Hudson Valley residents might want to be prepared for a shock when opening their electricity bills.
Downstate users can expect at least a 4 percent rate increase this year due to a so-called “electric capacity zone” that went into effect Thursday. Some estimates say bills could increase by as much as 10 percent, costing the region $280 million and $500 million over the next three years.
The zone, which stretches from New York City through the lower part of the state, was approved by the Federal Energy Regulatory Commission despite opposition from elected officials, local municipalities and the state Public Service Commission. PSC Chairwoman Audrey Zibelman called the zone a “windfall for incumbent generators” that doesn”™t provide any value to customers.
“Consumers in the lower Hudson Valley suffered terribly from high energy prices this past winter, and now they face moving into a summer period of high energy prices with no relief in sight,” she said. Statewide, consumers saw their bills increase during the winter from 44 percent to as much as 130 percent, according to PSC figures.
The capacity zone is a special-pricing plan first proposed by the New York Independent System Operator, which said that allowing power-generating companies to charge more to distributors like Con Edison during peak usage periods would eventually attract those companies to build power plants and infrastructure in the region.
U.S. Sen. Charles Schumer said Tuesday he was able to lobby for a “phase-in” period that kept the increase at 4 percent and had no rate increases in the next two years. The senator said he had ultimately hoped to stop the zone altogether.
“We have much better ways to increase power supply and reduce consumption in the Hudson Valley, rather than doing so on the backs of ratepayers,” he said.
Schumer and other critics of the zone have said that during peak usage periods, such as the hottest days of summer, downstate distributors could get cheap electricity siphoned down from upstate generators that aren”™t facing the same demand. The problem there is a lack of infrastructure through the lower part of the state, with a “bottleneck” noted near Albany and a lack of adequate transmitters through the Hudson Valley region.
Critics of the zone have said investing in repairing that bottleneck would more directly reduce costs and address the ever-increasing demand for power during peak periods. The opposition has said the zone not only results in higher rates but may not effectively spur development in the region as it intends to. Gov. Andrew Cuomo has launched several energy-related initiatives, including investment in solar panel technology, and some believe those are better alternatives to the the zoning plan.
U.S. Rep. Sean Patrick Maloney, a Democrat of Putnam County, has pushed to have the zone decision by the federal commission reversed. He said Wednesday that he would address FERC”™s members in Washington, D.C., and hand-deliver a pile of letters from residents in his congressional district in opposition to the zone.
“For months, I”™ve been banging on the door of Washington bureaucrats to reverse this reckless proposal, and I want them to hear our objections loud and clear,” he said. Maloney and Rep. Chris Gibson, a Columbia County Republican, proposed a bill to prohibit the new capacity zone.
In addition to the burden of the new zone, the PSC anticipates higher-than-normal prices for consumers this summer, with the futures market for electricity showing a 20 percent hike over last year”™s June through September costs, the commission said.
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