BILL NUMBER: S5593
SPONSOR: MAYER
TITLE OF BILL:
An act to amend the public service law, in relation to periods suspend-
ing the operation of certain rate, charge or other changes by utilities,
and provisions permitting utilities to retroactively recover revenues
they would have earned during such periods
PURPOSE:
This legislation would address and mitigate the financial burdens placed
on consumers due to escalating utility rates and the effects of retroac-
tive rate adjustments (known as "make whole provisions") that occur rate
cases run longer than allowed by statute.
SUMMARY OF SPECIFIC PROVISIONS:
Section 1 establishes the legislative intent, highlighting the growing
financial strain on New York residents and businesses due to escalating
utility costs and the inherent power imbalance in the favor of utilities
in rate cases.
Section 2 amends Paragraph (f) of subdivision 12 of section 66 of the
public service law, revising the extension period for utility rate case
suspensions from six to nine months. It introduces new conditions for
subsequent suspension extensions, including a monthly review process by
the Commission that factors in the impact on ratepayers.
Section 3 adds a new section, 66-x, to the public service law. This
section defines key terms and introduces gradient-based rate caps to
limit retroactive rate increases during extended suspension periods,
establishing a structured reduction in allowable rate increases over
time. It also prohibits utilities from recovering any revenue deficits
caused by these caps through future rate filings.
Section 4 contains a severability clause to ensure that if any part of
the act is declared invalid, the remaining provisions will still be
enforceable.
Section 5 specifies the act's effective date, one year after it becomes
law.
JUSTIFICATION:
In recent years, New Yorkers have faced unprecedented increases in util-
ity rates, putting approximately 1.5 million residential households and
thousands of businesses at risk of service terminations. These rate
hikes, combined with utilities' consistent profitability, underscore a
growing financial burden on consumers, particularly those in low-income
households.
Compounding this issue is the frequent delay in the resolution of utili-
ty rate cases, often extending beyond the statutory eleven-month suspen-
sion period due to prolonged settlement negotiations. During these
delays, utilities frequently seek and are granted "make whole"
provisions, allowing them to retroactively recover revenues based on new
rates that would have applied during the suspension period. This retro-
active adjustment often results in "rate compression," where consumers
face unexpectedly higher rates in a short period, exacerbating their
financial strain.
Although make whole provisions can theoretically apply to both rate
increases and decreases, they are predominantly used to justify
increases. This imbalance, where large utility corporations wield
disproportionate power in rate case settlements, leaves ratepayers to
bear the brunt of these financial pressures.
This bill seeks to address this imbalance by extending the statutory
timeframe for a rate case by 3 months to give all parties additional
time to reach a negotiated settlement. In rate cases that exceed the
allowable timeframe, this legislation would limit the ability of utili-
ties to retroactively recover increased rates. This legislation intro-
duces gradient-based rate caps, which will gradually reduce the permis-
sible retroactive rate increases over time during extended suspension
periods. This structured approach aims to protect consumers from sudden
and steep rate increases and promote fairness in the utility rate-set-
ting process by restoring the balance in the negotiation power between
utilities and ratepayers.
PRIOR LEGISLATIVE HISTORY:
New bill.
FISCAL IMPLICATIONS:
This bill is expected to have a minimal fiscal impact on the state.
EFFECTIVE DATE:
This act shall take effect one year after it becomes law.
Statutes affected: S5593: 66 public service law, 66(12) public service law