Statement By Attorney General Eliot Spitzer Regarding The Niagara Mohawk Request For A 13 Percent Rate Increase

This request is a source of great concern for all ratepayers, but especially for those living on fixed incomes and for upstate manufacturers struggling to improve their competitive position. I simply do not believe there is economic justification for an increase of this size, but I will carefully review Niagara Mohawk's financial position before reaching a final conclusion.

In addition to the size of the rate hike, I am concerned that Niagara Mohawk now urges the Public Service Commission to impose a rate plan that will permit it to automatically pass through to its customers each month the cost of electric power. This is a complete departure from the company's current rate structure. While customers must receive price signals so as to be encouraged to conserve electric power at times of peak demand, to totally expose residential ratepayers to the fluctuations of the wholesale power market during this time of transition to competition is unwise and bad public policy. I have pressed this point with the PSC on behalf of Con Edison and Orange & Rockland customers, and will do so in this case as well.

Niagara Mohawk is currently seeking approval for its merger with National Grid USA, and this announcement of a major increase to take effect in two months must be seen for what it is - an effort to influence the PSC's decision by threatening a huge rate increase unless the merger is approved quickly. The PSC must resist such tactics.

My office, which has been a party to the ongoing proceedings at the PSC on the Niagara Mohawk merger and the rate restructuring sought in the merger plan, will continue to urge that any new rates resulting from the merger be "just and reasonable," as the law requires. We will also continue to press for the removal of Nine Mile 1 and 2 stranded costs from the rate base and for the elimination of Niagara Mohawk's power to charge exit fees for those seeking to leave its system. I believe that the resolution of these important concerns is in the best interests of all ratepayers and imperative to the continued health of the economy of upstate New York.


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