In May 2007, the New York State Assembly’s Standing Committee on Energy convened a hearing to discuss Con Edison’s proposed rate increase. At the hearing, Assemblyman Hevesi addressed energy efficiency issues and the demand side management programs that Con Edison had included in their rate increase proposal. Con Ed’s representatives were unable to answer many of the Assemblyman’s questions regarding these issues.

Subsequently, the Assemblyman submitted a list of his questions in writing to Con Edison requesting basic information including which demand side management programs will be employed, how they will be structured, and what communities will be targeted. Con Edison’s responses were evasive, unsubstantial, and failed to address the Assemblyman’s concerns. Hevesi then sent follow-up letters to Con Edison detailing exactly what information needed to be produced. One of the letters stated:

“By not providing any specifics on how that money will be spent, Con Ed is unnecessarily raising concerns as to why the company is unwilling to disclose its plans for use of a large sum of money that will be added to the bills of the average ratepayer.”

Assemblyman Hevesi subsequently petitioned the appropriate Administrative Law Judges to become an active party in the Public Service Commission (PSC) proceedings on rate case 07E-0523. He also began a review of all the relevant material involved in Con Edison’s rate increase proposal for its demand side management programs, including Con Edison’s proposal, Con Ed’s testimony in support, and briefs by a wide range of experts in the energy field and active parties in the rate case.

Upon review of these materials, which included expert opinions from sources such as the City of New York, the Port Authority, and New York State Consumer Protection Board, Assemblyman Hevesi came to three conclusions regarding Con Edison’s proposed rate increase for demand side management programs:

1) the size of Con Edison’s proposed demand side management program was not sufficient to produce the level of demand reductions that will be required to fulfill the Governor’s 15 x 15 energy demand reduction proposal

2) due to the lack of sufficient details provided by Con Edison, it was impossible to determine program viability or get any sense of how Con Ed was going to spend the additional money it was requesting from ratepayers

3) the proposed incentive package in this request, which would have been paid by ratepayers on top of the $122.3 million program cost, was unwarranted and outrageous.

Based upon these conclusions, Assemblyman Hevesi drafted and submitted a letter to the Public Service Commission and all active parties in the rate case, calling on the commission to reject Con Edison’s efforts to increase the burden on ratepayers for these insufficient, clandestine and costly demand side management proposals.

Assemblyman Hevesi’s response also noted that the Public Service Commission is currently in the process of devising the Energy Efficiency Portfolio Standard (EEPS), a statewide energy efficiency program structure that will enable the state to achieve the goals set forth in 15 x 15. “The Commission will address all of the issues that I contend are lacking or problematic in Con Edison’s proposal. I therefore believe it is prudent to ask the P.S.C. to reject Con Edison’s current proposal in light of the soon-to-come collective strategies being formulated by the most knowledgeable and expert talent that the state of New York has on energy efficiency issues.”

Assemblyman Hevesi then organized over 100 elected officials who represent districts within Con Ed’s service area to sign onto the letter asking the Public Service Commission to deny Con Ed’s rate increase for these programs. This coalition included four Borough Presidents, more than 80 legislators in the State Senate and Assembly from both sides of the aisle, a number of New York City Council Members, and representatives from the Westchester County Legislature.

After a full review, the Public Service Commission denied Con Ed’s request for $122 million for the base cost of their programs and their incentive package which would have cost ratepayers close to $250 million. With regard to Con Edison’s requested demand side management programs, the commission ruled that “No new programs will be authorized at this time.” Instead, the Commission awarded Con Ed only $2 million to conduct a study on how specific energy efficiency programs could help alleviate stress on our electric grid.

“It is important to remember that it is our goal and responsibility to make sure that the expertise and institutional capabilities that Con Edison possesses are used appropriately in efforts to reduce energy demand. We want and need Con Edison and all other utilities in New York State to play a central role in energy efficiency efforts,” Assemblyman Hevesi stated.

Immediately after the close of this rate case, Con Edison filed for another rate increase with the PSC, case #08E-0539. In this new case, Con Ed is requesting half a billion dollars for their energy efficiency demand side management programs. The Assemblyman has already become an active party in this new rate case.

In recent years, there has been a growing awareness that reliance on imported fossil fuels has both negative economic and environmental consequences for our state and our nation. To address these problems, the New York State Public Service Commission (PSC) is in the process of developing a statewide Energy Efficiency Portfolio Standard (EEPS) designed to help the state reach the Governor’s goal of reducing New York’s energy demand by 15% by 2015.

