Authorizes and directs the public service commission to establish rules to limit a utility's ability to recover its direct or indirect costs associated with its attendance in, participation in, preparation for, or appeal of any rate proceeding conducted before the commission.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A5402B
SPONSOR: Burdick TITLE OF BILL:
An act to amend the public service law, in relation to authorizing the
public service commission to establish rules to limit a utility's abili-
ty to recover certain operating expenses
PURPOSE:
To limit the expenses utility companies can recover at cost from rate-
payers, specifically those related to their participation in rate cases
and excess employee and executive salaries.
SUMMARY OF SPECIFIC PROVISIONS:
Section 1 amends subdivision 12 of section 66 of the public service law
by adding a new paragraph (m) to prohibit the public service commission
from approving any rate increase that allows a utility to recover more
than $100,000 in costs associated with its participation in the rate
case, and or utility management employee salaries in excess of $250,000.
Section 2 sets the effective date.
JUSTIFICATION:
Over the last several years, the Public Service Commission has approved
multiple significant rate increases for public utilities which have
stretched many ratepayers to the limit. For example, in 2023, the PSC
approved a $457.5M electric rate increase over three years and $187.2
million gas rate increase for ConEd. For New Yorkers across the economic
spectrum, these rate increases are untenable. According to the Robin
Hood Foundation, 1.5M New York City residents live in households where
their utilities have been shut off at some time in the past 5 years.'
But even for families that haven't experienced shut offs, utility costs
represent a growing burden.
Under the current rate making process, utility companies are allowed to
recover 100% of their operating costs from ratepayers. These expenses
include employee salaries, office rent, legal expenses, software fees,
etc., and contribute to growing utility rates.
According to research by the AARP in 2022, utilities in New York State
spent a combined $18.9M on expenses related to their participation in
the most recent rate cases.2 ConEd, for example, spent more than $6.5M
on lawyers, expert witnesses, and other consultants in their most recent
rate case; NYSEG spent $2.6M. 100% of these costs are all borne by rate
payers. As AARP observed, "essentially, consumers pay for utilities to
increase their own rates." Similarly, ratepayers bear the cost of exces-
sive employee and executive salaries.
This legislation would cap the amount utilities can recover for direct
and indirect expenses related to their involvement in the rate case at
$100,000, and would cap the amount they could recover for any individual
salary for utility management employees at the current amount of the
Governor's salary (currently $250,000). Although the entire utility rate
setting process needs to be reformed, this bill ensures that ratepayers
are not footing the bill for excessive operating costs, and follows the
lead of other states, including Connecticut and Colorado, which have
adopted similar legislation.
PRIOR LEGISLATIVE HISTORY:
New bill.
FISCAL IMPLICATIONS:
None.
EFFECTIVE DATE:
180 days after it shall be enacted into law.
1 Wilkinson, N., et al. The Prevalence and Persistence of Energy Insecu-
rity in New York City." Robin Hood Foundation. July 2024. Access on
January 28, 2025.
https:/ /robinhood.ordwp-content/uoloads/ 2024/07/PovertvTracker-Enerav-
Insecuritv-Report-Robin-Hood-2024.07.18-FIN ALpdf
2 " The Great Utility Ratepayer Divide." AARP New York. October 12,
2022. Accessed January 28, 2025.
https://aara-states.brightsuotcdn.com/8c/
db/df62.4d0845a8888eed76832e8470/
the-Rreat-titilitv-rate-paverdivide-10-12-22.ndf
