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NY utilities NYSEG and RG&E file rate hikes to boost revenues $163M

Avangrid Inc. subsidiaries New York State Electric & Gas Corp. and Rochester Gas and Electric Corp. have asked New York state regulators to approve electric and gas rate hikes that would collectively increase the utilities’ annual base rate revenues by approximately $163 million.

In a May 20 filing (Case No. 19-E-0378), New York State Electric & Gas, or NYSEG, asked the New York State Public Service Commission grant a $156.7 million (20.4%) electric rate increase, and a $6.3 million (3%) increase in gas rates (Case No. 19-G-0379). Rochester Gas and Electric, or RG&E, requested rate hikes of $31.7 million (7%) for its electricity customers (Case No. 19-E-0380), and $5.8 million (3.3%) for its gas consumers (Case No. 19-G-0381).

Assuming that the PSC will take 11 months to review and approve the rate cases, Avangrid said it expects the new rates to go in effect on April 20, 2020, and be applicable through March 31, 2021.

If NYSEG’s rate requests are granted, the average monthly bill of its residential electricity customers would jump $10.17 (23.7%) and by $1.05 (1.9%) for gas service. RG&E’s rate requests would increase the average monthly bill of its residential electricity customers by $2.86 (5.4%) and $1.56 (4.0%) for its gas consumers. The proposed rate hikes would increase annual base rate revenues by approximately $157 million for NYSEG and approximately $6 million for RG&E.

Both NYSEG's and RG&E’s proposed rate increases are premised upon a 9.5% return on equity. NYSEG's and RG&E's previous electric and gas rate cases cover May 1, 2016, through April 30, 2019, and incorporated a 9% ROE for the companies' electric and gas operations.

In asking for the rate increases, Avangrid noted that NYSEG and RG&E have the lowest average residential customer base delivery bills in New York. According to the filing, NYSEG’s current electric delivery bills are approximately 26% lower than those of National Grid USA and at least 71% lower than Consolidated Edison Inc.'s Consolidated Edison Co. of New York Inc., Orange and Rockland Utilities Inc.'s subsidiaries and Fortis Inc.'s Central Hudson Gas & Electric Corp.

Along with ensuring reliable service, Avangrid told the PSC that the proposed rates would facilitate the utilities’ transition to a "cleaner" energy future while funding vegetation management, the hardening of the grid’s resiliency, emergency preparedness, and systemwide implementation of advanced metering infrastructure.

"NYSEG and RG&E cover a large and disbursed energy service area throughout the state, and much of the infrastructure is aging," said Carl Taylor, president and CEO of NYSEG and RG&E, in a statement. "It is absolutely critical that we harden the infrastructure to withstand increasingly severe and unpredictable weather."

The rate plan includes electric investments totaling $466 million for NYSEG and $284 million for RG&E in 2019, as well as $642 million for NYSEG and $375 million for RG&E in 2020. For their gas businesses, the capital expenditures amount to $95 million for NYSEG and $68 million for RG&E in 2019, and $134 million for NYSEG and $103 million for RG&E in 2020.

According to the filing, the largest driver of the requested NYSEG electric rate hike is vegetation management, which would use approximately one-third of the requested revenue increase. NYSEG is the only major electric company in the state that is not on a full-cycle distribution vegetation management program, the filing said.

Spain-based Iberdrola SA is the majority stakeholder of Avangrid.