Beyond the Grid 2

Their comments range from angry to anguished, some typed in all caps and punctuated with exclamation points. 

An 80-year-old retiree who said his charges from Central Hudson are outpacing last year’s 2.5 percent increase in his Social Security check is among the 182 people submitting comments in response to the utility’s latest request to increase the rates it charges to deliver electricity to homes and businesses. 

A single mother who said she lived with two children in a 700-square-foot house while earning $1,400 a month bemoaned the surge in her monthly bill from $100 to more than $200. “If the rates keep going up, I will have to freeze to death together with my teenage sons,” she wrote. 

For the homeowners, renters and business owners who have been railing against Central Hudson’s rising costs online and in public hearings before the state Public Service Commission, the frustration goes beyond the company’s latest request to raise rates. Its pending three-year plan is lower than the company’s original request but would still add $18 per month during that period to the average customer’s bill. 

Those customers, along with residents served by New York state’s other utility companies, are paying the most in at least 25 years for electricity, according to the New York State Energy Research and Development Authority. Utility bills statewide averaged 25 cents per kilowatt-hour in March, compared to 19 cents in March 2015. Nationwide, energy bills are forecast to continue rising through next year, according to the federal Energy Information Administration.  

“It’s unbearable for customers,” said Assembly Member Jonathan Jacobson, a Democrat whose district includes Beacon and other areas served by Central Hudson. “We get complaints all the time about their costs and their service.” 

Extreme Weather Powers Demand 
Cooling, heating rises as aid disappears
by Brian PJ Cronin

The spikes in energy bills come as Americans feel the increasing effects of climate change, including more frequent “heat dome” events like the Highlands experienced last week when temperatures reached into the high 90s. 

Those events spur even greater electricity usage as residents crank up air conditioners and fans to sustain themselves. 

Don’t expect a trade-off from warmer winters, however. Climate change is also manipulating the polar jet stream, pulling colder air from Canada south in the winter. This past winter, those polar-vortex events allowed freezing temperatures to blanket the Highlands, adding higher heating bills to the higher cooling costs residents faced during the summer.

These bills aren’t just a source of frustration and anxiety anymore. They’re literally a matter of life and death. Between 1999 and 2023, 21,518 deaths recorded in the U.S. were attributed to heat as the underlying or a contributing factor, according to a study published in Aug. 2024 in the Journal of the American Medical Association. 

The total number of deaths nationwide doubled from 1,069 in 1999 to 2,325 in 2023, according to the study. In New York state, extreme heat is the leading cause of weather-related deaths, said the state Department of Environmental Conservation in a report published in June 2024. 

Shortly after taking office, the Trump administration fired the entire federal staff responsible for the Low Income Heating Assistance Program (LIHEAP), which helps more than 6 million families avoid utility shut-offs. A representative from New York’s Office of Temporary and Disability Assistance said that the state had already received its LIHEAP funding for the year, but next year is in doubt. 

Part of this year’s funding is going toward the state’s Cooling Assistance Program, which will help approximately 18,000 households purchase either an air conditioner or a fan. The application window for the program is closed, but New Yorkers who suffer from asthma may still be eligible. See dub.sh/cooling-help for more information. 

Customers face costs on two fronts: the rate utilities bill for electricity supply, whose prices from power producers are determined through competitive bidding overseen by the New York Independent System Operator, the state’s grid operator; and the separate delivery rate utilities charge to fund operations and maintenance, and reward shareholders. 

Although supply prices are volatile, spending to produce electricity fell 24 percent from 2003 to 2023, mainly due to lower fuel costs, according to the EIA. Further relief could come from New York State’s Climate Leadership and Community Protection Act, which sets energy goals of 70 percent renewables by 2030 and 100 percent by 2040. The costs for solar and wind power have plummeted, making them competitive with power produced by natural gas and other fossil fuels.

Less certain is any relief from the fixed rate utilities charge for delivering electricity. Those rates are approved by the state Public Service Commission (PSC), which says its mandate is not solely protecting customers, but also ensuring utilities have enough revenue to keep their systems operating. 

Spending on transmission systems more than tripled nationally between 2003 and 2023, according to the EIA. Central Hudson’s delivery rate for residential customers has more than doubled since 2013 — from 5 cents per kilowatt-hour to nearly 13 cents — since 2013. Customers now routinely pay more for electricity delivery than for supply. 

“We need to support the ratepayer because this has been very challenging for them,” said state Sen. Rob Rolison, a Republican whose district includes Beacon and Philipstown. “No one’s told me that rates are not going to continue to increase.” 

