Con Ed rate case running late amid settlement talks

 

Con Edison’s request for higher gas and electric rates is running behind schedule because of settlement talks between the company and the Public Service Commission.

Normally the commission takes 11 months to decide utility rate cases. Since Con Ed filed for new rates in January, a decision was expected sometime this month.

But the PSC today suspended Con Edison’s request to boost prices in 2014. The suspension comes as Con Edison and the PSC talk about stretching the company’s one-year rate proposal into a multi-year settlement.

Con Edison and the other parties to the case see a “high probability” of a settlement, a pair of administrative law judges wrote on Dec. 9.  The schedule set by the judges calls for the settlement to be filed by Dec. 31, and for a public hearing to be held in Manhattan between Jan. 13 and Jan. 17. That means the commission won’t rule on the deal until mid-January at the earliest — perhaps at its Jan. 16 meeting.

Because the talks are secret and still ongoing, there’s no way to know how they’ll shake out.

Early on in the talks, Con Edison officials proposed a three-year rate plan. They have also expressed hope that the PSC will sweeten the deal with a “stay-out premium” — a bit of extra cash from ratepayers to compensate Con Ed for forgoing the chance to get even higher rates in a series of one-year deals.

It’s unclear how much of a stay-out premium the PSC would approve. Its non-partisan staff and Gov. Cuomo’s Utility Intervention Unit may take a dim view of the idea, as they’ve pushed for big cuts to Con Ed’s electric and gas rates.

Another open question is how the PSC views the interest-rate environment. If the PSC thinks Con Edison’s borrowing costs will rise in the next few years, it might be inclined to grant the company higher rates in later years of a multi-year plan.

Earlier this year, Con Ed asked to boost electric bills around 4 percent and gas bills around 1.5 percent. But the PSC staff says Con Ed residential electric bills should be cut by about 1.7 percent, and residential gas bills should be slashed about 6.7 percent. Cuomo’s Utility Intervention Unit would cut electric bills by around 10 percent, and would cut gas bills in line with the PSC staff proposal.

For an explanation of the outlines of the debate, check this earlier post.

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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