap excessive profits at ratepayers’ expense, said he hasn’t asked Attorney General Andrew Cuomo to investigate. But he promised he would open a probe if elected.
Brodsky is one of six candidates for attorney general. Aside from him, none of them has focused on this issue.
In an accompanying white paper, Brodsky said the daily auction involving utility companies and power generators fixes the price of electricity at “the highest possible cost.”
Thomas Rumsey, NYISO vice president, said the state’s wholesale electricity prices reached historic lows last year and the current market structure is the most efficient and minimizes total production costs. He said the uniform price auctions are used in many regions and that design in New York has driven $10 billion in private investment for new power generation over the last 10 years. He said the organization has never been investigated by the state attorney general for its price-setting mechanism.
Calls to Cuomo for comment were not immediately returned Monday.
The attorney general has oversight of not-for-profit corporations, which Cuomo has used in investigating state Sen. Pedro Espada’s Soundview health care clinic in the Bronx.
Brodsky, who proposed legislation to re-regulate the market to include some direct government oversight of electricity rate-setting and monitoring, said an investigation also should look into excessive NYISO salaries.
The statewide power grid operator is paying its directors $120,000 a year for a 12-hour work week, he said, and most employees get 15 percent bonuses while executives get close to 30 percent.