When freeze thaws, rates rise

Central Hudson asks PSC for increase and proposes upgrades

POUGHKEEPSIE—Central Hudson Gas and Electric customers may be asked to dig a little deeper if the utility’s new plan to raise electric and gas rates and fix up its energy delivery systems is approved.

The rate plan, which emphasizes its aim to “modernize and strengthen… electric and natural gas delivery systems by investing in storm hardening, improving grid efficiency and updating critical infrastructure,” has been filed with the New York Public Service Commission (PSC).

“Central Hudson’s decision to file a new rate case and what it included in that rate filing was made independently,” according to an email from PSC Public Information Officer James Denn.

A PSC review of a rate case takes about 11 months. It is a “detailed and thorough review process [that] provides ample opportunity for public participation and comment. The Commission’s goal is to ensure safe and reliable electric service for Central Hudson customers at just and reasonable rates,” the email said.

The new rates would take effect following a two-year rate freeze scheduled to end June 30, 2015. The freeze was agreed to as part of the utility’s acquisition by Fortis Inc. in 2013. Fortis is described as “the largest investor-owned distribution utility in Canada, serving more than two million gas and electricity customers,” in a June 2013 company press release about the acquisition.

Central Hudson is a regulated transmission and distribution utility serving 300,000 electric customers and 78,000 natural gas customers in a service territory extending from the suburbs of metropolitan New York City north to the Capital District at Albany. Its service area encompasses Gallatin and Ancram in Columbia County.

The proposed plan, which would set delivery rates July 1, 2015, raises total average residential electricity bills by about $4.78/month or a 4.4 % increase based on an average of 620 kilowatt-hours of electric usage per month at July 2014 market supply costs for electricity. The average residential electric bill in 2013 was $107.87/ month, based on a 12-month average.

The effect on average residential natural gas heating bills will be $1.04/month or less than a 1% increase, based on an average of 68 hundred cubic feet of natural gas usage per month and July 2014 market supply costs for natural gas. The average residential natural gas bill for customers who heat with natural gas in 2013 was $133.23/month, based on a 12-month average, according to a Central Hudson press release.

The filing seeks to increase total annual electric delivery revenues by $40.1 million and natural gas delivery revenues by $5.9 million. In its proposal, Central Hudson recommends that regulators utilize the remaining Fortis merger benefits of $15 million and certain other regulatory balances to offset about 50% of the bill impact for customers from July 1, 2015 to June 30, 2016.

The rate plan is for delivery charges only, which are regulated and typically comprise 30- to 50% of total bills. Other bill components include supply charges, which are market-based and comprise 40- to 50%; and taxes and state-mandated surcharges, which account for 15- to 20%, the release said.

These proposed rate increases are just the latest bad news for the pocketbooks of Central Hudson customers.
Back in May Central Hudson representatives appeared at a forum facilitated by Assemblymember Didi Barrett (D-106th) at the Ancram firehouse, where about 30 Central Hudson customers showed up to find out why their electric bills had skyrocketed in recent months.

At that time Central Hudson Director of Media Relations John Maserjian invoked the now infamous “polar vortex,” and explained that the winter price spike was due to the cold weather that enveloped a large part of the country. He said the phenomenon created a demand for energy that strained the energy delivery system. While delivery rates, which are regulated and set by the state PSC, did not change, supply prices rose by 123% between January and March, he said.

“Something happened that was unprecedented,” Mr. Maserjian said, noting both FERC (Federal Energy Regulatory Commission) and the Federal Trade Commission have been urged to investigate. In a follow-up phone call, Mr. Maserjian told The Columbia Paper there is a possibility that the same conditions could provoke a repeat price spike.

FERC raises rates
Also at that May forum, Mr. Maserjian said another factor impacting Central Hudson customer electric costs is the new Capacity Zone, which FERC imposed and implemented May 1 to address growing energy shortfalls downstate. The zone “will artificially raise prices by restructuring the way utilities purchase electricity.” Mr. Maserjian said.

The theory behind FERC’s enactment of the zone is that “higher prices will attract generators to help address the shortfall,” said Mr. Maserjian, who noted it is Central Hudson’s stand that it makes more sense to fix transmission problems rather than impose estimated bill increases of 6% on Central Hudson residential customers and 10% on industrial customers and provide a windfall to existing generators.

As a result of the new capacity zone, capacity prices for Central Hudson customers rose by about $4 million/month in May and June, according to a June 27 Central Hudson press release.

Central Hudson opposes the Capacity Zone and has filed a appeal urging the court to order FERC to revisit and revise its decisions relating to pricing in the new capacity zone, termination of the new capacity zone and to compensate customers for the higher resulting electric supply costs.  For more information and to view the briefs filed by Central Hudson and the Public Service Commission, visit www.CentralHudson.com/EnergySolutions.

REV’s not ready yet
Also in its press release about the rate plan filing, Steven V. Lant, chief executive officer of Central Hudson, said, “Some of these proposed programs and investments in infrastructure are largely in response to the Public Service Commission’s REV, or Reforming the Energy Vision, Proceeding, and Governor Cuomo’s call for system storm hardening. The REV initiative aims to improve the efficiency of the electric system, promote clean generation and energy efficiency measures, and provide customers with knowledge and tools for effective management of their total energy use through the adoption of new technologies. Statewide proceedings are underway to determine how these goals will be implemented, and our proposed rate plan is consistent with this initiative.”

Asked how Central Hudson could know that its proposed plan is consistent with the REV initiative when it is still being defined and will not be developed until early to mid 2015, Mr. Maserjian said by phone this week that Central Hudson has participated in meetings with representatives from different interests and REV goal or target documents have been filed by the state. “While we don’t have a definitive answer about where it will go, we have an idea on what the state is proposing and we are in support of where this is headed,” he said.

For more information on the new Central Hudson rate plan visit www.ValueForOurValley.com or www.CentralHudson.com.
Visit the Public Service Commission website at http://www.dps.ny.gov/ and click on Central Hudson Rate Case to fill out a PSC comment form on the proposal.

To contact Diane Valden email .

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