A faulty prediction

Falling costs were predicted in the late-1990s when New York State, under then-Gov. George Pataki, a Garrison resident, began deregulating the state’s utilities, who not only owned the transmission and distribution lines that carried electricity to homes and businesses, but also the facilities that generated power.  

Breaking up those monopolies fell to the PSC. Established in June 1907 to replace New York’s Railroad Commission and its Commission on Gas and Electricity with a single regulator, the seven-member commission’s primary mission is  “to ensure affordable, safe, secure and reliable” service by utility companies “at just and reasonable rates” for residents and businesses, while protecting the environment. 

Undergirding its deregulation effort was the idea that open competition from independent power companies would beget lower prices for customers. A new system emerged, with utilities having to sell their power plants, NYISO procuring energy for them at “spot market” prices and customers able to choose to get supply from state-approved “energy service companies” (ESCOs), instead of their utility.

A Central Hudson crew works on a power line on Main Street
A Central Hudson crew works on a power line on Main Street in Cold Spring. (Photo by L. Sparks)

As part of the restructuring, Central Hudson divested from two power plants in the Town of Newburgh: the 500-megawatt Danskammer, which it owned outright, and the 1,200-megawatt Roseton power plant, which it co-owned with Con Edison and the Niagara Mohawk Power Corp. 

Within the first few years of the new system, delivery costs were falling but supply rates were increasing, according to a 2002 report from the Public Utility Law Project. Founded in 1981, PULP is a consumer-advocacy organization that represents ratepayers when the PSC reviews requests from utilities to raise prices. 

“At best, customer rates have been frozen at what were relatively high levels even during a period of relatively low fuel costs,” PULP said in its report. “At worst, rates increased dramatically.” 

Independent and dependent

Today, New York has “the most energy-efficient state economy in the nation” and consumes less energy per capita than all states but Rhode Island, according to the Energy Information Administration. But the state also imports 85 percent of the energy it needs, according to the EIA. As of March, the average cost of residential electricity, 25 cents per kilowatt-hour, stood as the eighth-highest among states and well above the national average of 17 cents. 

Demand is expected to increase as part of the state’s transition away from fossil fuels. Beginning next year, electric appliances and heating systems will be required in new residential buildings up to seven stories, and for new large commercial structures. The mandate expands to all new buildings in 2029. 

New York is also encouraging people to replace older gas-powered appliances and heating systems with electric ones, and the expansion of personal and public chargers for electric vehicles will contribute to heightened demand for electricity. 

Climate change is also fueling hotter days and a greater use of air conditioning. On both June 24 and 25, Gov. Kathy Hochul urged residents downstate and in New York City to conserve energy during a heat wave because the grid approached peak capacity. 

It is a grid still dependent on volatile fossil fuel prices. Electricity supplied through Central Hudson averaged 8.3 cents per kilowatt-hour each month in 2024 compared to 5.1 cents per kilowatt-hour in 2020, but had fallen from 2022, when the utility’s prices averaged 11.2 cents. Through June 11, the price has averaged 9.8 cents. 

Delivery rates soar

While supply costs ebb and flow, the charges for delivery ascend. Those costs include a flat-rate service charge ($21.50 per month for Central Hudson customers), a state-mandated “system benefits charge” to fund assistance for low-income users, energy-efficiency programs and other initiatives, along with other surcharges. 

But most of the cost for delivering electricity comes from the rate Central Hudson and other utilities charge for each kilowatt-hour of usage. Between 2015 and 2024, a Central Hudson customer using 600 kilowatt-hours of energy monthly has seen their cost for delivery rise from $56 to $99.

The PSC and its Department of Public Service staff have staked out a middle position in negotiations over rate requests. Its members routinely approve a lower rate hike than initially requested by the utilities, but the result still leaves customers paying more. 

Central Hudson, in its current proposal, initially requested a one-year rate increase for electricity that would yield $47.2 million in new revenue. Under a compromise three-year proposal reached with the Department of Public Service (the PSC’s staff arm) and other parties, the company would raise $95.8 million in additional electricity revenues from July 1 to June 30, 2028. The proposal also raises rates for the 90,000 customers who receive gas service from Central Hudson. 

James Denn, a spokesman for the PSC, said the compromise is a “balanced proposed settlement that serves the public’s interests by limiting Central Hudson’s expenses to those necessary for providing safe and reliable service.” 

More than half the revenue (55 percent) from the delivery hikes will fund replacements for “aging and obsolete” infrastructure and 48 percent of the gas revenue will be used “to remove certain pipes that are more prone to leaks, gas distribution improvements and transmission gas line maintenance,” said Denn. 

