Provides that the public service commission may set gas and electric rates for a fixed period not exceeding three years

Title of bill

An act to amend the public service law, in relation to prices, rates and charges

Purpose of the bill

This bill would encourage additional gas and electric utility rate stability through multi-year rate proceedings.

Summary of provisions

Section 1 of the bill would amend Public Service Law (PSL) § 66(12)(h) to clarify that the Public Service Commission (Commission) has the authority to set rates for up to three years in addition to setting temporary rates for any period during which a rate increase is suspended in accordance with PSL § 72.

Section 2 of the bill would amend PSL § 66(12)(k) to clarify that the Commission may undertake proceedings to set multi-year rates, in response to a rate petition, for a fixed period not to exceed three years in duration. This section of the bill would also provide that, when rates are established for more than one year, utilities would be limited to filing for a rate increase no sooner than the start of the 11-month period preceding the end of such fixed period, except as otherwise authorized by the Commission.

Section 3 of the bill would provide for an immediate effective date.

Existing law

PSL § 66 establishes the general powers of the Commission with regard to gas and electric service. PSL § 66(12) sets forth requirements and process for rate proceedings. PSL § 72 provides additional notice, hearing and process requirements, and authorizes the Commission to set rates for gas and electric service; in response to a complaint or upon its own initiative, for a period not to exceed three years, and to approve temporary rate increases or decreases. PSL §§ 113 and 114 provide additional requirements for establishment of temporary rates, reparations and refunds.

Legislative history

This is new legislation.

Statement in support

This bill would make clear that the Commission has the authority to set rates for up to three years. The establishment of rates for a period of this length would enable the Commission to better align rates with utilities' business plans, infrastructure development and program implementation. Multi-year rate plans can provide rate stability and certainty, which is beneficial to residential, commercial, and industrial customers. These plans also may result in an increase in the regulatory lag between rate cases, thus producing added incentives for utility efficiency and productivity. Additionally, transaction costs associated with annual rate cases, which may be recovered from ratepayers, may also be reduced,

Historically, multi-year rate plans arose from joint proposals negotiated by parties in a rate case and submitted to the Commission for consideration. This bill would statutorily encourage the use of such plans, allowing the Commission to flow through the benefits, including reduced costs resulting from fewer rate proceedings, to the utilities' customers. Utilities would not be precluded from petitioning for rate relief prior to the end of the rate period as they would be allowed to file such a request, consistent with the Commission's rate order.

Budget implications

This bill may initially require reallocation of staff resources to administratively litigate multi-year plans rather than single-year plans. However, it is anticipated that such multi-year rate plans will help to strategically plan and manage Department of Public Service resources as significant rate case pressures occur.

Effective date

This bill would take effect immediately.