New York PSC Directs All Major Utilities To Review Approaches To Default Service Supply Billing To Reduce Likelihood Of Extreme And Sudden Price Volatility

March 1, 2022

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Copyright 2010-21 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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Rory M. Christian, Chair of the New York PSC, has issued letters to all of the state's investor-owned utilities (as well as PSEG Long Island) directing each to, "review their approaches to full-service supply billing to ensure they are reducing the likelihood of extreme and sudden price volatility."

As previously reported, Christian had already directed Consolidated Edison to undertake such a review, and ConEd reported that various measures suggested by the PSC reduced the default service supply rate by nearly 9 cents per kWh (see story here)

Christian has now issued substantially similar letters to the other major utilities, directing each to, "(1) strengthen communications to customers regarding anticipated bill increases due to rising energy costs, (2) continue to leverage power supply buying methods and hedges to mitigate the risk of severe price volatility, and (3) increase outreach and education efforts to promote consumer payment assistance plans and programs to reduce energy usage."

"The Department’s review of this issue reveals that recent commodity prices for New York’s utility customers were significantly higher in recent months, driven by a global increase in natural gas commodity prices due to higher usage as a result of abnormally colder weather and an increased international demand for natural gas. The increase in natural gas prices also drove up electricity prices," Christian generally wrote in each letter

"While the Public Service Commission (Commission) does not regulate commodity prices of natural gas and electricity, and New York’s utilities do not control market prices of these commodities, utility procurement and billing practices do impact the prices that customers pay and can dampen or exacerbate price swings from month to month. The Commission has repeatedly found that utilities have a responsibility to use strategies that responsibly procure commodities on behalf of their customers at least cost and have hedging strategies that smooth out market price fluctuations. [Utility name] should immediately review their approaches to full-service supply billing to ensure they are reducing the likelihood of extreme and sudden price volatility," Christian generally wrote in each letter

Christian said that utilities should continue to send out proactive messages to their customers on the projected increases in natural gas and electricity commodity prices and the impact to customers’ utility bills

Christian requested that a response with recommendations for how each utility will execute on all of the above actions be submitted to Department of Public Service Staff by March 8, 2022.

The utilities to which the latest letters were sent were:

• National Grid NY

• New York State Electric & Gas (NYSEG)

• Rochester Gas & Electric (RG&E)

• Orange & Rockland Utilities, Inc.

• Central Hudson Gas & Electric Corporation

• National Fuel Gas Distribution Corporation

• PSEG Long Island

The letters were issued as New York Governor Kathy Hochul announced that, "I have directed the Department of Public Service to ensure all the major electric and gas utilities in the state work with customers, and in particular, our most vulnerable residents to protect them from volatile pricing and educate them about resources available to them."

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