If an employee secured a raise and as soon as it took effect began lobbying for another raise, it might raise hackles among those paying the bills.
That could summarize the situation Central Hudson finds itself in when weeks after a rate increase took effect, the utility applied to the state Public Service Commission for higher rates next year.
The application has been made. The hackles are up.
The utility says it needs the funds, “To keep up with general cost increases,” according to a press release sent out July 31 announcing its intent to seek a rate hike. It also must wait a year before it sees any prospective rate increase in the form of more money from businesses and consumers, casting early action in a less harsh light.
A rate increase granted by the PSC in June took effect July 1. That approval increased by 8.5 percent the rates Central Hudson charges customers for electricity and by 23.5 percent the rate charged for natural gas.
The new proposals were filed with the state Public Service Commission beginning an 11-month review, said PSC spokesman James Denn. The review will be conducted by commission staff with input from interested parties. Any new rate would take effect next July 1.
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Elected officials were critical of the new request. “It seems to be a trend lately,” said Assemblyman Kevin Cahill, of the 101 District in Ulster and Dutchess counties, who is chairman of the Assembly Energy Committee. “As soon as your rate increase is granted, you apply for the next one. The utility argument is that the time it takes to process a rate increase means you have to go right back. I don”™t quite agree, but that is their argument.”
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Cahill said he would review the rate increase request in detail but said that based on preliminary information, he would be opposing most aspects of the proposed increase before the PSC. He said, however, he would consider supporting rate increases if the funds generated were guaranteed to be spent on improving the company”™s infrastructure.
“With the ink barely dry on the last rate hike, Central Hudson is clobbering the ratepayers with still another,” said Assemblyman Frank Skartados, 100th Assembly district resprsenting Orange, Dutchess and Ulster counties. “While their shareholders and investors may be feeling the pinch of this deep recession, so is everyone else. This is a time for Central Hudson and all of our utilities to be tightening their belts, not socking it to the ratepayers. This is outrageous to me and the hard-working people and businesses of the Hudson Valley.”
The new filing for a rate increase asks the company be allowed to raise $15.2 million more in revenues for power and $3.9 million more for gas. The Poughkeepsie-based utility said the requested increase would raise the delivery charge for electricity about $3.46 a month for an average customer and $3.97 a month for delivery of natural gas.
Compared with current delivery rates, that would be a 12.3 percent increase for electricity, and a 5.8 percent increase for gas. That’s not counting taxes and special charges, and not counting the cost for the electricity itself, which is usually the bigger part, and is a separate charge, to the bill. The cost of the power is based on costs derived from New York”™s market-driven energy auction where daily prices are set by the Independent System Operator (ISO).
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Central Hudson is currently in the middle of New York”™s six regulated utilities in terms of what they charge for their electricity delivery services. New York does not allow utilities to own any power generating equipment, so all of them buy power from generating companies at costs set by the nonprofit ISO, purchasing electricity supplied from power plants throughout the grid.
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According to figures provided to Assemblyman Cahill”™s office by the PSC, as of Jan. 1 this year, Central Hudson charged $.077 per kilowatt hour for residential customers to use their infrastructure for delivering electricity. The utility charged $.054 per kilowatt hour for commercial and $.025 kwh for industrial.
As of that date, Con Ed charged $0.104 per kwh for residential customers, $0.111 for commercial customers and $0.049 for industrial users. NYSEG charged $0.068, for residential, $0.054 for commercial and $0.015 per kwh for industrial users.
National Grid charged users $0.0810. $0.068 and $0.027 to residential, commercial and industrial users respectively. Orange and Rockland charged $0.077, $0.064 and $0.041 per kwh and RG&E $0.070. $0.088, and $0.026.
Central Hudson argues its request for a rate increase will not hurt customers because the cost of the electricity itself has come down in recent months.
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“It”™s important to note that due to a decline in the deregulated cost of energy supply, there is the potential that the impacts of the modest delivery rate increase requested today could be totally offset in customer bills that may be lower than those of 2008,” said Michael M. Mosher, vice president of regulatory affairs in the July 31 statement.
Central Hudson had total revenue of roughly $1.7 billion in 2008, up from $1.49 billion in 2007. However, total dividends dropped to $2.22 per share in 2008, down from $2.70 per share in 2007.
