State lawmakers target utility bills and rate-setting process in package of bills
Originally published in
Times Union
on
.
Lawmakers have grown increasingly intolerant of the rates charged by utilities and how they’re set by the state’s regulatory body, the Public Service Commission.
ALBANY — Several bills intended to rein in rates charged by utility companies for the delivery of electricity and gas in New York cleared the state Senate Wednesday evening but still face an unclear future at the state Capitol.
It’s the first step that Democrats in the state Legislature have taken this year to address the state’s rapidly growing energy bills, but lawmakers said it won’t be their last.
“I think each and every one of us is feeling that there is something systemically that has to change,” said state Senate Majority Leader Andrea Stewart-Cousins, a Democrat from Westchester County.
None of the 10 bills approved in the state Senate has enough support in the state Assembly to receive a vote on the floor. Democrats only move bills to the floor in either chamber if they’re guaranteed to pass.
It’s also not the first time the package of bills has passed the state Senate; each was approved by the chamber during last year’s legislative session but failed to move in the state Assembly.
That could change this year. Lawmakers have grown increasingly intolerant of the rates charged by utilities and how they’re set by the state’s regulatory body, the Public Service Commission.
“My goal is to see some major changes in the Public Service Commission, making sure that we can shine a clear light on what they’re doing and how they’re trying to help consumers, which they have not been doing since I’ve been in the state Senate,” said state Sen. Leroy Comrie, a Democrat elected in 2014.
The package of bills approved Wednesday includes a measure that would expand the commission from five to eight members and require at least two of them to have experience in utility consumer advocacy.
Another bill in the package would change the commission’s responsibilities in state law to require that its members consider noneconomic outcomes, like the pain and suffering or mental anguish of residents, when deciding if new rates should be approved.
Rory Christian, chair of the commission, has defended the panel’s decisions to approve rate increases for utility companies over the past year as necessary to preserve the reliability of gas and electric service for consumers statewide.
“The commission’s decisions are based on maximizing the affordability of benefits, the need for investments in the system and ensuring ratepayers are protected,” Christian told the state Legislature at a budget hearing in January.
The need cited most often by utility companies in recent years is funding to repair and maintain decades-old infrastructure used to deliver gas and electricity, including improvements to accommodate new demand and prepare for extreme weather events.
“We need to make investments in our system,” Christian said. “There are costs to making those investments.”
But lawmakers often point to the commission’s role in approving what’s called the “return on equity” for each utility as part of their increased rates. It’s what’s authorized by the commission as a return on shareholder investment.
The amount allowed — typically between 9% and 10% of their revenue — isn’t guaranteed to each company. It’s a target for them to meet if they don’t incur any unexpected costs.
Two of the bills approved in the state Senate seek to change how those amounts are calculated through a formula that would result in a more modest return and allow excess revenue to be returned to ratepayers.
“We have the process backward. We let the utilities come in with a proposed rate of return and then we negotiate down,” said state Sen. Shelley Mayer, a Democrat from Westchester County.
Mayer was one of several lawmakers who challenged Christian at the January hearing on the commission’s process of negotiating with utilities after they request a rate increase, including an agreed-upon return on equity.
“I was not satisfied with the answers,” Mayer said.
While most of the bills approved in the state Senate on Wednesday received bipartisan support, Republicans in the chamber said the measures would do nothing to immediately relieve ratepayers of their increasing costs.
“These bills don’t do anything,” said state Senate Minority Leader Robert G. Ortt. “In fact, they probably hurt the environment because of all the CO2 coming out of my colleagues’ mouth without doing a damn thing about lowering people’s energy bills.”
Ortt and Republicans in the state Legislature have attributed the state’s rising utility bills to policies approved by Democrats in Albany that mandate energy production in New York to shift away from fossil fuels.
Those policies were enacted as part of the Climate Leadership and Community Protection Act of 2019, which sets a timeline for the state to reduce carbon emissions and increase renewable energy production through 2050.
That transition has resulted in the closure of fossil fuel power plants at a rate faster than renewable energy sources have been able to come online to replace them.
Republicans in the state Legislature also contend that if the state allowed broader natural gas extraction in New York, the price of energy would decrease. The state doesn’t regulate the cost of the actual commodity of energy, only what utilities charge to deliver it.
New Yorkers for Affordable Energy, an advocacy group that represents utility companies in New York, also responded to the bills passed in the state Senate by attributing costs borne by consumers to state policy.
“From (the) CLCPA to the All-Electric Buildings Act and everything in between, the policies they support, and the resulting costs, are 100% on them no matter how hard they try to distract the public,” said Dan Ortega, the group’s executive director.
The All-Electric Buildings Act, which requires newly constructed buildings to exclude fossil fuel infrastructure, has not yet been implemented by the state but was supposed begin going into effect last month.
Avangrid, one of the state’s largest utility companies that operates NYSEG and RG&E, echoed Ortega’s opinion.
“We appreciate the Senate’s focus on the issue of affordability but unfortunately their bills miss the mark as it only focuses on a portion of the customer bill which is highly regulated, while ignoring the majority of the customer bill made up of skyrocketing unregulated supply costs, taxes and state mandates that are the main drivers of high utility bills,” said Max Weissman, a spokesman for Avangrid.
Democrats in the state Legislature disagree and contend that the state could both continue with its energy transition while blunting the rise of utility bills through stricter oversight and regulation of the costs those companies pass on to consumers.
“I think we can do both things,” said state Sen. Michelle Hinchey, a Democrat from the Hudson Valley. “We can protect our environment and we can also drive down the cost, making sure the (commission) is fighting for our constituents and customers and holding utility companies accountable.”
Gov. Kathy Hochul has expressed interest in renegotiating the state’s climate mandates with Democrats in the state Legislature this year but hasn’t formally started those conversations, according to Stewart-Cousins.
“These are the conversations I want to have with the Legislature,” Hochul told the Times Union this week during a conversation at the Hearst Media Center in Colonie.
Newsroom
Go to Newsroom
