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Electricity Advocacy Coalition, AREA, Formally Launched 11/5

Natural Gas Rates to Jump for O&R's Customers 10/24

NiMo Offers New Proposal on Security Deposits Based on Credit History 9/19

Upgrade to Power Grid May Result in Higher Rates 9/18

Electricity Advocacy Coalition, AREA, Formally Launched

(November 5) On Nov. 4, a diverse group of business, labor, and community leaders formally launched a coalition whose mission and purpose is to ensure that the New York metropolitan area has an ample and reliable electricity supply, and economic prosperity for years to come.

The New York Affordable Reliable Electricity Alliance (AREA) is comprised of 17 organizations based in New York City and the downstate area. It is intent on having the recent August blackout be the last time New York experiences economic hardship caused by a disruption of the electricity supply. In fact, AREA believes that the area's economic prosperity will depend on how effectively energy issues are addressed.

"Gone are the days when energy was a back burner issue to the people and businesses of New York," said Jerry Kremer, Counsel to New York AREA's Advisory Board and the former Chairman of the New York State Assembly's Ways & Means Committee. "Our area needs a world-class energy network if we are to continue to have a world-class economy. Today, a diverse group of business, labor, and community leaders comes together to raise public awareness and find solutions to our electricity challenges," said Kremer.

New York AREA's first order of business has been to support the continued safe operation of the Indian Point nuclear power plants in Buchanan (Westchester County), New York, which provide 20 to 40 percent of the electricity used in New York City and several downstate counties. Seasonal and usage factors determine the actual percentage of electrical power that Indian Point provides at any given time.

New York AREA's near-term activities include arranging briefing sessions for business and community leaders about Indian Point, the failure of the state legislature to extend the Article X siting law, and recommendations on how the state can protect itself from future blackouts.

Source: PRNewswire

Natural Gas Rates to Jump for Some New York State Customers

(October 24) On Oct. 22, Orange & Rockland Utilities' said that natural gas delivery rates would increase 5.8 percent beginning Nov. 1. Delivery rates for electricity, however, will remain stable until at least November 2006. With the natural gas increase, the company hopes to increase its earnings by $23.5 million over the next three years.

In 2004 and 2005, rates will increase by 5.06 percent and 2.81 percent, respectively, said O&R spokesman Mike Donovan.

O&R applied for the rate increase last November. After some changes and corrections in the application and two public comment hearings, the Public Service Commission approved the increase yesterday.

Beginning Nov. 1, the average natural gas customer will see an increase of $6.52 per bill, Donovan explained. Next year, there will be a $5.66 increase per monthly bill and in 2005, customers will see an increase of $3.14 per bill. The average gas customer now spends $111.86 monthly, O&R said.

O&R will need to meet certain performance standards under the agreement, among them:

• O&R is required to spend $108 million to improve its electric transmission and distribution facilities.
• According to the PSC, if O&R spends less money than $108 million, O&R's electric customers will receive the difference. If the company spends more, additional costs may be turned over to customers.
• If customer service or reliability falter, the PSC will penalize O&R financially.
• If earnings for the company's electric operation exceed 12.75 percent between July 2003 and June 2006, the earnings above that level will be shared with the company's 211,500 electric customers.
• Earnings in excess of 11 percent for the company's natural gas operation over the three-year period will be shared with the company's 121,000 natural gas customers.

Source: Knight Ridder Tribune Business News

NiMo Offers New Proposal on Security Deposits Based on Credit History

(September 19) Niagara Mohawk has dropped a plan to collect security deposits based partly on a customer's credit rating in favor of a new proposal that would affect consumers who have late or unpaid bills with the utility.

The latest proposal -- the third variation of Niagara Mohawk's bid to collect security deposits from some customers -- would be based on their credit history.  Those customers who are more than 60 days late in paying their bills would be required to pay a security deposit equal to one month's bill, as determined by the consumer's average use over the previous year. And, consumers who are resuming service but have unpaid bills from previous accounts would be required to put up a two-month deposit and would be obligated to pay off their old bill.  According to a utility spokesman, new customers with no prior history with Niagara Mohawk would not face a security deposit.

The latest plan won the support of the staff of the state Public Service Commission and the state Consumer Protection Board, which had opposed the company's two previous proposals.  However, it still must be approved by the PSC.

Niagara Mohawk wants permission to collect security deposits as part of its push to reduce its unpaid bills, which have averaged about $65 million a year over the last three years -- a level that utility officials have said is high compared with other Northeastern utilities.