This process is crucially important for every person using electricity in New York State. The EEPS will decide how and where every utility (Con Edison, Long Island Power Authority, Central Hudson Gas and Electric, the New York Power Authority) will spend the billions of dollars they are now requesting through rate increases that become part of the monthly bills for every ratepayer in New York.

Over the last several months, the PSC has been developing the EEPS. This has been done by conducting meetings of working groups comprised of experts tasked with discussing specific areas of New York State’s energy efficiency programs in an effort to streamline and coordinate these efforts. Among the experts participating in this process were representatives from the New York State Energy Research and Development Authority (NYSERDA), the Natural Resources Defense Council (NRDC), the Public Service Commission (PSC), every utility in New York State including Con Edison, and nationally renowned independent experts in the energy field.

After months of work, the PSC released a “Straw Proposal” in which the PSC outlined its conclusions and held a hearing on March 5, 2008 to discuss them. Assemblyman Hevesi was invited to address all participants in the EEPS at that hearing. The Assemblyman testified:

“In order to create and sustain a workable structure that is responsible for the enormous task of overseeing all of the stakeholders, customers, and magnitude of detail involved in a successful statewide energy efficiency apparatus, I respectfully submit a proposal to change the organizational structure recommended in the Straw Proposal.

The Straw Proposal is flawed in its structural design. Stakeholders and independent experts are relegated to only having input through smaller entities charged with specific tasks, ie. the Program Administrators group and the Evaluation Task Force. While I recognize that the Straw Proposal recommends a policy advisory board, comprised of stakeholders and independent experts, I submit that an advisory role will not be sufficient to achieve overall management of this large undertaking.

I therefore recommend that the structure for an advisory board be turned into an Oversight Board, to which all other groups and task forces report. The oversight board will make final non-binding recommendations to the Public Service Commission who will then comply with existing statutory requirements and “oversee the collection, disbursement and allocation of ratepayer funds.” The oversight board will become the conduit for macro-decision making, applying the lessons learned from ongoing experience, based on relevant facts and determinations made by other entities handling their specific tasks.

Without this hierarchical structure we will be left with a dysfunctional system where stakeholders and independent entities are engaged in a constant detrimental struggle for their piece of the overall energy efficiency pie in order to get what they can for their service territories without concern for the larger picture. We can not allow this to happen.”

As a result, discussions of the Oversight Board’s composition, how often it meets and how it coordinates with the smaller entities and the PSC are now part of the Energy Efficiency Portfolio Standard. As this ongoing discussion of energy efficiency measures moves forward and continued conversations regarding the creation of an oversight board progress, Assemblyman Hevesi will continue to advocate for a structure that is best suited to protect ratepayers and achieve our energy demand reduction goals.

It has recently come to my attention that several apartment buildings in our district and other districts throughout the state (predominantly, but not exclusively, in New York City) are currently undergoing a process called “sub-metering.” This process involves converting a building’s existing electricity metering structure from a single “master meter” that monitors the energy usage of the building as a whole to installing individual meters for each dwelling unit.

This is a process that, in principle, promotes more efficient behavior and reduces overall energy usage. People who live in master metered buildings do not pay rates dependent on their personal usage. Rather, they pay a standard charge that is included either in their base rent or a fixed monthly additional charge from their management company. This means that residents in master metered buildings do not have to be concerned with their own energy consumption. This can lead to an unfair situation in which a very careful electricity user will pay the same rate as a resident that leaves their air conditioning on for a month when they are on vacation.

Sub-metering is a helpful tool to reduce energy demand; however, there are a number of problems with this process. When a building makes the switch from master metering to sub-metering, tenants are required to pay electricity charges directly to the utility and the standard charge previously paid to management should be eliminated from the monthly rent. However, it is unclear at this stage that these baseline rent reductions will be fair. There is an opening for management companies to save money by buying energy at bulk rates and not pass these savings off to their residents, and there are consumer protection issues that stem from outdated statutes and regulations at various agencies.

As the Chair of the Subcommittee on Renewable Energy, my office has begun working with the Public Service Commission (PSC), Division of Housing and Community Renewal (DHCR), and New York State Energy Research and Development Authority (NYSERDA) to work out these problems and assist the tenants of buildings that are going through this conversion. If you are a tenant in a building that is either undergoing or will undergo the sub-metering process in the future, please contact either myself or my Legislative Director, Ashley Pillsbury, at (518) 455-4926.