Con Edison Steam Rupture
On August 8, 2008, the New York State Department of State Division of Consumer Protection filed this statement in support of the settlement reached in this case. The Division expresses support for the settlement as it achieved our key goal -- that ratepayers would not pay for any costs associated with the steam rupture. The settlement also committed the Company to embark upon significant improvements to the steam system.
2008 Electric Rate Case -- Testimony on Accounting and Ratemaking Issues
On September 8, 2008, the New York State Department of State Division of Consumer Protection identified approximately 25 adjustments totaling more than $150 million, that should be made to Consolidated Edison's submission projecting operations and maintenance expenses. These recommendations include reducing the Company's forecast of payroll expense to remove ratepayer funding for new positions that have not been adequately supported; eliminating the need of ratepayer funding bonuses for Company managers; reducing ratepayers' funding of employee health care costs; reducing projected property and liability insurance expense; eliminating the need for ratepayers to lower the cost of directors and officers insurance; eliminating many proposed new operations programs that were not adequately supported; and reducing the projection of the costs of moving and replacing Company facilities due to construction primarily by New York City. We explain why these proposals are reasonable and should be adopted by the New York State Public Service Commission.
2008 Electric Rate Case -- Testimony on Profit Rate
The New York State Department of State Division of Consumer Protection submitted testimony on September 8, 2008, regarding the fair return on equity for Consolidated Edison. We recommend a return of 9.90%, which includes 0.15% that would be applicable if Consolidated Edison issues new equity. We also demonstrate that the Company's request for a 11.0% return is overstated. Our proposal would save customers approximately $131 million over Consolidated Edison's recommendation.
2008 Electric Rate Case -- Testimony on Low Income Program
In testimony filed September 8, 2008, the New York State Department of State Division of Consumer Protection recommends that Consolidated Edison's initiative to assist low-income customers be enhanced by creating an "arrears forgiveness" program aimed at assisting customers who have chronic difficulty in paying their bills in full. If implemented as intended, the program is expected to provide substantial benefits to participating customers, and is also expected to reduce Consolidated Edison's cost of collecting receivables and its uncollectible expense, which ultimately will benefit the general body of customers. The new program is estimated to cost approximately $5 million to implement. The Division also explains why Con Edison's informational and institutional advertising expense should be reduced by approximately $12 million.
Statement in Support of Joint Proposal
On May 9, 2008, the New York State Department of State Division of Consumer Protection filed this document resolving issues raised in the investigation of the prudence of Con Edison's actions concerning the July 2006 electric outages in Queens, New York. If approved by the Public Service Commission, the Joint Proposal would provide consumer benefits including bill credits or payments to adversely affected individuals and businesses, and other benefits to the affected communities including a formal apology from the Company and funding for tree-planting and other environmental initiatives. It also provides an assurance that the general body of ratepayers will not bear the costs of capital spending required as a result of the outages. Many of these provisions could only have been attained through a negotiated settlement.
Reply Brief on Exceptions: Rate Case
In this brief submitted February 12, 2008, the New York State Department of State Division of Consumer Protection responds to proposals by Consolidated Edison and others disagreeing with the Judges' recommendations concerning the Company's electric rates. We address 11 issues, including the most significant issues of whether further review of the Company's capital spending is required and what profit rate Consolidated Edison should be authorized to receive. We also underscore several matters relating to the Company's operations and maintenance programs, as well as policy issues including revenue decoupling, the appropriate level of the customer charge for residential customers, and whether a three-year rate plan should be approved.
Brief on Exceptions: Rate Case
In this brief dated January 28, 2008, the New York State Department of State Division of Consumer Protection identifies our concerns with the January 8, 2008 Recommended Decision (RD) by the Administrative Law Judges regarding Consolidated Edison's proposed electric rate increase. The Judges recommended approval of most of the Division's proposals, including that the Company's rate increase request of $1.2 billion be rejected in favor of a $601 million increase and that Consolidated Edison's historic and proposed construction program activities be examined further. In this brief, the Division highlights several issues on which the RD does not consider the Division's recommendations, is mistaken or unclear. Specifically, we ask the New York State Public Service Commission to reject the Judge's findings that customers should fund the costs of restoring facilities damaged as a result of the attack on the World Trade Center before reimbursement from other entities is finalized ($25 million), a particular incentive compensation program for managers should be paid for by customers ($11 million), insurance expense should be inflated ($2 million), customers should fund interference expense exceeding a reasonable projection ($15 million) and operations and maintenance expense should include estimates that are overstated (approximately $10 million).
Reply Brief on Rate Case
The New York State Department of State Division of Consumer Protection filed this reply brief in the Consolidated Edison rate case on December 14, 2007. We address several new recommendations and arguments made by other parties in their initial briefs, including how the rate increase should be recovered from business, government and residential customers; the responsibility of electric customers for costs associated with environmental clean-up costs of old gas facilities; the appropriateness of the company's proposal to have customers fund advanced meters throughout its service territory; and, the scope of a new energy efficiency program.
