BILL NUMBER: S3734B
SPONSOR: MAYER
 
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 from ratepayers,
specifically those related to their participation in rate cases.
 
SUMMARY OF SPECIFIC PROVISIONS:
Section 1 amends subdivision 12 of section 66 of the public service law
by adding a new paragraph (m) that directs the Public Service Commission
to establish regulations limiting what costs related to preparing a rate
case a utility can recover.
Section 2 sets forth 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 $457.5 million electric rate increase over three years, and a
$187.2 million gas rate increase for Consolidated Edison. For New York-
ers across the economic spectrum, these rate increases are untenable.
According to the Robin Hood Foundation, 1.5 million New York City resi-
dents live in households where their utilities have been shut off at
some time in the past 5 years.1 Even for households that have not expe-
rienced shut offs, utility costs represent a growing burden.
Under the current ratesetting 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 ever-increasing utility rates.
According to research by the AARP in 2022, utilities in New York State
spent a combined $18.9 million on expenses related to their partic-
ipation in the most recent rate cases.2 Con Edison, for example, spent
more than $6.5 million on lawyers, expert witnesses, and other consult-
ants in their most recent rate case; NYSEG spent $2.6 million. 100% of
these costs are borne by ratepayers. As AARP observed, "essentially,
consumers pay for utilities to increase their own rates." Similarly,
ratepayers bear the cost of excessive employee and executive salaries.
Although the entire utility ratesetting 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 Connec-
ticut and Colorado, which have adopted similar legislation.
 
PRIOR LEGISLATIVE HISTORY:
New bill.
 
FISCAL IMPLICATIONS:
None.
 
EFFECTIVE DATE:
This act shall take effect 180 days after it shall be enacted into law.
(1) Wilkinson, N., et al. "The Prevalence and Persistence of Energy
Insecurity in New York City." Robin Hood Foundation. July 2024. Access
on January 28, 2025. https://robinhood.org/wp-content/uploads/2024/07/
Poverty-TrackerEnergy-Insecurity-Report-Robin- Hood-2024.07.18-FINAL.pdf
(2)The Great Utility Ratepayer Divide, AARP New York (Oct. 12, 2022).
Accessed January 28, 2025. https://aarp-states.brightspotcdn.com/8c/
db/df624d0845a8888eed76832e8470/the-
creat-utility-rate-payer-divide-10-12-22.pdf

Statutes affected:
S3734: 66 public service law, 66(12) public service law
S3734A: 66 public service law, 66(12) public service law
S3734B: 66 public service law, 66(12) public service law