Fred W. Thiele, Jr. headshot

Assemblyman

Fred W. Thiele, Jr.

Assembly District 1

Statement by Assemblyman Fred W. Thiele, Jr. 1st Assembly District on PSEG-LI Three-Year Rate Increase

March 2, 2015

PROPOSAL MATTER 15-00262
DEPARTMENT OF PUBLIC SERVICE-LONG ISLAND RIVERHEAD PUBLIC LIBRARY
MARCH 2, 2015 - 6:30 PM
MY NAME IS FRED W. THIELE, JR. I REPRESENT THE 1ST ASSEMBLY DISTRICT IN THE NEW YORK STATE ASSEMBLY WHICH INCLUDES THE TOWNS OF EAST HAMPTON, SOUTHAMPTON SHELTER ISLAND, AND SOUTHEAST BROOKHAVEN. I WISH TO THANK THE DEPARTMENT OF PUBLIC SERVICE FOR PROVIDING THE PUBLIC WITH THE OPPORTUNITY TO MAKE INITIAL COMMENTS ON PSEG-LI’S THREE YEAR RATE INCREASE PROPOSAL. I BEGIN MY COMMENTS WITH THE STATEMENT OF OUR GOVERNOR, ANDREW CUOMO, WHEN HE SIGNED THE LIPA REFORM ACT IN THE SUMMER OF 2013. HE STATED: “YOU HAVE TO OPERATE THE UTILITY BETTER. LIPA’S ANSWER TO EVERYTHING IS MORE MONEY. WE DON’T HAVE MORE MONEY. YOU CAN’T KEEP PUTTING YOUR HAND IN THE POCKET OF THE RATEPAYERS. THAT’S NOT THE ANSWER. THE ANSWER IS, USE THE MONEY YOU HAVE BETTER.” I FULLY AGREE WITH THE GOVERNOR. THE ANSWER IS NOT ASKING FOR MORE MONEY. USE THE MONEY YOU HAVE BETTER. THIS RATE INCREASE SHOULD BE REJECTED. RATHER THAN SENDING GLOSSY MAILERS TO ITS CUSTOMERS CROWING ABOUT CUSTOMER SATISFACTION WHEN IT IS 95TH OUT OF 95 IN THE NATION, PSEG-LI COULD BETTER USE EXISTING DOLLARS TO STABLIZE RATES, REDUCE DEBT, AND KEEP ITS COMMITMENT TO RENEWABLE ENERGY. THIS RATE INCREASE PROPOSAL IS EXTREMELY DISTURBING FOR SEVERAL REASONS. FIRST, PSEG-LI IS PROPOSING TO INCREASE THE DELIVERY CHARGE BY NEARLY 4% FOR THE NEXT THREE YEARS. THE PLAN WOULD INCREASE PSEG REVENUE BY $72 MILLION PER YEAR FROM 2016 TO 2018. THE DELIVERY CHARGE REPRESENTS ABOUT 50% OF THE AVERAGE LIPA BILL. LIPA INCREASED THE DELIVERY CHARGE ONLY TWICE OVER THE LAST 16 YEARS, BOTH TIMES BY LESS THAN 2%. THIS PROPOSAL IS THE LARGEST INCREASE IN THE DELIVERY CHARGE IN THE HISTORY OF LIPA. EQUALLY DISTURBING IS THE PROPOSED INCREASE IN INDEBTEDNESS WHICH EVERY PSEG-LI CUSTOMER WILL BE LIABLE TO REPAY UNDER THIS RATE PROPOSAL. THE LONG ISLAND POWER AUTHORITY PLANS TO BORROW UP TO $400 MILLION IN EACH OF THE NEXT FOUR YEARS, WITH AN ANTICIPATED DEBT LEVEL OF AT LEAST $8.26 BILLION BY THE END OF 2018. LIPA DEBT IN 2012 STOOD AT $6.9 BILLION. THIS PROPOSAL WOULD SADDLE LONG ISLAND WITH THE HIGHEST DEBT LEVEL IN THE HISTORY OF LIPA. PSEG-LI WOULD AGAIN MORTGAGE LONG ISLAND'S FUTURE WITH DEBT. FURTHER, THE LIPA RATE PLAN DOES NOT INCLUDE THE COSTS ASSOCIATED WITH ITS UTILITY 2.0 PLAN AND ITS REVENUE DECOUPLING PROPOSAL WHICH COULD ADD MORE THAN $100 MILLION IN ADDITIONAL COSTS. AT THE SAME TIME THAT PSEG-LI WANTS TO INCREASE RATES AND DEBT, ITS COMMITMENT TO RENEWABLE ENERGY IS IN QUESTION. ON THE SOUTH FORK OF LONG ISLAND, PSEG-LI STATES THAT RESIDENTIAL GROWTH HAS INCREASED THE DEMAND FOR POWER. IT WAS THIS DEMAND FOR POWER THAT RESULTED IN THE NEED FOR INCREASED TRANSMISSION LINES THAT WERE CONTROVERSIAL, FIRST IN SOUTHAMPTON, AND NOW IN EAST HAMPTON. THE ALTERNATIVE TO THESE TRANSMISSION LINES IS CLEAR. WE NEED TO GENERATE ADDITIONAL RENEWABLE POWER TO BE SELF-SUFFICIENT. WE WERE TOLD THAT UNDER THE LIPA REFORM ACT PSEG-LI WOULD MAINTAIN THE