This blog is designed to highlight the diversity of views and news stories on urban energy topics that appear daily in the media. They are intended to provoke discussions on how cultural, geographic, political, and institutional influences shape the way energy markets operate and energy policies are made in cities around the world.
Thursday, November 29, 2012
Before Hurricane Sandy, No Advocate For New York's Utility Ratepayers
NEW YORK -- Gov. Andrew Cuomo launched an investigation two weeks ago into utility companies' performance before and after Hurricane Sandy left millions of New Yorkers powerless -- some for weeks.
But one issue that could be crucial to Cuomo's special commission review is why there is no independent voice in New York state to stand up for electricity ratepayers before storms hit.
Last March, Cuomo rolled the state's independent Consumer Protection Board's Utility Intervention Unit into the Department of State. The unit now has a bare-bones staff with no authority to sue on behalf of ordinary customers. The governor's administration also has yet to issue a contract for independent utility watchdog and non-profit the Public Utility Law Project -- despite appropriations by the state legislature.
Across the Hudson, even though its population is a fraction of New York state's, New Jersey has a Division of Rate Counsel with dozens of employees on guard against jacked-up rates and lowballed tree-trimming budgets. It also can take utilities to court if it needs to.
"Right now as it stands, we have a diminished consumer protection representation," said New York Assembly Energy Committee Chair Kevin Cahill. "It's a serious, serious issue."
Utilities are claiming a staggering $1.5 billion in damages from Hurricane Sandy. If companies like Con Edison argue -- as they likely will -- that consumers should be forced to pay for most of that, there is no one with the technical knowledge necessary to find out what is warranted and what is not.
The lack of consumer protection also means that before Sandy, nobody was looking into whether ConEd was spending enough on maintenance and infrastructure investments, aside from the state regulator, the Public Service Commission.
New York's Utility Intervention Unit has just two employees, according to Cahill. And at a hearing earlier this year, when he asked about its jurisdiction since it had been rolled into the Department of State, he said, nobody seemed to know.
The governor's office and the Utility Intervention Unit did not respond to requests for comment.
Gerald Norlander, the executive director of PULP, said the state now appears to belatedly be moving to approve his outfit's contract. But he also sees a need for a strengthened, politically independent state utility intervention body.
"Under Pataki and Spitzer and Paterson and Cuomo -- it's not just Cuomo -- it's withered for 15 years," Norlander said of the unit. "They don't have the structural power and the independence they should have."
Having a voice independent from the regulator is critical, said Paul Flanagan, the litigation manager for the comparatively well-staffed and well-defined Division of Rate Counsel in New Jersey.
"We tend to be more the adversaries of the utilities, more so than the (regulator's) staff," he said.
An independent advocate can look out for customers before a disaster like Sandy strikes. It was the Division of Rate Counsel that filed a request in July with New Jersey's Board of Public Utilities to require one of the state's leading utilities, Jersey Central Power & Light, to explain how it was spending its storm mitigation money.
"As the utilities come in, which some of them already have and some of them will, to look for monies to pay for the storm … we look at the cost of things in particular, so we want to see whether the ratepayers are getting value for the money that is spent," said Flanagan.
Many other states have a similar ratepayers' advocate, usually funded by the utilities themselves in a way that amounts to pennies per consumer per year. There is even a National Association of State Utility Consumer Advocates. But New York is missing out.
"One of the problems with the rate-making structure in New York is that utilities can basically submit the bill for their response to storm damage, and it's pretty much passed through to the consumer," said Cahill.
But in many cases, he argued, utilities should have been spending more before the storm, to make outages less likely and shorter. Instead, he said, they have cut back on tree-trimming that can prevent downed lines, upgrading infrastructure, and hiring the lineworkers necessary to keep systems in shape.
"The question from a consumer representation standpoint at the current moment is, should the ratepayers in any way, shape, or form, be saddled with the costs of recovery where those costs could have been avoided with proper preparation?" he asked. "My answer to that is 'no'."