Initial Brief on Rate Case
In this detailed brief filed November 30, 2007, the New York State Department of State Division of Consumer Protection demonstrates that the Company's proposal to increase electric delivery rates by $1.2 billion should be substantially modified. We explain why the Company's request should be reduced by at least $600 million, to reduce the company's profit rate, its projected infrastructure spending, and its forecast expenses for labor, employee benefits, executive compensation, and certain operations and maintenance expenses. The Division also shows that the New York State Public Service Commission (PSC) should mitigate the rate increase by rejecting the Company's proposals to recover certain costs in a short period of time, including certain costs related to system restoration after the World Trade Center disaster and environmental clean-up costs, as well as the Company's proposal to accelerate depreciation of its equipment. We continue to recommend that the PSC conduct an audit of Consolidated Edison, including the reasonableness of $1.6 billion in recent capital expenditures that the Company is seeking to have customers fund, and the Company's on-going infrastructure planning process. Additionally, the Division recommends several changes to Consolidated Edison's proposal regarding policy issues, including energy efficiency, revenue decoupling and service quality incentive programs.
Testimony on Infrastructure and Policy Issues
On September 7, 2007, the New York State Department of State Division of Consumer Protection submitted testimony in which we demonstrate that Consolidated Edison's proposal to invest $1.9 billion of capital expenditures in delivery rates should be reduced by approximately 20%, and the $1.6 billion of capital spending in excess of the amounts reflected in rates should be carefully scrutinized as part of an audit of Consolidated Edison's operations. This proposal would reasonably balance the interests of consumers in obtaining reliable service, while not requiring customers to fund poorly supported or unwarranted spending. We also recommend several modifications to Company proposals regarding depreciation expense and recovery of certain costs to protect consumer interests. In addition, we present several proposals on policy issues, including energy efficiency, revenue decoupling and service quality incentives.
Testimony on Con Edison's Profit Rate
In testimony dated September 7, 2007, the New York State Department of State Division of Consumer Protection demonstrates that Consolidated Edison's proposal calling for the electric delivery rates to be established at a level that would provide the Company with a return on its common equity of 11.2% is overstated. We recommend that it be reduced to 9.0%, which would be fair to the Company, and save customers approximately $246 million.
Testimony on Accounting and Ratemaking Issues
In testimony filed September 7, 2007, the New York State Department of State Division of Consumer Protection identifies approximately 25 adjustments, totaling more than $200 million, that should be made to Consolidated Edison's projected expenses. These revisions include changes to the Company's projections of the following expenses: labor, employee benefits, insurance, substation operations and maintenance, transmission operations and maintenance, electric inspections and testing, call center operations, storm costs, and costs required due to construction activities by the City of New York. We explain why these proposals are reasonable and should be adopted by the New York State Public Service Commission.
Petition for Rehearing Regarding Long Island City Outage
In this petition filed August 20, 2007, the New York State Department of State Division of Consumer Protection asks the New York State Public Service Commission (PSC) to reconsider its July 2007 Order in which it directed that Consolidated Edison implement several directives to help reduce the likelihood of another prolonged outage such as occurred in Queens, New York in August 2007. We demonstrate that in several important respects, the PSC erroneously concluded that it need not take further action to protect consumers. Specifically, the PSC erred in permitting Consolidated Edison to adopt only the recommendations that it chooses, and in not providing any explanation for recommendations that the PSC declined to adopt.
Proposal on Reimbursement for Losses During an Outage
In March 2007, the New York State Department of State Division of Consumer Protection recommended several changes to Consolidated Edison's practices for reimbursing customers for losses resulting from certain prolonged power failures. We ask for an increase in the upper limit on customer reimbursement for food spoilage to reflect inflation since the last update, and Consolidated Edison agreed. In these comments, filed August 8, 2007, the Division identifies several additional required changes, including establishing a definition of "power outage" that captures low-voltage situations in which common electrical appliances and equipment are inoperable, and providing compensation to customers for verifiable damage to electrical equipment including electronics such as computers, and electric motors in appliances such as air conditioners and refrigerators.
Long Island City Outage
In this filing dated July 10, 2007, the New York State Department of State Division of Consumer Protection presents is prima facie case showing that Consolidated Edison was imprudent in several critical respects relating to the cause, scope and duration of the July 2006 outage in Queens, New York. The Division demonstrates, among other things, that Consolidated Edison did not have a system in place to identify the number of people affected by the outage, the tools to accurately ascertain the damage that was occurring to its secondary system, and a system to communicate accurate and timely information to customers.
Long Island City Outage -- March 2, 2007
In this filing dated March 2, 2007, the New York State Department of State Division of Consumer Protection identifies and explains its comments and concerns with the New York State Department of Public Service Staff Report summarizing the investigation of the July 2006 outage in Queens, NY. The Division agrees with the vast majority of that report's findings and recommendations. However, we explain that it should be strengthened to require Consolidated Edison to make several other specific improvements to reduce the likelihood of similar outages in the future. We also identify several required changes in the New York State Public Service Commission's (PSC) regulation and oversight of Consolidated Edison, particularly the need to enforce compliance with its orders.