Utility Rate Hikes: No-Win Scenario for NY Ratepayers

Rate Hikes

As New Yorkers pay the highest average electric rates in the continental United States, it is important to understand what goes into a rate hike.  Once investor-owned utilities have a rate increase approved, not only do they charge the consumers that higher rate, but also take the cost for representing themselves to get the increase approved and pass that through to the consumer as well.

A proposed rate increase is brought forth and approved by the Public Service Commission (PSC).  According to a new AARP report, it states “Essentially, ratepayers are paying to propose and defend increases in their own rates.  In contrast, ratepayers have little to no representation at the PSC during rate proceedings, even though the ratepayers are paying the legal bills of the party who is trying to raise their rates”.

There are 40 states in the United States, plus the District of Columbia, that have a utility consumer advocate office to represent the consumers in state and federal utility regulatory commission proceedings.  These offices are charged with taking legal positions opposing the utilities and their regulators, and seek judicial review.  There is no such office in the state of New York to fight rate increases on behalf of ratepayers or to appeal a rate increase in court.  In-turn, it should be no surprise that New York rates are 56 percent above the national average and second costliest in the nation – only second to Hawaii.

The AARP examined the electric rate savings for customers that have independent utility consumer advocate offices and found that the savings from such offices far exceeded the cost for their operations.  Here are some of their findings:

  • Connecticut reported approximately $730 million in savings on a $3 million budget – a 243-1 ROI.
  • Illinois reported approximately $300 million in savings on a $2.6 million budget – a 115-1 ROI.
  • Maryland reported approximately $114 million in savings on a $3.2 million budget – a 36-1 ROI.
  • Main reported approximately $24 million in savings on a $1.7 million budget – a 14-1 ROI.
  • Ohio reported approximately $107 million in savings on a $5.1 million budget – a 21-1 ROI.
  • Pennsylvania reported approximately $500 million in savings on a $5.1 million budget – a 98-1 ROI.

It is evident that when utilities push for a rate increase, ratepayers need to be able to push back.  An independent utility consumer advocate office in New York to advocate and participate fully in cases before the PSC would allow ratepayers a voice when it comes to their higher charges and the costs to utility providers that are being passed through to them.