PSC is seeking public comment on the Joint Rate proposal filed by Central Hudson Gas & Electric Corporation, Department of Public Service Staff and other parties to the case.  The Commission will hold two public statement hearings on the proposal and interested parties are invited to attend and provide comments.  Click here for a copy of the case factsheet that includes the dates and locations of the hearings.

Background

In July 2014 Central Hudson Gas & Electric Corporation (Central Hudson) formally asked the New York State Public Service Commission (Commission or PSC) to approve increases in revenues (the total amount collected from customers through the rates they pay) for electric and gas delivery service.

On February 6, 2015 a Joint Proposal (JP) was filed by Department of Public Service (DPS) Staff, Central Hudson, Multiple Intervenors, the Retail Energy Supply Association, the Pace Energy and Climate Center, and the Sabin Center for Climate Change Law at Columbia Law School (collectively, the “Signatories”).  The JP proposes a three-year rate plan to become effective July 1, 2015.

An Administrative Law Judge is presiding over the gathering of public comment and all evidence relating to the proposal.  The JP and public comments will be presented to the Commission for consideration.  It may adopt or reject the JP in whole or in part.

Summary of the Rate Case

As part of the ratemaking process, a utility will file a request with DPS for a rate increase. The request includes the proposed rates and supporting documentation justifying the Company’s proposal. 

In its initial filing, Central Hudson requested to increase its electric delivery revenues by $40.1 million and its natural gas delivery revenues by $5.9 million.  These proposed increases would have resulted in total bill increases of 8.4% and 2.7% for an average electric and gas residential customer, respectively.  Central Hudson stated that the main reasons for the requests are to offset sales reductions, fund environmental clean-up costs, and to pay for local property taxes, higher operating expenses due to inflation, and increased expenses associated with new infrastructure investment.

DPS assembled a team of experts, including lawyers, financial analysts, engineers and consumer service specialists, to analyze the filing.  The investigation involved a close examination of Central Hudson’s supporting documentation and of the contrary claims put forth by other parties in the case.  Following this investigation and examination, the parties developed through negotiation, the JP.

Summary of the Joint Proposal

Under the JP, a set of terms and conditions were developed for a three year rate plan for the Company’s electric and gas service.  The three year plan is to become effective July 1, 2015 with the Rate Year 1 ending on June 30, 2016, Rate Year 2 ending on June 30, 2017 and Rate Year 3 ending June 30, 2018.  As shown in the chart below, to mitigate bill impacts, the Signatories agreed to utilize available regulatory liabilities as bill credits, thereby reducing the proposed delivery rate increases:

The charts below show the estimated percentage bill impacts for average electric and gas customers:

The JP also includes:

• Modifications to the electric reliability and gas safety performance metrics that will hold the Company to higher performance measures than those currently in place;
• Stringent requirements concerning replacement of leak-prone gas pipes;
• Establishment of a Major Storm reserve for electric operations and funding for the reserve;
• Continuation of Central Hudson’s revenue decoupling mechanisms (RDM) per the 2010 Rate Case  Order with provisions for semi-annual RDM periods to replace annual and interim RDM periods;
• Reporting requirements for numerous topics such as the Empower program, low-income customers, security upgrades, actual earnings, capital expenditures and gas safety;
• Continued incentives for Central Hudson to provide high quality customer service;
• Requirement for the Company to transition to monthly billing for all customers; and
• Formation of a Reforming the Energy Vision (REV) Working Group to present demonstration projects for the Commission’s consideration.