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New York’s electricity market is a scam

If you agree with legislators in about half the states that the most efficient way to provide electricity is through wholesale auctions, take a leap down the rabbit hole into world of the New York Public Service Commission.

Electricity should be cheap in New York because the state’s capacity to generate power far outstrips demand. Its surplus is huge, as much as 63 percent in May, and never less than 4.6 percent, New England Power Coordinating Council reliability reports show.

Prices should fall when demand is below capacity. But when capacity falls short of demand by even 1 percent, electricity market prices soar. Demand in New York is falling, primarily because of “a decrease in upstate industrial” electricity use, the Northeast Power Coordinating Council’s latest report shows.

Yet instead of enjoying cheaper power, New Yorkers pay 40 percent more than the average for the 48 contiguous states, federal pricing data show. Adjusted for inflation, electricity in New York costs almost 17 percent more than a decade ago (though it is down a bit from last year).

So why does capacity-rich New York suffer the fifth most expensive electricity among the 48 states? The answer lies in the Alice in Wonderland rules of the Pubic Service Commission, the regulator; the Independent System Operator, which runs the so-called markets; and the independent power producers.

Publicly available secrets

The regulator, the operator and the producers all agree, at least for the moment, that the electricity market must be veiled in secrecy to protect trade secrets and prevent collusion by the bidders (which would be a crime).

Assemblyman James F. Brennan was skeptical and asked to see the data. He was refused, prompting a Public Service Commission inquiry into whether the data should be disclosed.

Lawyers, economists and executives for the System Operator and the power companies have told the commission that the data must remain secret or a truly competitive market will not exist.

Read full article at Aljazeera America