Seeks End to Price Fixing, Excessive Salaries and Illegal and Unethical Behavior NEW YORK, NY, August 2, 2010 — Assemblyman Richard Brodsky (D-Westchester) and candidate for Attorney General, today released his first major policy proposal as part of his commitment to transforming the Attorney General’s office into a protector of the people’s rights committed to solving the problems faced by New Yorkers in their every day lives.
In a novel and far reaching use of the existing statutory powers of the Attorney General, Brodsky committed to an investigation and reform of the system by which electricity is bought and sold in New York. This system, which consists of a price fixing scheme known as the “market clearing price” has resulted in the rates in New York growing to become 4th highest in the nation. Brodsky’s reform proposal would save New York residents and businesses over $2 billion a year. Brodsky stated, “The Attorney General should be the people’s lawyer and the people’s protector. Everyday New York residents and businesses shell out millions of dollars more than they need to that pays for electricity, which comes to them courtesy of a price fixing scheme set up by the energy industry. The Attorney General has the power to end this abuse and should. I will, on January 1st 2011.” The “market clearing price” price-fixing scheme is run by the Independent Systems Operator (ISO). This is a non-governmental not-for-profit corporation set up entirely by the energy industry under New York’s Not For Profit Corporation Law. It completely controls the daily buying and selling of electricity. Its rules forbid utilities such as Con Edison, NYSEG, Rochester Gas & Electric Corporation and all others from paying the lowest price each day and require that utilities pay every generator of electricity the highest price available each day. In other words, the NYISO requires, each day, that a utility, which has entered into an agreement for electricity for $100, must rather pay $300 for that same amount of electricity. A fuller explanation of the “market clearing price” price-fixing scheme and its economic effect on New Yorkers is contained in the attached White Paper. “This is price-fixing, pure and simple, and its victims are the average people of the state of New York and businesses that rely on electricity. This is not inevitable, it is a choice, and the Attorney General has unique powers to end these abuses,” said Assemblyman Brodsky. Brodsky cited two additional NYISO abuses that require Attorney General action that cost New Yorker’s millions of dollars. These are payments of hugely excessive compensation to officers of NYISO and the repeated failure of the NYISO to uncover and stop illegal and unethical practices. Taken together, these three abuses of the economic health of New Yorkers are the basis for the specific investigative and reform proposals made by Brodsky today. Brodsky cited the Martin Act, Donnelly Act, the Estates, Powers and Trust Law and the Not-For-Profit Corporation Law as the statutory basis for the next Attorney General to save New Yorkers from this price fixing scheme. A full description of the statutory basis for the Brodsky initiative is also included in the White Paper. The NYISO is organized under the not-for-profit corporation laws of the state. These laws give the Attorney General unique and sweeping supervisory and reform powers, which from time to time have been used to stop irresponsible, illegal and damaging behavior by the state’s not-for-profits. Attorney General Cuomo has invoked such powers in his investigation of the Soundview HealthCare Network, which is also a not-for-profit under New York law. Brodsky has a long record of taking on utilities and the energy industry and delivering for New York’s consumers. He brought legal action against Con Edison after the year 2000 steam explosion at the Indian Point power plant and after the Westchester and Queens outages and recovered a total of over $200 million that was returned directly to residential and business customers of Con Edison. “I’m not new to efforts to use the law to protect New York’s electricity customers. The success we had against Con Edison can be replicated in this fight against a statewide price fixing scheme. I’ve repeatedly said on this campaign what distinguishes my record from my opponent’s is the vision and skill to change institutional behavior and a record of protecting New Yorkers when they’re being abused or endangered. There are a number of critical issues the Attorney General faces: reform of Albany institutions, reasserting the “polluter pays principle” against corporate polluters, and strong prosecution of Wall St. wrongdoing under the Martin Act. But the most important thing we can do is to protect New Yorkers when powerful interests challenge their economic situation. I’ve done it before and will do so again. Reforming the NYISO is a necessary and important function that we will begin on January 1st of next year.” Brodsky also released a report by nationally known energy expert Robert McCullough outlining the specific costs of the price fixing scheme run by the NYISO. Download Brodsky NYISO White Paper.This report fully explains how “market clearing price” costs New Yorkers over $2 billion annually.