Jan. 08, 2008

County Executive Andy Spano will speak out against a proposed three-year, $1.9 billion Con Edison rate increase when the New York State Public Service Commission holds a public hearing on the increase at the Westchester County Center in White Plains.

The hearing will be held in two sessions, starting at 4:30 p.m. and 6:30 p.m. tonight.

The proposal from Con Edison calls for an increase of approximately 33 percent on the delivery portion of its bills in the first year alone. In total, the utility is asking for a first-year increase of $1.2 billion in Westchester and New York City, followed by an additional $704 million total increase in the second and third years. It could add an average of $275 a year to the average residents’ bill. This would apply to all electric residential customers as well as businesses, non-profits, and governments in the Con Edison territory—irrespective of whether electricity is purchased from Con Edison or some other supplier. The increase would take effect April 1st. 
Spano will speak before commission members at the start of the 6:30 p.m. hearings.

Residents, who already pay the highest utility rates in the continental United States, should not be forced to finance an increase of historic proportions, especially when Con Edison has not shown that it has addressed serious management deficiencies that were behind a series of extended outages in 2006, said Spano.
A report by an independent consultant hired by the PSC at the county’s urging following those outages, said Con Edison must adopt procedural changes to correct its emergency response plan.

“Before asking us for more money, Con Edison must put its own house in order, adopting the recommendations of this independent consultant, who by the way, made it clear that money alone would not cure the serious failings that led to the extended outages of 2006,’’ said Spano.

Spano was referring to the summer of 2006 when Westchester had several major power outages, some of which lasted for days and left thousands without power. Following those outages, Spano wrote to the PSC asking for an independent assessment of Con Edison’s performance, infrastructure, communication and other practices. The PSC responded by appointing an auditor, who in October issued a report.

“Many of the problems that Con Edison needs to correct are performance based and really are separate and apart from infrastructure problems that they claim to need the rate increases for,’’ said Spano.

The Spano administration has already filed written testimony with the PSC, urging it to reject the proposed increase, but the County Executive said he wanted to drive home the message in person.

Con Ed delivers electricity to all Westchester residents and businesses, except those in parts of the northern county covered by New York State Electric & Gas. Customers can choose to go with a different energy supplier even though Con Edison delivers the power. 
Spano urged resident to come out to tomorrow’s hearing, which will be the only one held in Westchester.Those who cannot attend the public hearing can still comment by writing to Jaclyn A.Brilling, Secretary of the Public Service Commission, 3 Empire State Plaza, Albany, NY 12223 or sending an e-letter through the “Contact Us” link at http://www.askpsc.com/ or by calling the PSC opinion hotline at (800) 335-2120 before February 8th.  To learn more about the Con Edison case or the Jan. 16 hearing, please visit the County’s website: http://www.westchestergov.com/. 

                  The following is testimony County Executive Spano will give at the hearing.

Public Statement on Behalf of Westchester County Executive Andrew J. Spano
New York State Public Service Commission
Case No. 07-E-0523
January 16, 2008

Good Evening.  I would like to welcome you to Westchester County and thank you for conducting these hearings. I am here tonight on behalf of Westchester County residents who are already burdened with the highest electric rates in the continental United States.Before you is a request by Consolidated Edison to raise those rates yet another 33 percent for service delivery – and that is just in the first year of the proposed three-year increase. To the average Westchester resident that would mean paying about $275 a year more than what they are paying now. This will be especially burdensome for senior citizens and others on fixed incomes.

Con Edison’s proposed rate increase on service delivery is based on a number of factors, including a return on equity that exceeds by far that which was recently granted to other utilities by your commission. In addition, it is seeking an unprecedented increase in its infrastructure program, an increase that, by its own admission, would involve an expenditure of $7.5 billion over the next five years.  This program far exceeds any undertaken by the company in its history.

Westchester County has committed substantial resources to research, analyze, and make its arguments in the pre-filed testimony, at the previous hearings, and in the County’s briefs against the increase.  Con Edison’s proposal can’t be seen, by any means, to be just and reasonable - the standard the commission uses to make it determination.  In fact, we consider this hike as an unprecedented and unconscionable burden on business and residential customers.

The issue before this commission is simply this: Is such a huge increase in spending really necessary to provide safe and adequate service?  The short response is, no.
After a series of outages in 2006, Westchester County asked the Public Service Commission to hire an outside auditor for an independent assessment of Con Edison’s Electric Emergency Outage Response Program.  We are appreciative that the commission did just that and hired Vantage Consulting Inc. The main shortcomings noted by the consultant’s report were related to management and planning deficiencies rather than a lack of infrastructure or resources. The Report stated that these deficiencies were the “root cause” of the problems experienced during the 2006 outages and before Con Edison does anything else it must review and change its emergency response plan. This means, among other things, adopting industry best practices, reorganizing staff, revamping maintenance and repair policies, initiating a clearer chain of command and speeding the analysis of field information to assess and respond to problems more quickly. The Vantage report also stressed another point – one which I have been making for years with regard to Con Edison – that more money alone will not solve the problem. 

 Accordingly, before allowing any rate increase, the Commission should:
 1. Require Con Edison to make the changes recommended by the Vantage Report
 2. Review the changes Con Edison has made to determine if their emergency management operations have improved and
 3. Require a detailed study of Con Edison’s system to ensure that the proposed funds will be spent effectively.

The Administrative Law Judges assigned to this case have issued their Recommended Decision.  Though it proposes a smaller increase, it still represents the largest increase in Con Edison’s history, almost $700 million in one year.  It is also the largest percentage increase in recent memory for Con Edison -  a 23 percent increase in delivery rates for NYPA customers, a 16% increase in delivery rates for residential customers, and a 12% increase in delivery rates for commercial customers.  This is in addition to any supply increases these customers may experience due to changes in the market.  The Recommended Decision addresses only some of the areas of concern raised by the various parties, including the County.  Now it will be up to the Commissioners to further reduce the proposed rate increase to ensure that rates are just and reasonable.

All ratepayers in Westchester will be affected, not only those on low and fixed incomes, and not only residents. Con Edison’s customers include local, small businesses who are generally more vulnerable to rate increases, and are forced to pass these costs on to their customers or go out of business.  

As noted earlier, the current Recommended Decision will mean an increase in delivery rates for NYPA customers. These include the County and over 100 municipal entities such as towns, villages, cities, school districts, fire departments, housing authorities and water works. The added cost to these entitites under Con Edison’s proposed increase of nearly 50 percent, would be about $13.6 million a year, much of which would be passed onto residents and businesses in the form of tax increases.

In considering the vast material that has been presented to you for consideration, I urge the Public Service Commission to look into the pocketbooks of our residents and the impact that such a large increase will have on all the customers within the Con Edison service territory.  On behalf of the residents and businesses of Westchester, I thank you for your time and attention.