Customers poorly represented in New York utility price hike cases

 

When Con Ed and other utility companies go to the state for rate increases, average-Joe ratepayers are treated like little children at a big family’s Thanksgiving dinner. They’re stuck at a small table away from the turkey and dressing, looked down upon by the grownups, nearly out of sight and mostly out of mind.

Consumer advocates are pushing to give utility customers a better place at the bargaining table, but it’s not clear the Legislature or Gov. Cuomo will go along.

On Tuesday, the state Assembly passed a bill, A06239, which would set up an Office of the Utility Consumer Advocate in the Department of State. The bill provides for the appointment of a state utility advocate, who would serve a 6-year term. The office would have broad power to argue on behalf of utility customers before local, state and federal government. It would be funded by assessments on state utility companies.

Some legislators think the idea is cost-effective. They say a similar agency in California has saved consumers billions in overcharges, and that for every dollar spent by the agency there, utility customers save $153. But the bill’s fate in the state Senate is unclear, and there are signs that Gov. Cuomo is not enthusiastic about the idea.

Compared to other states, New York has done a lousy job in recent years making sure residential utility customers are represented in incredibly complex rate proceedings. Utility companies and private industry have money for lawyers and lobbyists to make their cases. At Public Service Commission hearings, Con Ed can fill the room with experts ready to argue any question about its operations. But New York’s 19.6 million residents only have around a half-dozen lawyers speaking on their behalf.

The situation worsened during the great recession in 2010, when Gov. David Paterson cut funding for the Public Utility Law Project. PULP’s mission is to advocate for low-income utility customers — but in fact, at times it has been the only organization in the state advocating for any utility customers. It costs the state $505,000 a year.  Gov. Cuomo is no fan of PULP, and like Paterson, he declined to include money for PULP in his budgets. But enough legislators like the organization that it’s been able to limp back onto its feet over the last few months.

To Cuomo’s credit, the Department of State’s Utility Intervention Unit appears to be taking an activist role in Con Ed’s pending request for a rate hike. The UIU helped win benefits for low-income utility customers in two recent upstate utility cases — a gas-and-electric rate hike sought by Niagara Mohawk, and the purchase of Central Hudson Gas and Electric by Fortis, a big Canadian utility operator.

Some in state government say the Assembly bill passed Tuesday would simply codify what Cuomo is doing with the UIU. But the UIU’s firepower on behalf of consumers is weak compared to neighboring states. AARP, which advocates for better utility regulation in New York, notes that the state spends 10 to 11 cents per resident on representing consumers before utility companies. That compares to 83 cents per resident in Connecticut, 79 cents per resident in New Jersey and 40 cents per resident in Pennsylvania.

And the UIU is a ghost of its former self. In 1995, when the UIU was part of the state Consumer Protection Board, it had 31 employees assigned to utility regulation issues. Today, AARP says, the UIU has just four employees.

Con Ed’s current rate case before the state Public Service Commission is a big deal — it would set rates for gas and electric delivery for 2014, and will include hundreds of millions in new spending meant to fortify Con Ed’s systems against future Hurricane Sandy-like disasters. Who will step up to the plate on consumers’ behalf?

AARP’s news release about the Assembly’s passage of the consumer advocate bill is here. And here is an interesting editorial in Tuesday’s Kingston Daily Freeman about the Fortis-Central Hudson merger that argues the PSC ignored public opinion when it OK’d the deal.

 

About Bill Sanderson

I'm a New York-based journalist, and a former reporter at the Concord Monitor in New Hampshire, the Bergen Record in New Jersey, and the New York Post. My work has appeared in The Wall Street Journal, MarketWatch.com and Politico New York. Twitter: @wpsanderson.
This entry was posted in Con Ed, consumer advocacy, Public Service Commission, PULP. Bookmark the permalink.

One thought on “Customers poorly represented in New York utility price hike cases

  1. Thomas Myers says:

    Great article. You can’t blame utilities for wanting to discuss their economics outside of earshot from the crowd that thinks “profit equals theft.”

    They can’t blame customers for wanting to have their voices heard.

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