In FY 2009-2010, the New York State Consumer Protection Board (CPB) was active in several rate cases involving major utilities in the State.
Consolidated Edison Gas and Electric Rate Cases
In May 2008, Consolidated Edison, Inc. of New York (Con Edison) petitioned the PSC for increases to electric rates of more than $800 million, representing an 18% increase in the rates Con Edison customers pay for electric delivery service. The CPB intervened and filed testimony opposing the level of increase requested by the Company. As a result of the CPB's work, Con Edison's electric customers will realize $132 million in savings over the course of the recently adopted three-year rate plan.
In a 2007 Con Edison electric rate case, the CPB asserted that the Company had vastly overspent its capital budget. As a result, the New York State Public Service Commission (PSC) ordered the New York State Department of Public Service (DPS) staff to conduct an examination of Con Edison's capital spending. Upon conclusion of the investigation, the parties, including the CPB, entered into an agreement to resolve the issue.
In the Joint Proposal ("JP"), subsequently approved by the PSC, the Company agreed to forego recovery on depreciation costs and not to earn a return on capital expenditures of $25 million in each of the rate years from April 1, 2005 to March 31, 2008, i.e., a total of $75 million of capital expenditures in the three-year period. This action will result in the Company refunding to customers $19.3 million representing Con Edison's carrying charges accrued on the $75 million. In addition, the JP also requires the Company to refund an additional $6.7 million to customers representing the difference between the overall returns and the Company's cost of debt approved in Case 07-E-0523 and Case 08-E-0539. Also, Con Edison agreed to reduce its annual revenue requirement by $10.4 million during the three years of its pending Rate Plan to reflect the debt-only return allowed on the $75 million of capital expenditures. This portion of the refund will result in lower rates for the period April 1, 2010 to March 31, 2013 by an average of $3.46 million per rate year, reflecting the impact of foregoing the equity return. Lastly, the JP requires Con Edison to further reduce its annual revenue requirement commencing after March 31, 2013 to reflect the debt-only return on the above targeted $75 million of capital expenditures. This adjustment results in a total reduction in rates of $54.8 million between April 1, 2013 and March 31, 2047, to be made based on an amortization schedule that results in about half of the $54.8 million being refunded in the first ten years.
Orange & Rockland Gas Rates
Orange & Rockland Utilities, Inc. (O&R) requested approximately $17.8 million in gas rate increases for the rate year ending in October 2010. The CPB intervened and filed testimony which opposed the Company's need for this level of increase. In addition, the CPB supported the continuation of Customer Service Performance Incentives to improve service quality and advocated for the improvement of the Company's low-income program.
The rate plan that was approved by the PSC contained the following "consumer benefits" that the CPB advocated: a significant expansion of the low-income program; waiver of the reconnection fee for low-income program recipients; agreement by O&R to advise low-income customers of the benefits available via the EmPower program of the New York State Energy Research and Development Authority (NYSERDA); the gradual phase-in of a minimum charge increase; and, a significant increase in the monthly credit to assist low-income customers.
National Grid - Niagara Mohawk Power Corporation - Gas and Electric Rates
Niagara Mohawk Power (NIMO) Corporation filed a rate request with the PSC seeking additional gas revenues of $95.3 million annually or 10.9% for the rate year ending March 31, 2010. As a result of the CPB's advocacy, the revenue increase was reduced to $39.428 million in the first rate year with a limited rate re-opener in the second rate year. The Company also agreed to implement a low-income "Affordability Program" and to provide a gas service delivery credit of $7.50 per month to low-income participants.
Iberdrola USA - New York State Electric and Gas Company and Rochester Gas & Electric Corporation (Electric and Gas Rates)
New York State Electric and Gas Company (NYSEG) and Rochester Gas & Electric Corporation (RG&E), which are subsidiaries of Iberdrola USA, collectively filed electric and gas rate increase requests with the PSC seeking total annual revenues of approximately $278 million, representing additional revenues of $135 million for NYSEG Electric, $43 million for NYSEG Gas, $66 million for RG&E Electric and $34 million for RG&E Gas. The proposed rate requests would have led to increases in the average residential customer bill ranging from $7.80 per month to $12.20 per month or from 7.4% per month to 11.9% per month. The CPB argued that pursuant to the PSC's order allowing Iberdola SA and Energy East to merge, the companies were effectively precluded from filing a general rate request for at least one (1) year from the order, unless the companies could demonstrate that deterioration in their financial situation, absent rate relief, would jeopardize their ability to provide customers a safe and reliable level of service.
As advocated by the CPB, the PSC dismissed the companies' electric and gas rate filings, concluding that their financial performance had not deteriorated to the level that would have jeopardized their capability to provide safe and reliable service.
Protecting Low-Income Customers
The CPB played a key role in the implementation of programs, such as the Con Edison low-income program, that benefit New Yorkers in need. As a result of the CPB's efforts in a recent rate proceeding, approximately 153,000 eligible customers in New York City and 7,000 eligible customers in Westchester who had not been previously enrolled were added to the low-income program. Additionally, thanks to CPB's efforts, Con Edison will be required to provide quarterly reports to ensure that eligible participants are enrolled on a timely basis. The CPB's advocacy also led to the establishment of Con Edison's arrears forgiveness and reconnection fee waiver programs.