COMMITMENT TO RENEWABLE ENERGY SOURCES SUCH AS SOLAR AND WIND. IN 2014, LIPA EXTENDED A CONTRACT FOR UPSTATE NUCLEAR POWER COSTING $159 MILLION. AT THE SAME TIME, IT REDUCED ITS PLAN TO BUILD 280 MEGAWATTS OF GREEN ENERGY TO 122.1 MEGAWATTS. IT ALSO REJECTED A WIND ENERGY PROJECT OFF-SHORE OF THE EAST END THAT WOULD HAVE REDUCED RELIANCE ON FOSSIL FUEL AND MADE THE SOUTH FORK MORE ENERGY RELIANT. SHOULD WE REALLY BE GIVING MORE MONEY TO AN ELECTRIC COMPANY THAT HAS YET TO KEEP ITS COMMITMENT TO RENEWABLE ENERGY? WHAT IMPACT WILL THIS RATE PROPOSAL HAVE ON LONG ISLAND JOBS AND THE ECONOMY? PSEG-LI SHOULD BE REQUIRED TO PREPARE AN ECONOMIC IMPACT STATEMENT. THE LONG ISLAND ECONOMY IS JUST COMING OUT OF THE GREAT RECESSION. ACCORDING TO THE LIA MONTHLY ECONOMIC REPORT FOR FEBRUARY 2015, “RECENT ECONOMIC NEWS HAS BEEN MIXED…ECONOMIC CONDITIONS, WHILE PERHAPS FAVORABLE ON THE WHOLE, REMAIN FRAGILE AND UNCERTAIN.” DECEMBER SALES TAX COLLECTIONS DECLINED BY 8.48% YEAR-OVER-YEAR IN SUFFOLK COUNTY. IN NASSAU COUNTY THE YEAR-OVER-YEAR REVENUES FOR DECEMBER WERE FLAT. IN SUMMARY, THE LONG ISLAND ECONOMY IS “FRAGILE AND UNCERTAIN,” ACCORDING TO THE LIA. CLEARLY AN ELECTRIC RATE INCREASE WILL BE A DRAG ON THE RECOVERY. FURTHER, IT WILL NEGATIVELY IMPACT LONG ISLAND’S ABILITY TO COMPETE ECONOMICALLY, AS WE AGAIN SEND A MESSAGE TO THE NATION AND THE WORLD THAT COMPANIES ON LONG ISLAND WILL CONTINUE TO FACE THE HIGHEST UTILITY RATES IN THE NATION AS WELL AS INCREASED DEBT THAT WILL IMPACT RATES FOR DECADES TO COME. WE NEED TO KNOW WITH PARTICULARITY THE IMPACT THAT INCREASED RATES AND INCREASED DEBT WILL HAVE ON THE LONG TERM ECONOMIC HEALTH ON LONG ISLAND. ELECTRIC RATES AND REAL PROPERTY TAXES HAVE BEEN THE BIGGEST NEGATIVE FACTORS AFFECTING THE ECONOMY AND THE ABILITY OF PEOPLE TO STAY ON LONG ISLAND. THE GOVERNOR TACKLED THE ISSUES OF REAL PROPERTY TAXES HEAD ON. FIRST, WE IMPOSED AN ANNUAL PROPERTY TAX CAP OF 2% OR THE RATE OF INFLATION, WHICHEVER IS LESS. THIS YEAR, THE CAP WILL BE 1.62% FOR LOCAL GOVERNMENTS AND SCHOOL DISTRICTS THROUGHOUT THE STATE. A TWO YEAR TAX FREEZE HAS ALSO IMPLEMENTED FOR LOCAL GOVERNMENTS AND SCHOOL DISTRICTS WHICH COMPLIED WITH THE TAX CAP. THIS YEAR, THE GOVERNOR HAS PROPOSED A REAL PROPERTY TAX CIRCUIT BREAKER PROGRAM TO LIMIT PROPERTY TAXES BASED UPON A PERCENTAGE OF INCOME FOR THOSE WITH $500,000 OR LESS IN FAMILY INCOME. THE GOVERNOR HAS ALSO ADHERED TO A 2% CAP ON STATE SPENDING DURING HIS TENURE. ACCORDINGLY, PSEG-LI SHOULD BE REQUIRED TO LIVE WITH THE SAME FISCAL DISCIPLINE AS THE STATE AND LOCAL GOVERNMENT. FIRST, PSEG-LI MUST DEMONSTRATE THAT ANY INCREASE IS JUSTIFIED, WHICH IN MY OPINION THEY HAVE FAILED TO DO. REGARDLESS, NO INCREASE SHOULD BE APPROVED ABOVE THE 1.62% THAT LOCAL GOVERNMENTS AND SCHOOL DISTRICTS MUST LIVE WITH THIS YEAR. THE PROPOSED REAL PROPERTY TAX CIRCUIT BREAKER CONCEPT SHOULD ALSO BE APPLIED TO THE COST OF ELECTRICITY FOR MIDDLE INCOME HOMEOWNERS FOR THEIR PRIMARY RESIDENCES. BASED UPON AVERAGE USAGE, ANY ELECTRIC COSTS ABOVE THE INCOME PERCENTAGE LIMIT OF THE CIRCUIT BREAKER WOULD BE REFUNDED AS AN INCOME TAX CREDIT. IN CONCLUSION, I URGE DPS-LI TO RECOMMEND THE REJECTION OF THIS RATE PETITION AS IT IS PRESENTLY CONSTITUTED.