Friday, July 26, 2013

Opponents of Central Hudson Takeover File Petitions for Rehearing, Rate Investigation, and Temporary Rates

On July 26, 2013 Citizens for Local Power, Assemblyman Kevin A. Cahill, and PULP filed petitions with the Public Service Commission for rehearing of the June 26, 2013 PSC Order that approved a non unanimous settlement agreement for the acquisition of Central Hudson Gas and Electric Company by a Canadian holding company, Fortis, Inc.  Central Hudson is the utility serving approximately 300,000 electric and about 75,000 natural gas customers in eight counties of New York State's Mid-Hudson River Valley, and delivering electricity and natural gas in a 2,600 square-mile service territory that extends from the suburbs of metropolitan New York City north to the capital district at Albany.

The petitions present procedural and substantive reasons why the Commission erred in approving the takeover and extending, with modification, the rate plan.

The petitions assert that the State Administrative Procedure Act (SAPA) Notice never included notice that the Commission would set future rates in the merger case.  Further, no Revised SAPA notice was filed regarding the "Joint Proposal" of the settling parties, in which the Commission adopted a substantially modified merger proposal, different from the one originally filed by Central Hudson and Fortis, Inc.  Also, no Revised SAPA notice was filed regarding a Letter to Commissioners from Central Hudson and Fortis proposing extension and modification of the rate plan for another year, after all the parties had submitted their briefs to the Commission regarding a Recommended Decision that had recommended disapproval of the merger.  As a consequence there was no SAPA notice or opportunity to comment or scrutinize the revised proposal to modify and set rates for another year.

Citizens for Local Power and Assemblyman Cahill objected to the lack of evidentiary hearings, which had been scheduled but were cancelled by the Commission after some of the parties, including Department of Public Service Staff and Central Hudson and Fortis, Inc., reached their agreement. Citizens for Local Power objected to the refusal to consider evidence regarding the fitness of Fortis, based on its track record in other areas.  Their petition rebuts the Commission's assertion that there was substantial support for the merger, showing that overwhelming majority of public commenters and groups were against it.  They demonstrated that much of the claimed public support was traceable to Central Hudson's campaign aimed to get letters from its employees and non profit groups to which it gives money. The petitions also faulted the merger plan for not providing Central Hudson customers adequate protection from possible future voluntary bankruptcy of the utility under a Fortis-controlled board of directors.

The petitions said the rate plan allowing a 10% Return on Equity (ROE), when standard Commission methodology calls for 8.9%, is unreasonable, and amounts to a potential difference of more than $17 million in excess allowed earnings through June 30, 2015. Demonstrating that Central Hudson has achieved actual ROEs greater than 8.9% for the trailing four quarters in in ten out of eleven past quarters, the petitions asked for an investigation of the reasonableness of Central Hudson's current rates, terms and conditions.  PULP also asked for investigation of Central Hudson's low income rates and practices regarding the interruption of service for bill collection purposes, submitting data showing that shutoffs have risen from 4,688 in 2005 to 13,687 in 2012. Also, the percentage of customers shut off has risen from 1.89% in 2005 to 5.99% in 2012, and  Central Hudson provides fewer deferred payment plans, as a percentage of customers, than any of the major investor owned utilities in the state.


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