Relates to the regulation of municipal electric and gas corporations

Section 2 of the bill would provide for an immediate effective date.

Existing law

The Public,Service Commission (Commission) exercises regulatory authority over municipal gas corporations and over municipal electric corporations that purchase less than their full power requirements from the New York Power Authority (PAL § 1005 and § 1014) under Public Service Law Article 4 and the General Municipal Law, or generate their own electricity. These corporations are required to comply with requirements applicable to applications for a major rate increase defined as an increase in aggregate revenues more than the greater of $300,000 or 2.5% (PSL § 66(12)(c)). The requirements include an evidentiary hearing and initial six month and extended four month suspensions of the effective date of the rate change.

Legislative history

This is new legislation.

Statement in support

Each gas and electric corporation serving customers in New York State is required to obtain Commission approval of a change in rates and service terms and conditions contained in its schedule, or tariff. The Commission conducts a review of each tariff change, including a Department of Public Service (DPS) investigation and Commission order approving, modifying, or rejecting the change, after compliance with State Administrative Procedure Act requirements for publication of notice and an opportunity for public comments, and, in certain cases, newspaper publication. For a major rate change publication of notice in a newspaper is required in all cases, and the review also includes an extended suspension period of the effective date of the rate increase (up to 10 months) and an evidentiary hearing, including submission of briefs. The Commission's order may be made following its review of a recommended decision by an administrative law judge and any party's objections to the recommended decision. The Commission exercises jurisdiction over 39 municipal utility corporations: 2 municipal gas corporations and 37 municipal electric corporations. Over the last 9 years, municipal utility corporations have filed about 40 rate increase applications; of these, 9 applications requested major rate increases.

This bill would eliminate mandatory procedural requirements for major rate increase applications filed by municipal corporations and allow the Commission to require an evidentiary hearing and suspension of the effective date, when necessary. DPS staff would investigate the rate application, and the Commission would make a determination upon the request. Although this investigation would not require a mandatory hearing, other procedures would apply, including notice, opportunity for comment, written testimony, interrogatories, and a written Commission order. The reliance on written materials, without the mandatory evidentiary hearing, would reduce expenses for municipal corporations and their ratepayers.

A municipal corporation's involvement in a major rate proceeding and the applicable due process procedures requires significant time and resources. Elimination of mandatory evidentiary hearings for municipal corporations would reduce expenses and allow the municipality to limit its submissions to paper pleadings. The Commission would retain the discretion to conduct a hearing, on its own initiative or upon request of the municipal corporation. The costs incurred by municipal corporations relating to major rate case proceedings are included in the revenue requirement recovered from ratepayers. If the proceeding is unnecessary and associated costs are not incurred, ratepayers would benefit through rates from the reduced expenditures.

Further, to avoid the evidentiary hearing process and limit expenses, some municipalities choose to file a rate application for an increase under the level qualifying as a major rate increase, although the level of increased expenses may justify a major rate increase. The municipality is then compelled to submit additional rate increase applications. The bill would provide these municipal corporations with the flexibility to consider submitting an application based upon the corporation's actual need, avoid the costs associated with more frequent rate applications, and provide more rate stability for ratepayers.

Budget implications

Streamlining the rate case process for municipal gas corporations and municipal electric corporations would allow the DPS to redirect resources, estimated at one to 1.5 full time equivalent employees, to other major policy and regulatory initiatives.

Effective date

This bill would take effect immediately.