Central Hudson Rate Case Victory Lowers Fixed Rates

Every few years, each utility has to ask the Public Service Commission (PSC) to approve a rate increase. The hand-in-glove nature of relations between the PSC and the utilities – private, shareholder-owned companies operating as regulated monopolies – often means that the utilities get pretty much what they want. But when CLP and other grass-roots and environmental organizations get into the act, we can make things happen.

In the summer of 2017 Central Hudson submitted a new rate plan, asking for permission to charge residents and small businesses more for electricity and gas beginning in 2018. As a party to the rate proceeding, CLP submitted testimony and actively participated in settlement negotiations, and led the charge in calling for a significant reduction in the utility’s fixed customer charge for residents and small businesses.

On April 18th, 2018, following many months of negotiations with the staff of the Department of Public Service and other parties, including CLP, 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. And just this morning, the PSC approved this plan. Central Hudson’s fixed charge of $24.00 per month—the highest in the state—will drop by $3.00 in this year and another $1.50 over the next two years (a total reduction of 19%), bringing it below the fixed charges of Orange & Rockland Utilities and Rochester Gas & Electric by July 2019.

CLP had called for lowering the fixed charge—the amount customers pay before they ever turn on a light and regardless of how much energy they use (or save)—by $5 each year, for a total of $15. The actual reduction represents a compromise result that is nonetheless precedent-setting and marks an important breakthrough.

As CLP director Jen Metzger pointed out in our press release, “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.” To make this happen CLP spoke out publicly at hearings and in the press and participated tirelessly in the negotiations. We also submitted a letter signed by 130 local elected officials, and hand delivered more than 5,000 postcards from customers asking the PSC to make a “New Year’s resolution” to reduce rates.

The negotiations resulted in other improvements to the deal. While Central Hudson had asked for a rate hike of as much as 11.6% for residential electricity customers, the proposal now contains a rate hike of 1% in 2018-19, 2.8% in 2019-20, and 4% in 2020-21. The impact of the federal tax reduction played a role in the reduction, along with so-called “moderators,” which are accounting mechanisms that utilities use to reduce bill impacts.

Despite these improvements, CLP did not sign the Joint Proposal. We think the rate increase is still too high, especially in the third year, when the average residential increase will be about $5 per month. Poughkeepsie-based Nobody Leaves Mid-Hudson, which was also a party in the case, refrained from signing on for the same reason.

Despite our refusal to sign, CLP welcomes other improvements over Central Hudson’s original proposal that were achieved in addition to the reduction in the fixed charge. CLP strongly opposed the company’s initial request for an increase in its guaranteed shareholder profit rate of 9%. The utility had requested 9.5%, but will have to settle for a reduction to a (still excessive) 8.8%. CLP also opposed a proposed new “service size charge” for residential customers and money to expand natural gas programs – both were dropped. Finally, in response to the dangers posed by climate change, CLP and allies called for more aggressive energy efficiency targets and programs that would encourage customers to move from oil- and gas-fueled heat in buildings to heat pumps, and support wider adoption of electric vehicles. All these provisions are  included in the approved Joint Proposal.

CLP encourages our friends to support further reductions to the fixed rate and more aggressive action on reaching climate goals.