We Did It! In a Victory for Central Hudson Customers, Fixed Charges to Be Reduced

On April 18th, Central Hudson filed a Joint Proposal with the NYS Public Service Commission for a three-year rate plan that would include a more modest rate increase than first proposed, as well as the first-ever reduction in the utility’s fixed residential customer charge. Central Hudson’s fixed charge of $24.00 per month--the highest in the state--would drop by $3.00 in this year and another $1.50 over the next two years, bringing it below the fixed charges of Orange & Rockland Utilities and Rochester Gas & Electric by July 2019.

“This is an important victory for fairness in our electricity rates because bills will be more closely tied to how much power customers actually use,” said Jen Metzger, Director of Citizens for Local Power (CLP), a party to the PSC rate proceeding that has fought the rate increase and pressed for a reduction in fixed charges. CLP argued that Central Hudson’s historically high fixed charges penalize customers who use less than energy or who invest in solar for their homes.  Pointing to an analysis by the National Consumer Law Center showing that seniors and families with more modest incomes tend to use less energy, CLP noted that these customers have been particularly hard hit by high fixed charges.

In testimony filed on behalf of CLP at the outset of this rate case, Metzger called for lowering Central Hudson’s fixed charge by $5.00 each year over three years. In addition, CLP submitted a letter signed by over 130 local elected officials in support of a reduction, and in January, hand-delivered more than 1,500 postcards to the PSC from customers calling for the same. Metzger said that while the organization would have preferred to see a steeper reduction, the agreement among the parties to reduce the fixed charge is a step in the right direction and a win for residential customers.

The Joint Proposal filed by Central Hudson also calls for a more modest overall rate hike than first proposed last August, when the utility asked for an increase of as much as 11.6% for residential electricity customers.  As a result of negotiations among the parties, the rate hike has been reduced to 1% in 2018-2019, 2.8% in 2019-2020, and 4% in 2020-2021. The actual rate increases would be higher but the utility would apply off-setting credits, called “moderators,” to reduce the bill impact to these percentages. 

CLP actively participated in settlement negotiations but ultimately chose not to sign on to the Joint Proposal out of concern that the rate increase was too high, particularly in the third year, when the average residential electricity customer would see a bill increase of about $5 per month. Poughkeepsie-based Nobody Leaves Mid-Hudson, another party to the rate case, also refrained from signing on for the same reason.

While declining to sign, Metzger noted welcome improvements over Central Hudson’s original proposal, in addition to the reduction in the fixed charge.  CLP had strongly opposed the company’s initial request for an increase in its guaranteed profit rate, and the agreement reached would actually reduce the rate of return below the current level of 9% to 8.8%.  CLP had also opposed a new “service size charge” for residential customers as well as funds for promoting natural gas expansion, both of which have been dropped from the Joint Proposal. Importantly, too, CLP had called for more aggressive energy efficiency targets and programs to support “beneficial electrification,” including a shift from fossil fuel-based heating in buildings to heat pumps, and support for wider adoption of electric vehicles. Provisions for these are included in the Joint Proposal.

The Public Service Commission must approve the Joint Proposal to become effective in July 2018, and is expected to make its decision in the coming months.