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NY utility regulator takes comprehensive approach to coronavirus impacts

New York regulators opened a wide-ranging proceeding to consider the ramifications of the COVID-19 outbreak for ratepayers, utilities and regulatory programs and to develop approaches for managing through the crisis and economic recovery.

The unanimous vote by the New York State Public Service Commission, or PSC, on June 11 set in motion a so-called generic proceeding that will see commissioners shift away from a "piecemeal, case-by-case" approach to addressing impacts on consumers, companies and communities. It will instead seek to respond to those impacts in a "more comprehensive manner" by developing policies to guide all utilities and ratepayers through the crisis, the PSC said in the order. (PSC Case No. 20-M-0266)

"With this action today, we continue to enable prompt responses on pressing needs for relief and adjustments, as well as dealing with the full range of the impacts in a comprehensive, thoughtful and thorough manner," PSC Chair John Rhodes said in a news release.

SNL Image

The coronavirus has altered many aspects of Americans' lives, as can be seen in the sparsely trafficked streets of Time Square. For utilities, New York regulators are looking for comprehensive approaches to protecting these companies while delivering relief to ratepayers suffering financial hardship during the COVID-19 outbreak.
Source: AP Photo

As part of the proceeding, commissioners will consider COVID-19's impacts on rate setting and design, low-income assistance programs, regulatory priorities, bill collections and service terminations. The regulators will also explore how to ensure utilities are able to continue providing safe and adequate service at reasonable rates, recognizing that companies and consumers will face financial challenges throughout the crisis.

Commissioner John Howard said the proceeding was a "big undertaking" that could have ramifications for utility revenues and liquidity for years to come.

Commission aims to balance consumer, company protections

Commissioners will contemplate how they should address previously authorized rate increases and revenue adjustment mechanisms for utilities. They will also explore the recent impact and potential long-term effects on utility earnings, liquidity and cash flow.

"From where I sit, it's a key importance for us as regulators to be balanced in our approach and consider the impacts not only on the customers, but also on the utilities' financial health and their continued access to capital. We have seen that utility stocks are not immune to COVID-19's impacts," Commissioner Diane Burman said. Burman raised concerns about whether even "appropriate" rate increases are at risk, noting that demand is under pressure and the revenue growth that utilities were relying on may not materialize.

Another key question is how commissioners will direct the utilities to resume collections and service terminations in a way that accommodates ratepayers experiencing financial strain without compromising utility service. Bans on service shut-offs throughout the country have raised concerns that utilities will face mounting bad debt. The order raises the prospect of waiving down payments for deferred payment agreements and prohibiting late fees in some cases.

The commissioners expect to grapple with fundamental issues such as providing rate relief to customers and potentially asking utilities to eliminate or defer planned spending while also considering novel approaches such as requiring utilities to develop economic stimulus plans.

"We thank New York PSC for protecting New Yorkers during this devastating public health and economic crisis by starting a statewide proceeding on how to avert rate increases and lower rates while maintaining utilities' financial stability," said Richard Berkley, executive director of the Public Utility Law Project of N.Y., a consumer advocate that petitioned commissioners for a generic proceeding.

The proceeding will consolidate existing and future petitions related to COVID-19, including one from the Public Utility Law Project and another from the Multiple Intervenors, a group of large customers that asked the PSC to suspend clean energy programs and return uncommitted funds to customers.

PSC approves financial assistance for NYC ratepayers

Regulators separately approved $70.56 million in financial assistance this summer for electricity customers enrolled in Consolidated Edison Co. of New York Inc.'s low-income bill discount program.

The commission said the Consolidated Edison Inc. subsidiary has about 441,000 electric customers in New York City and Westchester County enrolled in the program, with most customers receiving a $13 discount each month. The emergency summer cooling credit, available from June through September, will add up to $40 a month in relief, the commission said.

The order came in response to New York City's request for more financial support for customers in the program. The city argued that giving more aid to these customers would remove financial impediments from using air conditioners this summer. According to the city, there will be limited availability of public cooling centers and pools because of social distancing measures to prevent the spread of COVID-19.

The commission said Con Edison can recover costs of the emergency relief over five years, which will help mitigate bill impacts on customers. (PSC Case No. 20-M-0231)