Doug Elner, the Consumer Protection Board's director of utility intervention, said the state agency prefers the latest proposal over earlier plans that targeted customers who had leases of less than one year or who failed to meet credit standards set by the utility. "It's targeted to those customers who have proven they don't pay their bills, yet it minimizes the burden of keeping the customers on the system," he said.

But some advocates for low-income consumers oppose the proposal, saying it would make it harder for many cash-strapped families to get electric or natural gas service.

"It creates barriers to both getting service and keeping service," said Gerald A. Norlander, the executive director of the Public Utility Law Project, an Albany-based advocacy group for low-income consumers. "It's going to impose enormous difficulties for people who don't have a lot of cash," said Norlander, who estimated that the latest plan would affect upwards of 115,000 customers, compared with 73,000 under the company's original proposal.

Customers receiving public assistance or who are blind, disabled or age 62 or older would be exempt from the security deposit rules. The security deposits would be refunded to customers, as a credit on their account, after their account has been current for 12 straight months.

Source: The Buffalo News

Upgrade to Power Grid May Result in Higher Rates

(September 18) It will cost billions of dollars to upgrade the nation's power grid to ease the threat of sweeping blackouts like the one that hit the Northeast on August 14. And the brunt of those costs will likely be borne by consumers, which could push up the already-high electric rates in the Buffalo Niagara region.

Just how big a bite those costs take is anyone's guess, with a lot depending on how much actually gets spent and how those expenses are spread around, both in New York state and elsewhere. On the transmission side, it's far from certain just how much the upgrades will cost, with estimates ranging from less than $10 billion to upwards of $100 billion.

The Electric Power Research Institute (EPRI), a utility-backed group in California, estimates that consumers would have to pay out as much as $100 billion to upgrade the nation's electric system. Likewise, the Edison Electric Institute, the biggest US utility industry group, estimates that about $55 billion needs to be spent to upgrade the nation's transmission system and build new lines. But even at the high end of those estimates, the big investments in the power grid may not necessarily result in a huge case of sticker shock for consumers. At $100 billion, the EPRI study said the average resident's annual electric bill would rise by less than $100 a year, assuming the costs were spread equally throughout the country, which is far from certain.

One business group, the Business Council of New York State, in early September recommended that New York divert some money from a surcharge imposed on all electric bills that now is earmarked for conservation and energy research programs and use those funds to pay for improvements to the transmission grid. The group proposed funding grid upgrades with the portion of the $150 million raised each year through the system benefit charge that is paid by industrial and commercial customers.

Still, there are no guarantees that the costs will be spread evenly across the country, which could add another layer of controversy to transmission upgrade projects, especially in high-cost areas like New York. Energy experts said the transmission upgrades would yield other benefits. EPRI estimates that the average consumer eventually would save about $500 a year because of lower power costs and the subsequent drop in the prices of goods and services as the benefits of the more efficient power grid filter through the economy.

Part of the problem is something that industry officials call "congestion," or transmission bottlenecks that prevent electricity from moving from areas where it is plentiful or cheaper to regions where it is in short supply or more expensive. One of New York's biggest bottlenecks limits the amount of power that can flow from upstate New York to the electricity-starved New York City region. The New York Independent System Operator (ISO), which manages the state's power grid, estimated this spring that congestion cost New York consumers $2.75 billion from 2000 through this year. "This problem also has a continuous upward effect on electricity prices, since congestion on our transmission grid inhibits the free trade in electricity that the competitive markets were designed to foster," said William Museler, the ISO's chief executive, in testimony to Congress earlier this month.

That's been a problem nationally over the last three decades, as the deregulation of parts of the electric industry, pressure to cut rates and what some believe are less than lucrative returns available from the more heavily regulated transmission segment have stifled investment. As a result, spending by the utility industry on transmission and distribution projects is at a 40-year low, according to the C Three Group, an Atlanta-based energy consultant. Over the same period, electricity use nationally has soared nearly six-fold.

To encourage investment, federal regulators adopted incentives earlier this year that raised the potential rate of return from transmission projects to 12 percent from 11 percent. But industry and business groups, including the Edison Electric Institute and the state business council, are pushing for even more incentives. They support legislation in Congress that would allow even higher rates of return and give further tax incentives to transmission projects.

The legislation also would give the Federal Energy Regulatory Commission more authority to oversee the usually long and controversial process of siting new transmission lines -- an area where individual states now have jurisdiction.

Source: Buffalo News

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