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NYSEG wants rate increase

By: Jeff Platsky |

New York State Electric & Gas Corp. customers will be paying more for electric and natural gas service by next May if New York regulators approve a rate increase requested by the utility.

The proposed increase would raise average residential electric bills by $8 a month and average residential natural gas bills by $10 a month. Increases could be higher or lower based on usage and service classification.

New York’s Public Service Commission will review the utility’s request for higher rates over the next year. Staff will assess data from the company in support of the rate increase and those in opposition to the increase and conduct a round of public hearings in NYSEG service territories across the state.

The increase represents a 10 percent increase on electric distribution rates and an 11 percent rise in natural gas distribution fees.

Overall, the increase would raise $126 million in electric revenues annually for the utility and $38 million for natural gas services.

The last rate increase was in September 2012.

“After nearly four years without a rate change, this plan provides funding to enhance safety and reliability and recover past storm expenses, while keeping our customers’ costs among the lowest in the state.” said Mark S. Lynch, president and CEO of NYSEG and RG&E.

Utility representatives said proceeds from the electric rate increase would be used to enhance maintenance of the 35,000-mile electric distribution system, in addition to strengthening the overall security and automation of the network.

The company proposed a five-year plan to recover $260 million in damage and recovery costs incurred during Tropical Storm Lee in 2011 and Hurricane Sandy in 2012. Recovery of storm-related costs amounts to half of the total revenue that would be collected from the rate increase, company representatives said.

On the gas side, revenues would be used to replace potential weak links in the gas distribution system and expand the natural gas network to communities that now lack service.

A portion of the rate increase would also cover an estimated $18 million increase in the utility’s annual property tax bill.

In 2014, NYSEG reported net income of $115 million on revenues of $1.76 billion, up from a net income of $110 million on revenues of $1.62 billion in 2013, according to company financial statements.

New York regulators are expected to review the proposal over the next year, soliciting input from interested parties.

“This is a long process,” said Clayton Ellis, NYSEG spokesman based in Binghamton. “There will be ample opportunity for people to get involved in the process.”

Lynch said NYSEG residential electric customers pay some of the lowest costs among major electric utilities in the state and natural gas costs are also among the lowest.

The rate increase only affects the distribution portion of a ratepayer’s utility bill. Since utility industry deregulation in New York, distribution and supply have been separated.

Electricity and natural gas is either supplied by the utility or can be purchased from an independent supplier, Rates on the commodity are set not buy regulators but by market forces. NYSEG is responsible for getting the supply from the respective supplier to a home or business.

NYSEG, a subsidiary of Bilboa, Spain-based Iberdrola, serves 883,000 electric customer and 264,000 natural gas customers across a patchwork of upstate New York covering about 20,000 square miles with a population of 2.5 million.