Kingston - Assemblyman Kevin Cahill (D - Ulster, Dutchess), Chair of the Assembly Energy Committee, released a letter to the Public Service Commission reiterating his opposition to Central Hudson Gas and Electric's proposed rate increases. On the heels of this week's public hearings in Kingston and Poughkeepsie, he urged the Commission to abstain from any backroom agreements with the utility. Assemblyman Cahill also released the following statement:

"With the ink barely dry on the last rate hike, Central Hudson is looking to once again clobber ratepayers with the third increase in the last five years. Their willingness to repeatedly saddle customers with higher costs demonstrates a fundamental disconnect with the experiences of families and small businesses struggling to make ends meet in trying economic times. For years, Central Hudson has hidden behind rising commodity costs as the reason for high customer bills, yet now with a significant drop in the cost of electricity and natural gas, consumers are still getting hammered with increases. Enough is enough. It is time for Central Hudson to tighten its belt."

January 27, 2010

Hon. Garry A. Brown, Chair New York State Public Service Commission Three Empire State Plaza Albany, NY 12223-1350

Dear Chairman Brown:

I write to express my reservations regarding the petition by Central Hudson Gas and Electric Corporation to once again raise rates for the delivery of gas and electric services. As you know, I am strongly opposed to the utility's efforts to increase the cost burden on their customers.

On January 26th, public statement hearings were held in Kingston and Poughkeepsie in order to give ratepayers the opportunity to comment on Central Hudson's filing to increase electric and gas delivery rates as proposed in July of 2009. Documents filed with the Commission in January indicate that a settlement resulting from confidential negotiations between the utility, the Department of Public Service and other stakeholders will be announced within the week. I urge the Department not become a party to this agreement and allow the public litigation process to continue. However, should this settlement come to fruition, I would expect the Commission to schedule additional public statement hearings to allow ratepayers to react to the latest iteration of the proposed rate hike.

Filed just weeks after their 2009 increase went into effect, this would be the third rate hike in five years. Central Hudson's willingness to repeatedly saddle its customers with higher costs demonstrates a fundamental disconnect with the experiences of families and small businesses struggling to make ends meet in trying economic times.

Instead of asking for more money from ratepayers, I believe it is time for Central Hudson to tighten their belts. I find any additional increases difficult to justify during these tough times, especially given level of increases their customers have absorbed in recent years. Between 2006 and 2009 delivery rates increased 30% and 19% for electric and gas service respectively. On top of those hikes, rates went up 8.5% for electricity and a 23.5 % for natural gas just last year. An attempt to further increase charges by 3.7 % and 3.5 %, is excessive and unduly burdensome to consumers.

Central Hudson's continued reliance on justifications such as commodity purchasing costs, reductions in customer energy use and environmental remediation expenses as reasons for further rates hikes suggest that the company has not done its part to manage those issues impacting its bottom-line. The rate hikes in 2006 and again in 2009 were intended to address these matters, yet Central Hudson is still coming back to ratepayers for more.

Moreover, two of the issues that have been long been at the heart of their arguments are not currently relevant. For years, the utility has hidden behind rising commodity costs as an explanation customer bill increases. Over the past year we have witnessed a precipitous decline in energy prices, so much so that at the time of Central Hudson's most recent filing, an average customer using 500 kilowatt hour of electricity was subjected to delivery costs that made up approximately half of their bill. While similar numbers are not yet available for natural gas this winter, I would expect an even higher percentage of customer bills to fall on the delivery side, given the sharp falloff in the price of fuel.

The company is also once again pointing to energy conservation efforts by their customers as another reason to increase rates. The revenue decoupling mechanism approved in the previous proceeding should have eliminated any validity to these claims. Central Hudson must no longer be allowed to punish their ratepayers for using less energy. Instead the Commission should be introducing measures that will allow investor owned utilities to add energy efficiency services as an additional product to offer to the households and businesses they serve.

As this process continues, I urge the Commission to carefully examine the current proposal and any future iteration to determine which costs are essential to maintaining service integrity and those implicit to the value of Central Hudson's stock. While I respect the needs of shareholders to secure a good return on their investments, those financial decisions are not without risk and the necessity to contain costs at this time is more compelling.

The Public Service Commission was established to protect the rights of the public with regard to public utilities and is charged with reviewing and regulating the costs of the utilities that should be borne by ratepayers. As the Commission acknowledges, a primary rationale for regulation is that it protects consumers and the broader public interest. It is vital that you remain committed to this mission by striving to ensure that Central Hudson will continue to have the resources to maintain a safe, reliable and efficient system while mitigating the financial impact on ratepayers to the fullest extent possible.

I appreciate your consideration.

Sincerely,

Kevin A. Cahill
Member of Assembly