Con Ed Rate Deal Far From Perfect, Says AARP

As NYC Residents Pay Some of Nation's Highest Electric Rates, Deal Hides Hikes for Residential Consumers - Highlights Need for NY Utility Watchdog

Feb 20, 2014, 15:24 ET from AARP New York

NEW YORK, Feb. 20, 2014 /PRNewswire-USNewswire/ -- What's really in the Consolidated Edison rate deal approved by the New York State Public Service Commission (PSC) today? AARP warns that while the ruling temporarily staves off a $400 million rate hike via a "rate freeze" by the utility company, which already charges some of the highest rates in the nation, it also comes with a price: a built-in mechanism to increase rates, decreases for every other group but residential, and the threat of even higher rates right around the corner.  

Under today's ruling, Consolidated Edison's residential customers will automatically be on the hook for rate increases: $47.7 million for electric customers after two years and $40.8 million for gas customers after three years – though those rate increases will be offset in the first year after the freeze by a $62.4 million one-time credit, providing some relief.  But once that credit is gone, the hikes will stay in place to deliver rate shock to struggling consumers. AARP also says the automatic rate hikes could hit at the same time Con Ed seeks even higher rates.

"This deal is far from perfect, but it's better than a $400 million rate hike, and the credit will provide some temporary relief to those struggling with their Con Ed bills – we commend the parties for coming to that agreement," said Beth Finkel, State Director for AARP in New York State. "The best deals were cut by those who could afford to be at the table with expert witnesses and attorneys; residential customers, on the other hand, will see their bills increase. New York needs a level playing field when it comes to utility rate hikes. The Empire State should not be a utility empire."

The Association has made it a top legislative priority to establish an independent consumer utility advocate office to represent consumers in rate hike proceedings and other complex regulatory matters before the PSC.  Making the case for the office, AARP recently issued a report detailing how the cards are stacked against consumers in cases like this one "David v. Goliath; Why consumers are losing New York's utility game."

"We are very concerned about what happens after the freeze is over, and the fact that consumers lack a watchdog to stand up for them," added Finkel

The deal includes a rate decrease for commercial and industrial customers; AARP argues residential consumers should have received a decrease as well. And Con Ed pushed the deal and ones like it through using rate payer dollars – the utility company has used more than $11.5 million of consumer's money over the last four years to push rate hikes.

AARP members attended today's PSC hearing to voice their opposition to the deal. 

AARP says the freeze is also misleading; in addition to the looming rate hikes, utility bills could unexpectedly increase during the two-year period. Market fluctuations in gas and electricity prices could drive bills higher, as is currently occurring across New York and the nation. 

"New Yorkers are struggling to heat their homes right now due to Con Ed's high and seemingly ever-increasing electric rates.  AARP wanted a deal that held no rate increases for residential consumers, just as other ratepayer groups received," added Finkel.

In New York City, 58% of the 50+ population and 52% of Baby Boomers are concerned about being able to afford Con Ed's current rates - which are already more than twice the national average– according to a recent AARP survey.

High utility rates are particularly burdensome on older New Yorkers, who must spend a higher proportion of their household income on energy - especially those on fixed incomes.

About 80,000 Con Ed customers are shut off each year for bill collection purposes, and hundreds of thousands are threatened with shutoffs every month.

AARP is urging Governor Andrew Cuomo to heed the recommendation of his own Moreland Commission for Utility Storm Preparation and Response by establishing an independent consumer utility advocate office as 40 other states have done, saving residential ratepayers far more than they cost.

The New York State Assembly last year passed a bill sponsored by Assemblyman Jeffrey Dinowitz (D-Bronx) to create such an office in New York. The State Senate's Independent Democratic Conference has made passage of the bill, carried by Sen. Diane Savino (D-Staten Island), a 2014 priority. AARP is urging the Governor and other state leaders to join in this effort.                                                        

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