“The joint proposal will now be issued for public comment,” he said. “The PSC will consider the joint proposal, along with the comments, when it comes time for a decision.” 

Your Bill, Explained

Electric Delivery Charges:
Central Hudson’s costs for delivering electricity to homes and businesses, operating and maintaining power lines and its infrastructure, and for customer services. 

a. Basic Service Charge:
Maintenance of electric lines, meter reading and other costs. 

b. Delivery Service Charge:
The cost to deliver electricity to customers, whether purchased from Central Hudson or another supplier. 

c. Merchant Funtion Charge (MFC): The cost incurred when independent marketers bill through Central Hudson’s system. Customers receiving a separate bill avoid this charge. 

d. Transition Adjustment:
Recovers revenues lost when

customers purchase energy from independent suppliers.

e. System Benefits Charge (SBC): State-mandated charge to fund energy-efficiency programs,
assistance for low-income
customers, energy research and development and other initiatives. 

f. Revenue Decoupling Mechanism (RDM): Intended to minimize the impact to Central Hudson resulting from reduced energy consumption as efficiency programs are implemented. 

g. Total Delivery Charges: The total cost to deliver electricity. 

Electricity Supply Charges:
Central Hudson’s costs for electricity purchased on behalf of its customers on the wholesale market. Central Hudson does not mark up supply charges.

Miscellaneous Charges:
Credits and charges related to transactions with the state’s grid operator, or for other programs.

Market Price: The average wholesale price of all energy needed to supply customers.

Market Price Adjustment:
An adjustment, up or down, of the previous month’s market price to reflect differences caused by the timing of billing and collection.

Joe Jenkins, Central Hudson’s director of media relations, said that replacing aging infrastructure and upgrading the company’s distribution system in response to the Climate Leadership and Community Protection Act are the main drivers of the rate increases. To accommodate the new energy generated by renewable sources such as solar and wind, the utility is rebuilding transmission lines, upgrading substations and replacing circuitry,” he said. 

In June 2024, Central Hudson began soliciting bids for energy storage projects totaling at least 10 megawatts combined, with the preferred location at its substation in Saugerties. It is also using funds from the Bipartisan Infrastructure Law signed by former President Joe Biden to upgrade its Dashville Hydroelectric facility in Ulster County. The company owns two other hydroelectric facilities in Ulster: High Falls and Sturgeon Pool.

Central Hudson is also finishing the replacement of 23.6 miles of lines between Kingston in Ulster County and North Catskill in Greene County. Budgeted at $34 million, the project will boost the capacity of the lines from 69,000 volts to 115,000. 

Along with rebuilding transmission lines, the company plans to upgrade substations and replace circuitry as it focuses on projects that will “maintain reliability and unlock additional capacity on our system,” said Jenkins. The cost, about $37 million per year, will allow Central Hudson to distribute an additional 500 megawatts of electricity, he said.  

“It will also provide some of the headroom needed to help us transition building heating and transportation away from their traditional fossil fuels and onto the electric grid,” said Jenkins. 

Growing arrears

But it comes at a cost. As rates have increased, so have the number of people with arrears greater than 60 days. More than 55,000 of Central Hudson’s residential customers (20 percent) had $134 million in charges older than two months in December 2024, a significant increase from the 21,493 (8 percent of customers) owing $8.7 million reported in December 2019, according to state Department of Public Service data. 

At the same time, more than twice as many customers were repaying Central Hudson in installments at the end of last year and fewer were receiving termination notices. 

When the pandemic shutdown began in March 2020, Central Hudson stopped suspending service and assessing late fees, keeping the policy in place until the fall of 2024, said Jenkins. The amount of uncollected payments grew during the pause, he said, so the company “is actively working with customers to help them bring their accounts into good standing” through financial-assistance and repayment programs, he said. 

New York’s utilities are also being pushed to expand their outreach to low-income customers who may be eligible for their energy affordability programs, which provides credits that lower monthly bills to people receiving benefits through a number of programs, such as Home Energy Assistance, Supplemental Nutrition Assistance (aka food stamps), Medicaid and Supplemental Security Income. 

The Public Utility Law Project estimates that as many as 1.1 million people are eligible for the discount but not enrolled. Central Hudson had 13,598 customers enrolled in its EAP program as of April 30, and is promising as part of its pending rate hike to increase enrollment to 15,500. 

Relief from Renewables 

Some ratepayers may eventually see relief from the CLCPA. Primarily undertaken to reduce greenhouse gas emissions from the burning of fossil fuels, the shift toward solar and wind power could lead to lower supply prices. 

