Schumer wants to block energy rate hikes

NYSEG and RG&E Rate Hike Audit reviews PSC oversight, Iberdrola deal, Energy East funds, and upstate New York utility bills, probing a $275 million reserve, deferred expenses, and proposed electricity and gas rate increases.

U.S. Sen. Charles Schumer is urging New York's Public Service Commission to reject a request from Energy East to increase gas and electric rates for more than 1 million customers in the state.

Schumer, a New York Democrat, said the commission should audit $275 million set aside to prevent rate hikes when Energy East purchased Rochester Gas and Electric and New York State Electric and Gas.

The commission rejected a similar request from NYSEG and RG&E in January, four months after the companies agreed not to seek an increase before September 2009, except in a financial crisis.

That agreement was one of the PSC's conditions for approving the Spanish company Iberdrola's acquisition of their parent company, Maine-based Energy East.

The rate request is $383 million combined for both companies. NYSEG customers would see charges increase, similar to NJ rate hikes seen recently, about 18.6 percent for electricity and 17.4 percent for gas. The typical bill would increase about $12.39 for electricity and $25.34 for gas. The RG&E increases would be 16.1 and 15.2 percent, driving bills up $11.86 and $21.03.

Energy East officials warned that customers would be affected if the rate increase isn't approved.

"The expenses necessary to provide safe and reliable service to our customers have climbed year after year," Michael Conroy, senior vice president and CEO of NYSEG and RG&E, said in a written statement. "These ever-increasing operating and maintenance costs make this rate request essential."

The $275 million fund was set aside to keep rates low and avoid user rate hikes across the system. Now Schumer wants to know how that money was spent and whether any is left.

"New Yorkers are struggling to make ends meet, and now is simply not the time to hammer them with rate hikes," Schumer said in a written statement. "The PSC should reject this application without any hesitation."

A spokesman for the two companies said the funds to help consumers have grown to $300 million with interest, but they want to use that money now on expenses that would otherwise be passed onto the customer. The companies call them deferred expenses, which can include storm restoration, environmental, property tax and pension expenses.

The companies said customers are obligated to cover those expenses.

Iberdrola acquired Energy East last September. The New York subsidiaries serve more than 1.5 million customers across upstate.

The PSC doesn't comment on pending rate requests as a policy.

Customers who want to comment on the proposed increase can call 1-800-335-2120.

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