Creates the citizens' utility advocacy board, inc., a not-for-profit corporation

Justification

The intent of this legislation is to recognize and remedy the fact that individual action by residential consumers for the purposes of participating in utility matters and communicating their views is rendered impracticable by reason of the disproportionate expense of taking such action. Such participation and representation can be best secured by the creation of a permanent, not-for-profit, statewide organization which is under the democratic control of its membership, solely responsive to that membership's goals, and which is funded by voluntary contributions.

The formation of such an entity by consumers acting voluntarily is impeded because consumers have neither the resources nor an efficient mechanism to contact all residential utility customers, raise initial funds and join such an entity, In addition, in order to create such an entity, it is necessary to establish a democratically structured organization and to provide for the dissemination to all customers of information as to the formation and purposes of such organization and to provide an efficient means for joining and contributing to such organization.

For these reasons, this legislation seeks to once again establish a not-for-profit corporation known as the citizens' utility advocacy board, inc. (CUB) with the responsibility to promote adequate representation of residential utility consumers; to collect operating funds; to assist in the redress of residential utility consumer complaints; and to provide for residential utility consumer membership in such corporation and residential utility consumer direction of the actions of such corporation.

In 1991 (then-Governor Mario Cuomo issued Executive Order No. 141) establishing a Citizens Utility Board (CUB). CUB's purpose was to provide a seat for ratepayers in the regulatory process. They would have a representative to deal with the Public Service Commission (PSC), ensuring that their viewpoint be heard when decisions impacting millions of consumers were being made. Over 20,000 New Yorkers quickly joined.

As an independent entity entirely reliant upon voluntary contributions, the most invaluable section of this Executive Order gave CUB access to state agency mailings. However, in 1995, Governor Pataki revoked this privilege: He claimed that since the goal of the Public Service Commission was to protect consumers, allowing CUB even this minimal privilege was unnecessary. Since that time, CUB has been dormant. In 2006 Common Cause/NY released a study which showed that the energy industry spent just shy of $ 10 million lobbying the state between 2003 and 2006. Over the past year power outages in Queens and Staten Island have revealed that our electric system is bursting at the seams; plagued by ineffective power plants, an antiquated transmission system and rapidly growing demand. Many of Our colleagues have been up in arms due to rate increases like the one granted to Central Hudson and massive power line projects like the one proposed by NYRI. Some have argued that deregulation, a policy actively pursued by the Pataki administration over the last decade, has worsened rather than improved reliability and cost effectiveness.

New York utility ratepayers are suffering from a double whammy of increasing rates and a bewildering marketplace. As a result, consumers are unable to benefit from market forces in order to comparison shop and end up paying more and more.

The promise of deregulation was a promise of lower utility rates, but it is a promise that has not materialized. Proponents of utility deregulation promised that the free market would bring lower rates to consumers. In November of 2002, the Public Utility Law Project (PULP) examined the progress of electricity deregulation in New York. The PULP report pointed out that, despite delivery rate reductions, by most accounts total cost, that is cost of delivery combined with the cost of electricity, had gone up substantially.

Confusion about deregulation has not given consumers greater choices. Increased consumer choice, especially in the case of residential consumers, has failed to materialize. Of the 5.6 million residential customers who are eligible to purchase their energy from an entity other than a utility company only a bit more than 400,000, or 7%, currently do so. The majority of marketing for those alternatives has been focused on the more lucrative industrial and commercial users Residential consumers are largely unaware they have choices in receiving their natural gas and electricity.

PSC proceedings are offered in a way that minimizes public participation. It is incredibly difficult for typical New Yorkers to remain on top of the goings-on of the PSC. In an age where widespread usage of the Internet has allowed bodies such as our own to offer live, free coverage of sessions, proceedings of the PSC are available only if the consumer pays a large fee ($125) Obviously, the fee does nothing to limit the participation of powerful interest groups, but does create an obstacle to average ratepayers. Also, the PSC's usual meeting time is 10:30 in the morning - a time when the average citizen has no possible way to participate.

The time has come to once again allow ratepayers a regulatory "seat at the table" through the offering of a Citizens Utility Board (CUB), a non-profit, non-partisan, ratepayer-directed organization with a clear mission: to represent the interests of residential utility customers across the state. CUBs empower utility ratepayers by organizing them into democratically governed advocacy groups. They give consumers an effective voice in regulatory proceedings concerning utilities by arming them with the kind of expertise normally afforded only by the utilities, state regulatory commissions and special interest interveners CUBs afford consumers the opportunity to make an impact on utility rate proceedings and policy debates. They also provide a forum for residential ratepayers to coordinate their efforts, control rates and establish policies that benefit consumers.

This bill is modeled off of the successful Illinois CUB. When the Illinois General Assembly created CUB in 1983, it gave the nonprofit, nonpartisan organization a clear mission: to represent the interests of residential utility customers across the state. Since its inception in 1984, CUB has been doing just that -- working for lower rates and better service from the state's investor-owned electric, gas and telephone companies, Over the last 22 years, CUB has saved consumers more than $10 billion by mitigating rate hikes and winning consumer refunds.

Legislative history

S.1723 of 2007/2008 - Senate Energy Committee

Fiscal implications

None.

Effective date

This act shall take place on the thirtieth day after it shall have become law.