Provides that subsequent requests for an extension of a suspension period for certain rate, charge or other changes by utilities shall require approval by the public service commission and shall be valid for one month, after which the commission shall review and determine the necessity of a further extension; provides limitations on retroactive rate recovery by utilities.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A6951
SPONSOR: Mamdani TITLE OF BILL:
An act to amend the public service law, in relation to periods suspend-
ing the operation of certain rate, charge or other changes by utilities,
and provisions permitting utilities to retroactively recover revenues
they would have earned during such periods
PURPOSE:
This legislation would address and mitigate the financial burdens placed
on consumers due to escalating utility rates and the effects of retroac-
tive rate adjustments (known as "make whole provisions") that occur rate
cases run longer than allowed by statute.
SUMMARY OF SPECIFIC PROVISIONS:
Section 1 establishes the legislative intent, highlighting the growing
financial strain on New York residents and businesses due to escalating
utility costs and the inherent power imbalance in the favor of utilities
in rate cases.
Section 2 amends Paragraph (f) of subdivision 12 of section 66 of the
public service law, revising the extension period for utility rate case
suspensions from six to nine months. It introduces new conditions for
subsequent suspension extensions, including a monthly review process by
the Commission that factors in the impact on ratepayers.
Section 3 adds a new section, 66-x, to the public service law. This
section defines key terms and introduces gradient-based rate caps to
limit retroactive rate increases during extended suspension periods,
establishing a structured reduction in allowable rate increases over
time. It also prohibits utilities from recovering any revenue deficits
caused by these caps through future rate filings.
Section 4 contains a severability clause to ensure that if any part of
the act is declared invalid, the remaining provisions will still be
enforceable.
Section 5 specifies the act's effective date, one year after it becomes
law.
JUSTIFICATION:
In recent years, New Yorkers have faced unprecedented increases in util-
ity rates, putting approximately 1.5 million residential households and
thousands of businesses at risk of service terminations. These rate
hikes, combined with utilities' consistent profitability, underscore a
growing financial burden on consumers, particularly those in low-income
households.
Compounding this issue is the frequent delay in the resolution of utili-
ty rate cases, often extending beyond the statutory eleven-month suspen-
sion period due to prolonged settlement negotiations. During these
delays, utilities frequently seek and are granted "make whole"
provisions, allowing them to retroactively recover revenues based on new
rates that would have applied during the suspension period. This retro-
active adjustment often results in "rate compression," where consumers
face unexpectedly higher rates in a short period, exacerbating their
financial strain.
Although make whole provisions can theoretically apply to both rate
increases and decreases, they are predominantly used to justify
increases. This imbalance, where large utility corporations wield
disproportionate power in rate case settlements, leaves ratepayers to
bear the brunt of these financial pressures.
This bill seeks to address this imbalance by extending the statutory
timeframe for a rate case by 3 months to give all parties additional
time to reach a negotiated settlement. In rate cases that exceed the
allowable timeframe, this legislation would limit the ability of utili-
ties to retroactively recover increased rates. This legislation intro-
duces gradient-based rate caps, which will gradually reduce the permis-
sible retroactive rate increases over time during extended suspension
periods. This structured approach aims to protect consumers from sudden
and steep rate increases and promote fairness in the utility rate-set-
ting process by restoring the balance in the negotiation power between
utilities and ratepayers.
PRIOR LEGISLATIVE HISTORY:
New bill.
FISCAL IMPLICATIONS:
This bill is expected to have a minimal fiscal impact on the state.
EFFECTIVE DATE:
This act shall take effect one year after it becomes law.
