Tuesday, February 12, 2013

Consumer Groups ask NY Leaders for Better Utility Oversight, Stronger Consumer Protections, and More Resources for Independent Utility Consumer Advocacy

New York utility companies propose to hit New Yorkers with hundreds of millions of dollars in rate hikes to recover Superstorm Sandy-related costs, AARP and the Public Utility Law Project (PULP) say it’s these kinds of actions that demand change in the industry.

Following up on the recommendations made by the Moreland Act Commission, today, AARP and PULP issued a new analysis outlining crucial areas that need improvement to better protect New York consumers and ensure rates are fair.  More than half of AARP’s 2.5 million members live in areas impacted by Sandy.

“New Yorkers, who already pay some of the highest utility bills in the nation, need and deserve a stronger voice to combat soaring utility rate hikes,” Beth Finkel, State Director for AARP in New York State. “Utility companies have the money and resources to be the biggest voice at the table and continually pushing through higher rates, the playing field is uneven for consumers who see their interests go largely unrepresented.  It is time to change that.”

"New York lags other states in supporting advocacy for residential consumers in the complex and protracted Public Service Commission utility rate cases that affect vital consumer and public interests,” said Gerald Norlander, Executive Director, Public Utility Law Project (PULP). “New York should put more resources into independent residential utility consumer advocacy and reform the funding streams and structures to bolster it."

Today, AARP and PULP issued four recommendations the organizations say will better protect New York consumers, provide crucial utility reforms and should be included in a final state budget currently being debated in Albany and due to pass by April 1.  The recommendations are as follows:

Funding an Independent Utility Consumer Advocate: An independent consumer advocate is essential to the strengthening of oversight of the state’s utilities by giving consumers a seat at the table in complicated rate hike and regulatory hearings and level the playing field.  A recent AARP survey found the move is supported by nearly 77% of 50+ consumers in the NYC and Long Island areas. Forty other states in the country already have an independent utility consumer advocate office.

 Establishing Protection for Long Island Power Authority (LIPA) customers: The Moreland Commission recommends re-privatizing LIPA. AARP and PULP believe the costs, benefits, and rate impacts concerning utility consumers on Long Island must be examined when proposing to re-privatize LIPA as well in comparison with continued public ownership.

Reviewing Utility Performance Regulations:  The New York Public Service Commission (“PSC”) “Performance Regulation” ratemaking approach should be reviewed and revised or eliminated. It currently allows utilities to set multi-year rates, and then cut costs while keeping savings during the term of the rate plans so long as they satisfy minimum performance standards, which do not apply to major storm outages, and guarantees no loss of revenue even when meters have stopped registering service during lengthy outages.  These incentives to cut costs may have exacerbated the damage from Superstorm Sandy.

Protecting Consumers from “pass-through” storm recovery costs: AARP and PULP state that storm-related rate hike proposals, such as the $400 million one being proposed by Con-Edison, must be scrutinized to ensure consumers don’t get hit with all the costs, while the utility company bears no risk or liability.

The full comments and analysis, New York Utility Performance, can be found online here. .

“New Yorkers were victimized twice: Once by the path of destruction left by Superstorm Sandy and once by the utilities' failure to plan for this major weather event.  After the nation's economic collapse, we realized that we needed a stand-alone agency to solely look after consumer interests without concern for the financial health of banks.  It's time for a similar approach to utility oversight in New York.  We need an independent utility watchdog with a single, un-conflicted mission: represent the interests of residential and small business ratepayers and fight for an affordable, reliable electric system,” stated Russ Haven, Legislative Counsel, NYPIRG.

"Vision Long Island supports AARP and PULP in asking questions and insisting on full review of utility privatization or any alternative structure to LIPA” Eric Alexander, Executive Director, Vision Long Island. “In this difficult economy ratepayers including seniors, have been squeezed potential rate increased are particularly onerous for residents and Local business”

“In the aftermath of Hurricane Sandy, where consumers experienced widespread service outages, it is clear that the public deserves a much stronger, independent voice in utility regulation,” said Chuck Bell, programs director for Consumers Union, publisher of Consumer Reports.  “This report makes clear that other states such as Connecticut and New Jersey provide significantly larger budgets for consumer representation in utility proceedings, when analyzed on a per capita basis.  In New York, large utilities such as Consolidated Edison, National Grid and NYSEG employ literally dozens of technical experts, lobbyists, and consultants to advance their interests before state government.  We strongly urge the Cuomo administration and the legislature to create a more level playing field for ratepayers, by providing increased funding to support robust consumer intervention at the Public Service Commission and other agencies.”

Background Information on Consumer Opinion in areas hit by Super Storm Sandy:

AARP conducted a recent survey of New York residents 50+, 76% of who reported being LIPA customers and nearly 14% are Con Ed customers.  The survey found over 86% of respondents lost power as a result of Sandy, with 44% saying their electric utilities response was poor. According to the survey a consumer utility advocate office has strong support and need:
69% said their elected officials weren’t doing enough to protect people affected by rising energy costs.
73.2% believed their interests aren’t taken into consideration when rate increases for gas and electric are proposed.
76.7% said they thought New York needed to establish an independent consumer advocate office to represent them in rate cases before the Public Service Commission.

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