NY Regulators Consider Utilities' Rate Request

New York State regulators are considering a rate hike requested by two upstate utilities four months after their parent company, Energy East, agreed not to seek a rate increase for a year except in a financial crisis.

The state Public Service Commission held a procedural conference on the requests from New York State Gas & Electric and Rochester Gas & Electric. That's the first step in a review process that usually takes about 11 months.

"The staff is conducting a full and thorough review," Public Service spokeswoman Anne Dalton said.

For residential customers, the increases would add about $17 to the average monthly RG&E bill and $21 to the average NYSEG bill.

When its $4.6 billion acquisition by the Spanish energy company Iberdrola was approved in September, Energy East, based in Portland, Maine, agreed not to request a rate hike unless safety and reliability were at risk without one.

Matt Maguire, a spokesman for NYSEG and RG&E, said the merger order specifically allows the utilities to file for a rate increase before the one-year "target period" ends if they can show their financial performance otherwise would fall to levels that jeopardized their ability to provide safe and reliable service.

The PSC also required Iberdrola to put aside $275 million to buffer future rate increases; sell the fossil-fuel power plants Energy East owns in New York to conform with a state policy that power companies shouldn't own both transmission lines and generating plants; and commit to spend $200 million on wind energy development in New York.

In their rate request filed at the end of January, RG&E and NYSEG forecast a significant shortfall in cash needed for required infrastructure investment.

They blamed that shortfall on a long list of factors, including the national recession and credit crunch as well as an increase in uncollectible bills, reduced sales, high property taxes, and rising costs of pensions and health care.

The utilities asked the PSC to approve the increased rates by July 1.

Sen. Charles Schumer issued a statement in response to the rate hike request, saying the PSC should reject it quickly.

"The credit crisis has put everyone, especially ratepayers, under financial strain and now is not the time to stick New Yorkers with spiking utility bills," Schumer said.

NYSEG and RG&E said their electricity delivery rates haven't increased since 1996 and natural gas delivery rates have been essentially flat since 1994.

NYSEG serves 872,000 customers across more than 40 percent of upstate New York and RG&E serves 360,000 in a nine-county region surrounding Rochester.