STATE OF NEW YORK
________________________________________________________________________
6951
2025-2026 Regular Sessions
IN ASSEMBLY
March 18, 2025
___________
Introduced by M. of A. MAMDANI -- read once and referred to the Commit-
tee on Energy
AN ACT to amend the public service law, in relation to periods suspend-
ing the operation of certain rate, charge or other changes by utili-
ties, and provisions permitting utilities to retroactively recover
revenues they would have earned during such periods
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Legislative intent. The legislature finds and declares
2 that:
3 1. In recent years, the proposed delivery rate increases and the ones
4 authorized by the public service commission have grown progressively
5 larger. Escalating utility costs have caused a significant financial
6 strain and has left approximately 1.5 million residential households and
7 thousands of businesses at risk of having their utility services shut
8 off. Concurrently, the consistent trend of utilities achieving
9 unprecedented profits jeopardizes the well-being of countless New York-
10 ers struggling to cover their utility expenses.
11 2. It has become common for the resolution of rate cases to occur long
12 after the statutory eleven-month suspension period, primarily due to
13 prolonged settlement negotiations. When these delays occur, utilities
14 often request, and the commission routinely approves, suspension exten-
15 sions paired with "make whole" provisions, which allow the utility to
16 retroactively recover revenues based on the new rates that would have
17 otherwise been applied during the suspension period. Such retroactive
18 rate increases often result in "rate compression", where consumers are
19 required to fund annual or multi-year rate increases over shorter peri-
20 ods of time, leading to larger, unexpected bills that can be particular-
21 ly burdensome for households and businesses grappling with an already
22 significant rate increase.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD09031-01-5
A. 6951 2
1 3. While "make whole" agreements can be symmetrical, applying to both
2 rate increases and decreases, it is observed that in practice, these
3 agreements predominately manifest in the context of rate increases.
4 Utilities currently hold undue power over the initiation and duration of
5 the rate case settlement process, yet bear minimal risk associated with
6 delays to the eleven-month suspension period. Utilities initiate settle-
7 ment negotiations, play a major role in the timing of meetings and the
8 exchanges of offers, and, because the commission lacks the authority to
9 impose multi-year rate plans on utilities, negotiations on such plans
10 currently cannot end successfully unless and until the utility is satis-
11 fied with the rate relief provided. Conversely, captive ratepayers
12 disproportionately shoulder the liabilities associated with prolonged
13 settlement negotiations and the resultant rate compression. This preva-
14 lent trend, where the majority of rate cases result in increases rather
15 than decreases, highlights an inherent imbalance in the negotiation
16 power between large utility corporations and individual consumers. Such
17 imbalance is a matter of serious concern and underscores the necessity
18 for legislative intervention.
19 § 2. Paragraph (f) of subdivision 12 of section 66 of the public
20 service law, as amended by chapter 154 of the laws of 1989, is amended
21 to read as follows:
22 (f) Whenever there shall be filed with the commission by any utility
23 any schedule stating a new rate or charge, or any change in any form of
24 contract or agreement or any rule or regulation relating to any rate,
25 charge or service, or in any general privilege or facility, the commis-
26 sion may, at any time within sixty days from the date when such schedule
27 would or has become effective, either upon complaint or upon its own
28 initiative, and, if it so orders, without answer or other formal plead-
29 ing by the utility, but upon reasonable notice, hold a hearing concern-
30 ing the propriety of a change proposed by the filing. If such change is
31 a major change, the commission shall hold such a hearing. Pending such
32 hearing and decision thereon, the commission, upon filing with such
33 schedule and delivering to the utility, a statement in writing of its
34 reasons therefor, may suspend the operation of such schedule, but not
35 for a longer period than one hundred and twenty days beyond the time
36 when it would otherwise go into effect. After full hearing, whether
37 completed before or after the schedule goes into effect, the commission
38 may make such order in reference thereto as would be proper in a
39 proceeding begun after the rate, charge, form of contract or agreement,
40 rule, regulation, service, general privilege or facility had become
41 effective. If any such hearing cannot be concluded within the period of
42 suspension as above stated, the commission may extend the suspension for
43 a further period, not exceeding [six] nine months. Notwithstanding any
44 inconsistent provision of this paragraph, any subsequent requests for an
45 extension of the suspension period shall require approval by the commis-
46 sion and shall be valid for a period of one month, after which the
47 commission shall review and order upon the necessity of a further exten-
48 sion. In its determination to approve, modify, or deny an extension of
49 the suspension period, the commission shall consider the length of time
50 the rate case has already been under suspension, any previous extensions
51 granted, and the financial impacts such extension would have on custom-
52 ers.
