Friday, October 10, 2008

PSC Typical Electric Bills Show Trend of Higher Prices and Volatility

The New York Public Service Commission (PSC) publishes a snapshot report of typical electric and gas bills of the major investor owned utilities twice a year, in January and July. Click on chart to enlarge:

Because the PSC reports only provide a belated snapshot of prices in two months, they mask other price spikes in other months. For example, Con Edison typical bills for August 2008, based on PULP's Con Edison bill calculator, went up even higher than they were in July, to $164 . See Con Ed Summer of $lam.

The chart dramatically shows the effect of the advent of the NYISO in November 1999. Prices began to spike by the summer of 2000 for the utilities that did not have fixed rate plans, which the PSC staff is still trying to stamp out. National Grid's residential bills remain relatively stable, but that is due to its long term rate plan that protected small customers. That plan will expire in 2011. National Grid's large customers are exposed to NYISO prices, to their detriment. NYSEG continues to offer a residential fixed rate plan which protects customers from price volatility.

PSC policies adopted during the deregulation fad of the late 1990's encouraged utilities to form holding companies, sell their power plants, and then buy electricity back for their customers at the NYISO spot market or through contracts indexed to the NYISO spot market prices. Still under influence of discredited Enronian deregulation doctrines today, the New York PSC continues in its efforts to introduce the effects of volatile and manipulated NYISO wholesale spot market prices into retail rates, often with results devastating to residential consumers living on fixed incomes. See Disconnected Policymakers.

As a result of this system, New York's electric rates and bills are increasing faster than the bills of customers in the 35 states that did not fall for deregulation. States that had not "restructured" when Enron went bankrupt in 2001 pulled back from the brink in time to keep state jurisdiction over the price of electricity generation, instead of ceding it to FERC. FERC, still under sway of the merchant power and energy trading interests, essentially is trying to deregulate wholesale energy under a so-called "market-regulated" regime of dubious legality.

The chart shows that typical bills of Central Hudson, which once had steady rates that were lowest in the state, are looking more like Con Edison and Orange & Rockland. Those utilities cooperated earlier with the PSC, while Central Hudson delayed the sale of its power plants and then had long term buyback contracts with the new owners for awhile, delaying reliance on the NYISO markets for purchased power, but now the buyback contracts have ended, more purchases are made at the spot market prices, and the Central Hudson prices have spiked dramatically.

RG&E now has the lowest rates in the state. That, we believe, is because RG&E did not sell all its power plants and so is less dependent on wholesale rates influenced by NYISO spot market prices. In the recent Iberdrola case, the PSC, at the insistence of the merchant power and energy trading interests who dominate its policies, required RG&E to sell its non-hydro plants (which account for only a small portion of its generation) and so, eventually, we are likely to see RG&E customers begin to suffer the same pain as others. Perhaps the example of a small, well-run local utility owning its own power plants serving the public at low cost with stable rates was simply too embarrasing for the PSC not to destroy when it had the chance in the merger case.

In the days when the Commission actually fixed utility rates and when fuel costs were predicted, rates and bills tended to change glacially. An eleven month rate case was required for "major" changes of 2.5%. Now customers face abrupt monthly rate increases in excess of that with no notice.

Research shows the obvious, that energy cost unpredictability creates serious difficulties for customers trying to manage their household budgets. Social Security checks are not adjusted to accommodate the price spikes fostered by the PSC.

Many households in New York live in or near poverty, without savings, from check to check, and they often run out of money and Food Stamps before the end of the month. They find it difficult to absorb the sudden and unreasonable utility price changes that flow from the PSC's mistaken deregulation policies.

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