Central Hudson is proposing a new rate plan that includes the company’s first ever reduction of fixed charges. Advocates who pushed for changes to the gas and electric company’s initial proposal are calling the agreement an important victory.
Poughkeepsie-based Central Hudson and parties to the energy company’s rate proceeding have filed a joint proposal with the New York state Public Service Commission. It is part of the regulatory review process for a rate plan Central Hudson proposed in July 2017. The new plan includes the company’s first ever reduction in the fixed charge for residential customers. Jen Metzger is director of Citizens for Local Power, a party to the rate case. She calls the proposed reduction a victory for fairness.
“We were fighting the rake hikes, the overall rate hike, but we were also really focused on trying to get a reduction in Central Hudson’s fixed charges which, for residents, it’s $24 a month,” Metzger says. “It’s the highest in the state and it’s among one of the highest nationally.”
Metzger says high fixed charges penalize customers who use less energy or who invest in solar for their homes. John Maserjian is spokesman for Central Hudson.
“Central Hudson agreed to lower the fixed rate portion of utility bills for residential and small commercial customers primarily because our customers really asked for it and many of the parties to our case felt it was very important,” says Maserjian.
Metzger says Central Hudson’s fixed charge of $24 per month would drop by $3 this year and another $1.50 over the next two years, bringing it below the fixed charges of Orange & Rockland Utilities and Rochester Gas & Electric by July 2019. The new rate plan also calls for a reduction in the rate increase initially proposed for electric and gas. Here’s Maserjian.
“The original proposal called for a 3.7 percent increase in electricity bills, our residential electricity bills, and a 4.7 percent increase for natural gas bills,” Maserjian says. “And now, under this new plan, we’re calling for a 1.3 percent increase for electricity bills for our residential customers in the first year, followed by a 2.9 percent increase the second year, and 4.4 percent increase in the third year.”
Central Hudson’s initial proposal would have raised the average residential electric bill $4.19 a month and the average residential gas bill about $5.54 a month. With the new plan, Maserjian says, the average residential electric bill would increase $1.46 per month in the first year; $3.31 per month the second year; and $5.04 the third year. Again, Metzger.
“Citizens for Local Power, we chose not to sign on ultimately to the negotiated agreement because we were concerned that the overall rate hike was still high, especially in the third year, but it is much more modest than before,” says Metzger. “And there were, again, there was this important victory in the fixed charge that we really welcomed, as well as some other provisions in the joint proposal which we think are very beneficial to customers.”
Metzger says other provisions include a reduced profit rate and more aggressive energy efficiency targets. Central Hudson would provide incentives for heat pumps and develop programs to promote electric vehicle use. Nobody Leaves Mid-Hudson, another party to the rate case, declined to sign the proposal for the same reason Metzger described. Several parties to the case did sign. Again, Maserjian.
“Our original proposal asked for a 9.5 percent return on equity,” says Maserjian. “In this proceeding we’re seeing an 8.8 percent return on equity.”
Democratic state Assemblyman Kevin Cahill of the 103rd District says the joint proposal is a strong indication that the public was heard and that New York state will not stand for corporate gains at the expense of residents. He called on the PSC to approve the joint settlement as soon as possible. The proposed rate plan covers a three-year period beginning July 2018 through June 2021. The PSC is expected to decide on the new plan in the next few months.