## Facts

- During the 1990s, the U.S. electric-power industry was moving toward greater competition, influenced by technological change and regulatory developments.
- The New York Public Service Commission (PSC) responded by developing actions intended to make New York’s power-supply market more competitive.
- In 1996, the PSC issued an order directed at restructuring New York’s electric industry.
- The order required electric utilities to file plans describing how they would restructure their operations in a more competitive marketplace.
- The order rejected the utilities’ position that they were legally entitled to recover all competitive losses (often described as “stranded costs” or other losses caused by increased competition) from consumers as a matter of law.
- The order also included a “competition statement” setting out general policy direction for how the state would approach electric-industry competition.
- A group of electric utilities, acting through the Energy Association of New York State, challenged the order on multiple grounds, including the PSC’s authority to require restructuring plans, the asserted right to full recovery of competitive losses, and the ability to challenge policy statements that did not impose specific, immediate obligations.

## Issues

1. Did the PSC have statutory authority to require electric utilities to file restructuring plans aimed at operating in a more competitive marketplace?
2. Were the utilities entitled, as a matter of law, to recover all competitive losses from consumers?
3. Could the utilities obtain judicial review of portions of the PSC order that were only general policy statements and did not impose concrete, immediate requirements?

## Decision

- The court upheld the PSC’s authority to require utilities to file restructuring plans.
- The court rejected the utilities’ claim that they had an automatic legal entitlement to recover all competitive losses from consumers.
- The court declined to entertain challenges to the order’s policy-only portions to the extent they were nonbinding statements of future regulatory direction rather than operative commands.

## Legal Principles

- New York’s Public Service Law grants the PSC broad regulatory authority over electric utilities, including the power to direct utilities to submit plans and information needed for changes in the structure and regulation of electric service.
- Utilities do not have a categorical statutory right to full recovery of all losses associated with increased competition; recovery remains subject to the PSC’s ratemaking authority and judgment under “just and reasonable” standards.
- Courts generally limit review in Article 78-style challenges to final, binding agency determinations that have present legal effect; nonbinding policy statements are commonly not ripe for review until applied in a concrete way.
- A regulatory agency may announce policy direction without creating an immediately reviewable dispute when the statement does not itself alter legal rights, set enforceable obligations, or impose direct penalties.

## Conclusion

The court sustained the PSC’s 1996 restructuring order insofar as it required utilities to file restructuring plans, refused to recognize an automatic right to recover all competitive losses from consumers, and treated the order’s general competition policy statement as largely nonreviewable absent a specific, binding application.


In the Matter of Energy Association of New York State v. New York Public Service Commission, 653 N.Y.S.2d 502 (1996)