Driven by such factors as economies of scale, global supply chains and advances in technology, the average cost of solar power dropped by over 90 percent between 2010 and 2023, and for onshore and offshore wind by 73 percent and 65 percent, respectively, said Gang He, an energy policy expert from CUNY Baruch College. 

Building and maintaining renewable systems has become so much cheaper that the costs for power plants relying on natural gas and other fossil fuels is projected to be higher, according to a 2023 report from the Energy Information Administration that studied projects expected to come online by 2028.  

“Solar is the lowest cost electricity source in the world,” said Noah Ginsburg, executive director of the New York Solar Energy Industries Association. 

Although solar power derived from utility-scale facilities — those capable of generating more than 5 megawatts — have the lowest-cost, they require large pieces of land. Most of the state’s solar capacity, 93 percent, is through “distributed” projects — private rooftop systems and commercial-scale solar farms whose power can be purchased by homeowners and businesses. 

On April 17, Central Hudson said nearly 17,400 solar systems with a capacity of 334 megawatts were connected to its grid and powering more than 27,000 homes. 

Those and other projects have helped New York exceed its goal for total solar capacity a year ahead of schedule, and the state is “making rapid progress toward our expanded goal of 10 gigawatts by 2030,” said Ginsburg. 

Headwinds threaten those gains, however, said Gang He. The drop in costs for installing solar and wind projects has “recently slowed, or even reversed in some cases” due to rising material and labor costs, trade restrictions and tariffs, he said. Despite the increases, renewables “remain the cheapest source of new electricity generation” in many areas of the U.S., he said. 

Legislative relief

Hochul and state lawmakers are pursuing other remedies. 

In September 2024, the governor signed legislation requiring that the PSC include in public information about rate increases an explanation of why the utility is requesting higher prices and a summary of how the new revenue will be spent. In February, she called on the PSC to reject Con Edison’s latest request to increase rates and directed the Department of Public Service to audit utility salaries and compensation, which it began doing in February. 

An audit of Central Hudson prompted by the widespread bill problems that began when it switched to a new customer-information system concluded that the company’s use of incentive pay skewed toward increasing financial performance rather than improving performance to benefit customers.

At Hochul’s direction, the Department of Public Service “is scrutinizing all rate cases to prioritize affordability,” said Denn. 

Critics of the rate increases also accuse the utilities of inflating their rate requests with higher-than-needed returns on equity. A February report from the nonprofit RMI, which studies energy markets, estimated that 50 percent of an average ratepayer’s bill covers operating costs and 16.7 percent represents profits. Central Hudson’s current proposal, which the PSC has yet to vote on, includes a 9.5 percent return on equity. 

“I would like to see a change in how a reasonable rate of return is calculated,” said Jacobson, who introduced in April legislation that would cap profits for utility companies at 4 percent. 

Legislators passed this spring a bill he introduced in the Assembly mandating that capital expenses embedded in proposed rate increases “be described by the utility, include the purpose, cost and benefits to the ratepayers” and be posted to the PSC’s website. Michelle Hinchey shepherded passage in the Senate, and the bill received support from Rolison and Dana Levenberg, whose Assembly district includes Philipstown. 

The goal of the legislation, which still needs to be signed by Hochul, is to be able to scrutinize whether those capital expenses are “just and reasonable and beneficial to ratepayers,” said Jacobson. 

“They just can’t say, ‘We need $10 million for capital expenditures,’” said Jacobson. “We want them to put in exactly what each project is.” 

Rolison is pushing legislation mandating that the PSC hold public hearings on proposed rate increases at least 90 days before voting, and allow people attending to ask questions of the commission and the utility. While the PSC generally holds public hearings on rate proposals, state law only says the commission “shall have the power” to hold those hearings. 

“It takes so much time for the PSC to do what they need to do,” said Rolison. “For the ratepayer, both business and residential, this is a burden — not knowing when they’re going to go up, how they’re going to go up.” 

Some people are not waiting, instead pursuing conservation. Next week, we examine passive houses.

Part 1: Peak Power
Part 3: Home Energy

Behind The Story

Type: Investigative / Enterprise

Investigative / Enterprise: In-depth examination of a single subject requiring extensive research and resources.

Leonard Sparks has been reporting for The Current since 2020. The Peekskill resident holds a bachelor’s degree in English from Morgan State University and a master’s degree in journalism from the University of Maryland and previously covered Sullivan County and Newburgh for The Times Herald-Record in Middletown. He can be reached at [email protected].

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