Con Edison wants big electric rate increase

 

Con Edison wants a big electric rate increase in January 2016. It filed with the New York Public Service Commission on January 30 for a one-year rate hike it says will boost electric charges an average 3.2 percent.2015-01 Con Ed 2016 Rate Proposal

What you’ll really pay depends a lot on who you are and how much power you use. It’ll also depend on the price of electricity itself, so be skeptical about Con Ed’s claims about the overall size of the rate hike. In the end, you may pay more or less, depending on energy prices. Con Ed doesn’t control its supply charge, which is based on the price of the electricity it buys from generating companies.

But you can take to the bank Con Ed’s statements about the delivery charges, which it wants to raise an average 7.2 percent. That’s what the case is really about. You’d be right to question whether anyone in Albany will let the company raise its delivery rates by 7.2 percent, which is far ahead of the general inflation rate.

Keeping all that in mind, let’s go to the Con Ed press release:

A typical bill for a New York City residential customer using 300 kWh per month would rise from $82.06 to $85.94, an increase of 4.7 percent (7.9 percent for delivery).  A typical bill for a Westchester residential customer using 450 kWh per month would rise from $114.98 to $119.68, a 4.1 percent increase (7.2 percent for delivery).  For a typical commercial customer using 10,800 kWh per month with a peak demand of 30 kW, the monthly bill would rise from $2,173.08 to $2,236.71, a 2.9 percent increase (6.5 percent for delivery).

Note that the proposed delivery charge increase is higher for New York City residential customers — 7.9 percent — and lower for commercial customers — 6.5 percent.

Cliche alert: This post is about to use the phrase “kabuki dance.”

It takes 11 months for the Public Service Commission to decide big rate cases like this. So now the PSC and Con Ed will enter into a long kabuki dance over whether the rate increase is fair, whether the company’s expenses are in order, and myriad other issues.

Like an, uh, kabuki dance, the whole thing will be choreographed in a way well understood by the participants.  The PSC’s staff will investigate as best it can whether the company’s spending is in line with customer needs. Con Ed, advocacy groups and others with a stake in the company’s pricing will argue for and against the request.

One thing worth noting about Con Ed’s proposal is that it asks for a 10 percent return on equity, which is the percentage return the company is allowed to make from the estimated value of its gas mains, transformers, transmission wires and other infrastructure.

Con Ed’s current rates, which will stay in effect at least to the end of 2015, allow for a maximum 9.8 percent rate of return. So though it wants to increase your delivery charges by an average 7.2 percent, the company expects little of that increase will land on its bottom line. Con Ed says it plans to spend most of the $368 million it would raise in the increase on storm hardening and other infrastructure upgrades.

It’s early days yet for this case. Con Edison has already filed hundreds of pages of documents with the Public Service Commission. It’s not light reading. Here’s a fact sheet with some wonky information about the proposal. And here’s a link to the PSC case file on the proposal.

o-o-o

It’s a fair question whether consumers will be adequately represented in this rate case. Gov. Cuomo’s Utility Intervention Unit has been criticized by advocates as underfunded and not aggressive enough in its representation of average ratepayers. The Public Service Commission’s staff does exhaustive study of rate cases, but not necessarily with consumer interests in mind.

One voice likely to be missing in the Con Ed case this year is Gerald Norlander, who is retiring as executive director of the Public Utility Law Project. Gerry advocated for low-income people. But he was often a de facto advocate for all New Yorkers, given the poor state of consumer advocacy in New York utility cases. He was also a valuable source for reporters who cover New York utility issues. NYP&L wishes him a long and happy retirement.

Update, February 1: See my story about the new Con Ed rate case in the New York 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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