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Post date: September 14 2000

Spitzer Files Petition With Psc Challenging O & R Rates

Attorney General Spitzer today filed a petition with the state Public Service Commission on behalf of customers of Orange & Rockland Utilities, urging that O&R no longer be permitted to pass along increases in its costs to electricity consumers.

The Commission granted O&R 'automatic rate adjustment' mechanisms in February of 1999. The mechanisms permit the utility to pass through to its customers all of its increases in power costs.

And with the utility's bills up 22% 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.

Spitzer believes that the PSC's regulatory structure has failed consumers because O&R is largely shielded from the downside of doing business, and therefore has little incentive to economize or operate more efficiently.

The Attorney General pointed out that over the past two years, the utility has made just under $60 million, and that the PSC places no ceiling on how much money O&R can earn.

"Currently, O&R has the best of both worlds -- it has no limit on how much 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.

O&R serves 277,000 customers in Orange, Rockland, and Sullivan counties in New York, and adjoining communities in New Jersey and Pennsylvania. Average residential bills jumped from $79.82 in July of 1999 to $97.91 this past July, an increase of 22%.

"Last summer was one of the hottest on record, this past summer was the second coolest ever, yet O&R's bills are up over 20%- there's 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."

The Attorney General noted that for years, O&R's rates have been well above the national average. Spitzer says if the PSC does not act on his petition, he will ask the state legislature to revoke the pass through mechanisms.

Said the Attorney General, "We need to ensure that O&R -- through pricing regulations set by the PSC, as well as its own business practices -- is doing everything possible to operate more effectively and efficiently. Residential consumers and business customers deserve nothing less."

The PSC filing is being handled by Mary Ellen Burns, the head of Spitzer's Telecommunications and Energy Bureau, and Assistant Attorneys General Richard Golden and Keith Gordon.