Restructuring Today
November 16, 2005

NYSEG wants PSC Chairman Flynn out of its rate case now

New York State Electric & Gas asked PSC Chairman William Flynn to recuse himself from the utility's rate case and consideration of the utility's retail access plan.

          Flynn and Ron Cerniglia, director of the office of retail market development, support the principal of utilities' exiting the merchant function.

          For NYSEG, having that view reveals "personal and improper bias."

          Energy East's NYSEG and Rochester Gas & Electric have been critics of Orange & Rockland Utilities' PowerSwitch shopping plan that the commission wants IOUs to adopt.

          Energy East likes its own Voice Your Choice plan where customers are sent ballots for choosing a variable or fixed-rate service from the utility or a marketer.

          NEMA called NYSEG's motion an "unfounded attack" in comments filed last week.

          NYSEG, NEMA accuses, "confuses 'prejudgment' and what is in fact taking place -- willfully and intentionally filing a retail access plan and rate case" that conflicts with the PSC's longstanding policy.

          "NYSEG seeks yet again to defy the commission and preserve the competitive advantages inherent in its competitive fixed-price product offering."

          Marketers oppose NYSEG's fixed-rate commodity service because it competes unfairly with marketers who can't go back to their customers for true ups to actual costs as utilities can.

          Meanwhile, the PSC rejected RG&E and NYSEG's proposal to divert more than $22 million they collected from customers via the statewide system benefits charge (SBC) to provide bill credits to help their low-income gas customers.

          The SBC funds public benefit programs -- including low-income programs -- now run by the New York State Energy R&D Authority (NYSERDA).

          Diverting the funds from long-term energy efficiency and demand management programs, the PSC decided, "could do more harm than good."

          Such a short-term solution to high energy prices may cause high prices to hang around unnecessarily or even create long-term expenses that exceed the short-term savings, the PSC wrote.

          Expect that to result in higher energy use instead of the trimming of demand to ease price spikes, the PSC wrote.

          The commission shot down as well RG&E's proposal to refund in less than five years its customers' share of the proceeds of the Ginna Nuclear plant sale.

          The proposal assumes, the PSC pointed out, a "direct match" between the utility's gas and power customers.

          Some of RG&E's customers don't heat with gas, the PSC noted.

          The Consumer Protection Board's (CPB) suggested that utilities begin to offer fixed-price deals, even though the commission has been clear it doesn't favor fixed-price SOS.

          "Utility fixed-price offerings can exceed standard tariff prices," the PSC noted, and "disrupt the competitive marketers that will reduce prices if allowed to operate properly."

          Marketers offer fixed-price deals, the PSC added, and the board "failed to demonstrate that the competitive market offerings are inadequate."

          Besides, it's too late now to set up fixed-price offers for this winter.



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