NY Budget Adopted without Reform of State Utility Consumer Advocate Function

For awhile it appeared that the glaring weakness of New York’s state utility consumer advocacy function would begin to be addressed.  The Governor’s Moreland Commission  signaled the need for reform, in its final report issued last June.  This was supported by consumer groups including  AARP, Consumers Union, NYPIRG and the Utility Project. The Assembly, for the second year in a row, passed a bill to create a more independent office with greater powers, including the ability to question actions of utilities and their regulators in court.  Editorial support weighed in support of the bill.  The leader of the Senate IDC indicated support for reform.  Unsurprisingly, Verizon and the investor-owned energy utilities opposed any strengthening of the consumer advocacy function.  Last week, however, in the final days and hours as the budget deadline approached, action on improving utility consumer advocacy was blocked by the Governor and Senate Republicans, according to this article which cites capitol sources.

Meanwhile, the spiking wholesale gas and electricity rates this winter may draw more attention to the malfunctions of FERC’s “market based rates” experiment in laissez faire regulation, which departs from the traditional filed rate system still on the law books. At the wholesale level, New York lacks effective independent consumer representation on NYISO and FERC issues.  At the NYISO, the residential consumer voice is marginalized in the “stakeholder” process to about 2% voting power, while power producers and traders together can block reforms proposed by buyers, and the designated NYISO advocate has no real power to challenge NYISO tariffs approved in FERC orders by seeking judicial review.  Money for that purpose was made available a year ago, through a settlement in which AARP and others won $10 million, to be distributed  $1 million a year for residential consumer advocacy on wholesale electricity rate issues.  See FERC ALJ ISSUES FINAL REPORT ON DISTRIBUTION OF FUNDS DISGORGED BY ALLEGED NYISO ENERGY MARKET MANIPULATOR,  May 22, 2013.  The money was part of the disgorgement of funds by an alleged market manipulator agreed to in a settlement.

The money is appropriated as special revenue to the New York Department of State.  DOS has not used any of the $1 million given it last year expressly for advocacy on wholesale electricity issues, and has not bolstered its utility intervention unit work on PSC cases involving retail rates, which is sorely needed.  The utility intervention unit within DOS has not had a director for many months. Indeed, in the new budget, one cannot find a budget line in the DOS budget for work in the PSC cases.

Meanwhile there are major issues involving reasonableness of rates set privately in the wholesale markets with no real FERC review and no possibility of price correction when the markets are gamed; controversial new NYISO capacity market changes slated to raise rates 10% or more in the Central Hudson area, and pending FERC initiatives that could thwart efforts of states and publicly owned utilities to secure reliable electricity at reasonable prices through self-supply or long term contracts.

In all these and other matters, such as the recent price spikes, there is little voice for New York consumers, who continue to pay prices that are at or near the nation’s highest, who after the spikes are even more indebted than before to the utilities, and who are facing greater hardship. In the winter some upstate utilities forbear from shutoffs as a bill collection measure.  With the thaw and advent of warmer weather, we expect a major flood of service termination threats and actual terminations to collect the high charges for essential utility services that burden many New York households.  See CATCHING UP IS HARD TO DO – NEW YORK’S UTILITY CUSTOMERS AND THE GREAT RECESSION

Gerald A. Norlander

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