“I’ve said it before, and I’ll say it again,” said state senator Michelle Hinchey. “Central Hudson should not receive a rate increase, and most certainly not at a time when the company is being investigated by the PSC for improper billing practices.”
Despite the name change on the door of the executive’s office in the red brick fortress at 284 South Avenue in Poughkeepsie, the utility company is back at it again, looking to squeeze extra change out of its customers’ pockets with its announcement of a proposed 16 percent rate hike for electricity and 19 percent for gas.
According to Central Hudson, the proposed rate plan would allocate funds to replace aging infrastructure, incorporate technologies to facilitate interconnection of renewable resources, and support the adoption of energy conservation and the use of electric vehicles and heat pumps.
For thousands of the utility’s 309,000 electric customers and 84,000 gas ratepayers, though, the memories of overcharges, delayed bills, and incorrect or illegal withdrawals of funds from customer bank accounts remain at the forefront of their minds. These occurrences were substantiated in a report released by the NYS Public Service Commission (PSC) on December 15 of last year.
If granted, the higher rates would cost Central Hudson’s 393,000 customers a dollar a day. The utility’s request for an approximately $139.5-million boost in annual electric delivery revenues would result in a monthly bill increase of $30.12 for the average residential customer using 660 kWh per month.
According to PSC public information officer Jim Denn, the investigation into Central Hudson’s billing issues is continuing.
“This proposal was filed now,” explained Joe Jenkins, a spokesman for Central Hudson, “because we have entered into the final year of our current rate plan and need to begin the eleven-month review process in order to have a new rate plan in place when the current plan comes to an end.”
Like Hinchey, assemblymember Sarahana Shrestha takes a dim view of the proposed increase. She sees an inherent conflict the utility faces between serving the public and serving its shareholders.
Fortis, the Canadian holding company which owns Central Hudson, reported $11 billion in fiscal revenue for 2022, a $1.6-billion increase over the previous year. The company anticipates its shareholder dividend will grow by between four and six percent this year.
“We need legislative solutions,” said Shrestha, “for a fundamentally broken rate structure where the cost of almost everything these corporate monopolies do is passed onto ratepayers.”
How the rates are set
The current rate plan expires in June 2024. The proposed rate increase would take effect in July 2024.
But first, according to Denn, state utility regulators will have to sign off on the hikes. “Utility rate cases such as Central Hudson’s are scrutinized as part of the statutorily required eleven-month review process,” explained Denn. “State regulators pore over the utility’s books to identify ways to cut costs. Nothing about a utility’s rate case is taken for granted or assumed.”
The approved rates after this process are nearly always dramatically lower than what is requested, Denn noted. He credited this outcome to an intensive stakeholder review process.
Jenkins said the last rate increase Central Hudson proposed was 2.8 per cent, or an average of about $3.50 extra per month. It ended up being allowed to charge 2.45 percent in a three-year tiered adjustment.
Numbers provided by Jenkins show that the rate decreased by a quarter of one per cent in 2021, increased by 1.3 percent in 2022, and increased by 1.4 percent this year. Prices charged for gas fluctuated over the same period, rising 1.2 percent the first year, 1.6 percent the next, and 1.1 percent in 2023. In the case of gas, Central Hudson got more than it asked for.
System verification
The Department of Public Service announced on July 27 that Central Hudson had agreed to pay for an independent monitor to verify the system and operational improvements undertaken to correct billing-system errors which cropped up after the implementation of a new customer information system on September 1, 2021.
The interim agreement to install the independent monitor at shareholder expense specifically noted that it did not resolve the ongoing investigation into past billing-system failures by the company.
Central Hudson has announced plans to phase out the practice of estimated billing, one of the acknowledged drivers of the billing inaccuracies. The utility intends to perform monthly meter readings for its customers, a move recommended by a commission-directed audit and long pursued by state senator Hinchey, who introduced bills to curb the practice of estimated billing. This year the bill passed unanimously in the State Senate but died in the Assembly when speaker Carl Heastie failed to bring it up for a vote.
What customers deserve
According to Public Service Commission chair Rory M. Christian, there is evidence that the company is correcting many of the problems that led to the billing-system errors in the first place. A sampling of DPS complaints received between November 2022 and January 2023 had showed that close to a quarter of the complaints were due to Central Hudson errors.
A sampling of complaints received between February 2023 and April 2023 indicated that less than one per cent could be attributed to the utility.
The PSC-assigned monitor will also review the integration of the monthly meter reading into the system. Central Hudson says that by December 2024 it plans to be able to read a “vast” majority of customer meters every month.
“We believe that this proposed rate plan is essential to address our infrastructure needs, recover from the impacts of Covid 19, and ensure that we can respond effectively to extreme weather events – which are occurring more frequently,” stated Joe Hally, vice-president of regulatory affairs for Central Hudson.
In her July 29 statement, Hinchey said that Central Hudson’s commitments were important steps to getting residents the level of service and transparency they deserved from their utility company. She said her office “would be closely monitoring to ensure the corrective measures and deadlines are honored.”
Claiming to emphasize transparency, Central Hudson invites its customers and its stakeholders alike to examine the complete rate-proposal filing at dps.ny.gov. When available, it will also be found at CentralHudson.com/RatePlanProposal.
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