Noting controversy surrounding multi-year incentive agreements in utility rate cases, the New York Public Service Commission (PSC) has approved guidelines for filing multiyear rate proposals and...
ConEd Wants Controversial Industrial Rate Cut
A controversial electric restructuring settlement proposed by Consolidated Edison Company of New York to the New York Public Service Commission, which includes a 25-percent rate cut for some industrial customers, was attacked as hostile to small customers.
ConEd filed the plan in response to the PSC's efforts to develop a new framework for the state's electric industry in its "Competitive Opportunities" proceeding (Case 97018/96EO897). ConEd's proposed five-year plan would run through March 31, 2002 and cut rates by $655 million.
Proposal Details. Industrial customers with monthly demands of more than 1,500 kW would receive the largest rate reduction of 25 percent ($40 million cumulative). Commercial customers would receive a 10-percent rate reduction ($261 million) by the end of the five years. Average rates for residential customers would decline by 3.3 percent. A rate increase that was to have been effective April 1 would be canceled (a $435-million hike over five years).
Retail access to competing suppliers of electricity would be phased in over a five-year period starting in 1997. All customer classes would have access to competitive providers for up to 500 MW starting in 1998. Additional retail access would be added each year, with full access available no later than the end of 2002. ConEd would divest at least 50 percent of its fossil-fueled generating capacity in New York City.
According to the PSC, ConEd's plan does not include projected savings from the securitization of its stranded costs. Governor George E. Pataki's "Electric Ratepayer Relief Act," would give utilities access to low-cost capital that could ease the renegotiation of mandated purchased power contracts. The PSC estimates that savings obtained that way could double the rate decreases for residential and small commercial customers.
Labeled as "Hostile." But New York Assembly Speaker Sheldon Silver and Energy Committee Chair Paul D. Tonko have attacked the proposed settlement. They claim the plan is protective of stockholders and hostile to residential and small- and medium-sized businesses. According to Silver, the rates charged by ConEd to its 3 million customers in New York City are twice the national average.
"At the end of the (five-year) period, the PSC allows ConEd rates that would still be twice the national average," Silver said. While the settlement was the first reached by one of New York's seven investor-owned utilities, Silver said it was not the kind of precedent he wants other utilities to emulate.
On April 4, various parties told the New York Assembly that they would challenge the plan in court if approved by the PSC in June as expected. Timothy S. Carey, chair and executive director of the New York State Consumer Protection Board, believes more work on the settlement is needed.
"The $655-million rate reduction provided for by the settlement is in our estimation distributed inequitably," Carey said. "ConEd's 16.1-cents average per kilowatt-hour for residential customers is the
second-highest in the continental United States, 82 percent above the 8.84 cents per kilowatt-hour national average for residential customers."
The CPB has developed its own plan for ConEd, which would implement an across-the-board rate reduction through a few innovative