New York Public Service Commission “REVs” Up Utility Reform in Central Hudson Gas & Electric Corporation Rate Case

June 13, 2018 Press Release
E-House at Pace Law

The New York Public Service Commission adopted a three-year rate plan for Central Hudson Gas & Electric Corporation on Thursday, and the Commission’s order marked a significant milestone in New York’s Reforming the Energy Vision (“REV”) initiative. After a lengthy testimony and negotiation process, the parties to the case reached an agreement for Central Hudson to become the first utility since REV’s inception to reduce its fixed customer charges.

Earthjustice and the Pace Energy and Climate Center (“Pace”) partnered in their seventh New York rate case to push for a number of REV-aligned reforms. Pace and Earthjustice played a key role in securing wins reducing Central Hudson’s fixed charge for residential customers, eliminating another new customer charge based on demand-related costs, developing a Benefit-Cost Analysis framework for natural gas Non-Pipeline Solutions to better align Central Hudson’s natural gas programs with state climate change goals, and increasing deployment of energy efficiency. Pace’s involvement in New York regulatory proceedings is supported by grant funding from the Energy Foundation.

“The outcome of this complex case marks an important step in aligning electric utility rates with the vision for electricity sector transformation set forth in NY REV,” said Karl R. Rábago, Pace Executive Director and expert witness in the case, “and it takes a meaningful step toward reducing the burden of monthly customer charges faced by electric customers served by Central Hudson.”

The months-long settlement negotiations resulted in a Joint Proposal, filed on April 18, 2018, between twelve parties, including state and federal agencies, environmental and non-profit consumer organizations, and commercial and industrial company representatives.

Three of Pace’s subject matter experts—Executive Director Karl R. Rábago, Senior Staff Attorney Sheryl Musgrove, and Equitable Access to Sustainable Energy Fellow Robert Habermann—testified on a number of REV concepts and issues, and three Earthjustice attorneys represented Pace in the case. Several law student interns from the Pace University Elisabeth Haub School of Law also worked on the case.

In its testimony, Pace addressed the complex but vitally important issues of cost allocation methodology and rate design; the alignment of natural gas programs and policies with New York’s climate change goals; customer engagement in a REV world, Earnings Adjustment Mechanisms; low-income customer programs and mechanisms for enabling more customers to benefit from them; and Central Hudson’s recovery of trade association dues from ratepayers.

These issues are foundational to transforming New York’s utility sector, and many of them are addressed in the Joint Proposal and Commission order, including:

  • Reducing the fixed charge for residential customers from the current $24 per month to $19.50 per month. Rate design is a vital to providing customers with price signals to invest in clean energy and protecting low-income customers and those on fixed incomes from unjustifiably high rates.
  • Eliminating entirely a utility-proposed “Service Size Charge” that could have added an additional $4 per month to customer bills, and that Central Hudson had plans to increase in the future.
  • Developing a Benefit-Cost Analysis for Non-Pipe Alternatives projects and Gas Demand Response programs. This is part of Pace and Earthjustice’s broader advocacy to move the needle on aligning utility natural gas investments and programs with New York’s climate change and environmental goals.
  • Increasing Central Hudson’s energy efficiency program budgets and incentivizing the Company to achieve higher efficiency targets through Earnings Adjustment Mechanisms (“EAMs”). The Commission also approved EAMs for customer engagement, environmentally beneficial electrification, interconnection, gas efficiency.
  • Reforming Central Hudson’s standby rates to include storage batteries as a “designated technology,” and increasing the emissions stringency for technologies that are exempt from standby rates.

The Central Hudson Joint Proposal follows on the heels of Earthjustice and Pace’s successful completion of National Grid’s 2017 rate case, Con Edison’s 2016 and 2015 rate cases, New York State Electric and Gas / Rochester Gas & Electric’s 2015 rate cases, and Central Hudson and Orange & Rockland Utilities’ 2014 rate cases. 

Chinyere Osuala, Earthjustice’s Senior Associate Attorney for the Clean Energy program, summed up the Commission’s order as follows: “This order ensures that Central Hudson customers not only experience lower fixed charges on their bills, but also receive services that other utility customers across the state are already getting, such as greater access to clean energy technologies and more robust energy efficiency programs. This is what we advocated for and we are glad to help deliver this victory to residents in the Mid-Hudson River Valley.”

Pace and Earthjustice continue to advocate for REV-aligned and fair rates, clean energy, and climate responsibility, and utility transformation in support of distributed energy resources and customer empowerment.

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