53 § 3. The public service law is amended by adding a new section 66-z to
54 read as follows:
A. 6951 3
1 § 66-z. Granting of make whole provisions. 1. Definitions. For the
2 purposes of this section, the following terms shall have the following
3 meanings:
4 (a) "Regulated utility" means an electric corporation, gas corpo-
5 ration, or combination gas and electric corporation as defined in
6 section two of this chapter.
7 (b) "Suspension period" means the designated timeframe during which
8 the implementation of a proposed utility rate, charge, or related change
9 is temporarily halted by the commission, pursuant to paragraph (f) of
10 subdivision twelve of section sixty-six of this article.
11 (c) "Hearing" means a formal proceeding conducted by the commission,
12 initiated either upon complaint or at its own discretion, to examine and
13 determine the appropriateness of proposed changes in rates, charges,
14 contracts, agreements, rules, regulations, services, or general privi-
15 leges or facilities by a utility, as outlined in paragraph (f) of subdi-
16 vision twelve of section sixty-six of this article.
17 (d) "Make whole provision" means an arrangement in utility rate regu-
18 lation that permits a utility to retroactively recover revenues it would
19 have earned if new rates had been applied during a suspension period.
20 (e) "Rate compression" means the phenomenon where customers are
21 charged higher rates in a condensed timeframe to compensate for retroac-
22 tive rate adjustments, often due to the application of a make whole
23 provision.
24 (f) "Rate period" means the time period in which a regulated utility
25 collects rates that are authorized and approved by the commission.
26 2. Limitations on retroactive rate recovery. (a) To alleviate the
27 impact of rate compression on all customers, the following limitations
28 on make whole provisions are hereby established for any period beyond
29 the initial suspension period. The percentage limit applied shall extend
30 uniformly to the entirety of the extended suspension period.
31 (i) For the first two months beyond the initial suspension period
32 prior to a hearing, a utility may recover up to ninety percent of the
33 additional revenues it would have collected had the new rates been
34 effective during the rate period.
35 (ii) For the third month, a utility may recover up to seventy percent
36 of the additional revenues it would have collected had the new rates
37 been effective during the rate period.
38 (iii) For the fourth month, a utility may recover up to thirty percent
39 of the additional revenues it would have collected had the new rates
40 been effective during the rate period.
41 (iv) For the fifth month and any subsequent months, a utility shall
42 not recover any additional revenues for the rate periods.
43 (b) In instances where a make whole provision is granted by the
44 commission, a utility shall not seek to recover, in any future rate
45 filings or through any other financial mechanism or strategy, any reven-
46 ues not recovered due to the limitations specified in paragraph (a) of
47 this subdivision, nor shall any interest or carrying charges be imposed
48 on any deferred recovery granted under a make whole provision.
49 (c) In the absence of a multi-year rate period, any allowable recovery
50 under a make whole provision, as limited by this section, shall be
51 deferred as determined by the commission, provided however that such
52 recovery shall occur over a period specified by the commission within
53 the following two fiscal years and shall not include any additional
54 costs or interest charges to customers.
55 § 4. Severability clause. If any clause, sentence, paragraph, subdivi-
56 sion, section or part of this act shall be adjudged by any court of
A. 6951 4
1 competent jurisdiction to be invalid, such judgment shall not affect,
2 impair, or invalidate the remainder thereof, but shall be confined in
3 its operation to the clause, sentence, paragraph, subdivision, section
4 or part thereof directly involved in the controversy in which such judg-
5 ment shall have been rendered. It is hereby declared to be the intent of
6 the legislature that this act would have been enacted even if such
7 invalid provisions had not been included herein.
8 § 5. This act shall take effect one year after it shall have become a
9 law.
