State utility watchers propose lower Con Ed gas, electric rates

 

Update, Oct. 8, 2013: This story in The Wall Street Journal contains more up-to-date information and data on the rate case, including better numbers on Con Ed’s gas prices for home heating.

2013-08-19 gas bill projections

Gas bills

Albany utility bureaucrats are swinging an axe at Con Ed’s request for a big price increase next January.

Gas customers would benefit most from rate cut plans advanced by Public Service Commission staffers — their current bills would plunge by around 11 percent. Electric customers wouldn’t save nearly as much — their bills will drop by around 1 percent.

It’s unlikely the commission will adopt all of its staff’s rate-slashing ideas. But at least someone in state government is looking out for New Yorkers who pay some of the highest utility rates in the country.

The graphics with this post reflect the monthly bills of Con Ed electric customers in New York City and Con Ed customers who use gas to heat their homes.

The first column in each graph shows typical bills, for January 2013 in the case of electric customers and October 2012 in the case of gas customers. The other two columns are projections of what customers would pay in 2014 under Con Ed’s original filing in January and the PSC staff’s counter proposal, contained in documents posted on the agency’s Web site last month.

For gas customers, the PSC plan would lower bills by more than 11 percent for those who use 100 therms of gas in a typical month. Customers who use more gas might save a bit more on a percentage basis; those who use less might end up saving as little as 9 percent.

In its original proposal, based on January 2013 bills, Con Ed figured its gas customers would pay an overall increase of 1.3 percent. The PSC decided to base its projections on October 2012 bills instead, which is why the numbers in the gas graph are a little different from the company’s proposal.

2013-08-19 electric bill projections

Electric bills

The electric bill projection is the PSC staff’s calculation that its proposed 3.3 percent decrease in what Con Ed charges to deliver power to your home and estimates of what generating companies will charge Con Ed for electricity next year leads to a bottom-line overall bill reduction of 1.6 percent. Con Ed’s original proposal was for a 7.2 percent hike in delivery charges that would boost total bills by 3.3 percent.

PSC staffers arrived at their proposed rates mainly by picking apart Con Ed’s expenses in great detail. On the electric side, the staff proposed paring the company’s operating expenses, creating $225 million in savings. On the gas side, the PSC found about $41 million in operating expense savings.

Some of the cost savings identified by PSC staff are offset by changes in what the agency expects will happen to Con Ed revenues next year. They’re also offset by adjustments to Con Ed’s other expenses, including taxes. Thousands and thousands of pages of data about Con Ed’s operations — broken up into what now are more than 840 separate exhibits — are on the PSC’s Web site here.

A Con Ed spokesman sees the commission staff proposal as part of the usual give-and-take in the state’s rate setting process. Plenty of debate lies ahead. Between now and December, when the rate case is to be decided, Con Ed, the PSC and lobby groups will negotiate and argue more over the size of the price hikes or decreases.

And of course, the usual caveat: What you ultimately pay next year will depend on the unpredictable costs of natural gas and electricity generation, which Con Ed and the state don’t control.

Con Ed’s expenses aren’t the only subject of the rate case. The company, the state and lobby groups are also talking about how the rates are divided up among different kinds of customers.

For example, the state Division of Consumer Protection’s Utility Intervention Unit argues that fixed fees make Con Ed residential customers pay an unfair share of the company’s costs. The UIU wants Con Ed to “modestly” lower its fixed charges, such as the basic service charges of $17.33 paid by residential electric customers and $18.50 paid by residential gas customers. The UIU says Con Ed should make up the lower fees by raising charges on larger customers and businesses.

Lowering the fixed charges would benefit lower income people, who use less energy than people with larger homes yet are stuck paying the same basic fees, the UIU says. Also, the UIU believes that if per-kilowatt hour charges for electricity and per-therm charges for gas became a bigger proportion of peoples’ bills, they’d have more incentive to conserve energy.

The PSC staff has taken up some of the UIU’s thinking — it’s proposed slashing the monthly gas charge from $18.50 to $16.60.

An interesting factor in the rate case may be that Gov. Cuomo now has appointed three of the PSC’s five members, including a new chairwoman, Audrey Zibelman, who is expected to take office in the coming weeks. It’ll be interesting to see if Cuomo’s appointments have any impact on ratepayers’ pocketbooks — especially since a rate decrease could help him in an election year.

The Public Utility Law Project expressed optimism that Zibelman will be more consumer-oriented than past commission chairs. She’s also got a strong utility industry background, and was once a top official at PJM, which manages the power grid in New Jersey, Pennsylvania, Maryland and 11 other states.

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.
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