Community Group Asks NYS PSC To Lower Utilities' Fixed Charges

Dec 4, 2017

Central Hudson Gas & Electric has a rate case before the New York state Public Service Commission. A number of local officials want to see the utility’s fixed charges lowered and have signed a letter to the PSC saying so. Meanwhile, a Central Hudson spokesman says decreasing the charges would be a step backwards.

The letter initiated by Ulster County-based Citizens for Local Power has been signed by 131 mainly local elected officials. It’s been filed with the PSC in the Central Hudson rate case. Jen Metzger is director of Citizens for Local Power, a party to the case.

“The time is now, basically, to reform utility rates in New York,” Metzger says. “The Reforming the Energy Vision initiative, the governor’s initiative, has been going on since 2014. It’s all about encouraging customers to be more energy efficient, to reduce their use, to put solar panels on their homes and essentially empower customers to better manage their energy costs. And, as long as the utility’s fixed charges, which is that basic charge on your bill — and in Central Hudson territory, that’s $24 a month that we all pay — as long as those charges are really high, we can’t do that.”

Metzger, who also is a Rosendale Town councilwoman, says the rate structure is unfair to low-income customers.

“This structure of the rates really penalizes people who use less energy,” Metzger says. “They’re essentially subsidizing very high energy users.”

Metzger says the letter filed in the Central Hudson case calls for fixed utility charges to be lowered statewide. John Maserjian is spokesman for Poughkeepsie-based Central Hudson.

“It’s our view that the fixed charges are fair,” Maserjian says.

He explains why.

“When we look at the cost of delivering power to our customers — maintaining our system, the personnel, the equipment that we’ve invested in — it’s really a fixed cost of about $50 per customer, regardless of how much energy they use,” Maserjian says. “So in reality, it costs Central Hudson $50 per account, residential account to serve the electricity. Our current fixed cost on our bills is $24, so almost half that amount.”

Metzger says her group proposed the following.

“We have proposed to gradually reduce the fixed charge, Central Hudson’s fixed charge, from $24 to $10, which is more consistent with regional and national trends,” says Metzger.

Metzger would like to see the rate decrease from $24 to $20 in the first year, $15 in the second year, and $10 in the third year. Again, Maserjian.

“If we were to lower that fixed charge, we’d be taking a step backwards in terms of the cost basis for the rate design,” says Maserjian. “In reality, the delivery charge, or the fixed charge, should be $50, with no volumetric charge after that, but the current rate design allows for volumetric charges to make up for the rest of those fixed charges.”

By volumetric rates, he refers to energy usage. Signatories to Citizens for Local Power’s letter to the PSC include elected officials in other New York utilities’ territories, such as those of NYSEG and National Grid. National Grid has a fixed charge of $17; its rate case is also before the PSC.  A spokesman says the PSC will review comments that have been submitted in both cases and expects to rule on them in June.