Spitzer Files Petition With PSC Challenging Con Ed's Rates
State Attorney General Spitzer today filed a petition with the state Public Service Commission on behalf of consumers in New York City and Westchester County, urging that Con Ed no longer be permitted to pass along increases in its costs to customers.
And with Con Ed's bills up 30% over last summer -- despite significantly cooler temperatures this year -- the Attorney General's petition also seeks a roll back of the utility's rates to last year's levels while the PSC looks into the problem of pass through costs.
Spitzer is asking the PSC to rescind the "automatic rate adjustment" mechanisms that it has granted to Con Ed. This mechanism permits the utility to pass through to its customers much of its increases in costs for power, fuel and many other expenses.
The Attorney General believes that the PSC's regulatory structure has failed consumers because Con Ed is largely shielded from the downside of doing business, and therefore has little incentive to economize or operate more efficiently.
Spitzer pointed out that last year the utility earned $714 million, a 13% return on equity, and that there is no ceiling on how much money the utility can make.
"Right now, Con Ed has the best of both worlds -- it has no limits on what it can earn, and it can simply pass through increases in its costs -- consumers meanwhile, get stuck holding the bag and footing the bill," said Spitzer.
"I feel strongly that there's a direct connection between these pass through mechanisms that the PSC has granted Con Ed and the dramatic increase in consumers' bills this summer."
Con Ed serves three million residential and business customers in New York City and Westchester County. Average residential bills have jumped from $51.59 last June to $73.55 this June.
"Last summer was one of the hottest on record, this summer is one of the coolest, yet Con Ed's bills are up by 30% and more - there is something dramatically wrong with this picture," said Spitzer. "These increases affect everyone, but are especially hard on senior citizens living on fixed incomes and small businessmen and women trying to support their families.
"I am also filing with the Commission a request to roll back Con Ed's rates to those of last year while the PSC is acting on my petition to end pass through costs."
Spitzer says that if the PSC does not act on his petition he will ask the legislature to take action on the pass through measures.
Spitzer also noted that for years, Con Ed's rates have been well above the national average.
"Any business in the private sector that simply passed along its increased costs to consumers without doing anything to hold them down wouldn't stay in business for too long," said Spitzer.
"We need to ensure that Con Ed -- through pricing regulations set by the PSC and its own business practices -- is doing everything possible to operate more efficiently and effectively. Residential consumers and business customers deserve nothing less."
The filing to the PSC is being handled by Mary Ellen Burns, the head of Spitzer's Telecommunications and Energy Bureau, and Assistant Attorneys General Charlie Donaldson and Richard Golden.