Assemblyman Kevin Cahill (D - Ulster, Dutchess), Chair of the Assembly Energy Committee, released a letter to the Public Service Commission reiterating his opposition to Central Hudson Gas and Electric's proposed rate increases and urging the commissioners to factor the current state of the economy into their final decision.

"Given the recent volatility of energy costs, the severe economic downturn and an unprecedented number of New York households already behind on their utility bills the timing of a rate hike could not be worse," said Assemblyman Cahill. "Families in the Hudson Valley are struggling right now; the last thing they need are cost increases designed to line the pockets of Central Hudson's shareholders."

The Commission is expected to decide on the case at their meeting on Thursday, June 17, 2009.

Below is the letter to the Public Service Commission.

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June 17, 2009

Hon. Garry A. Brown, Chair
New York State Public Service Commission
Three Empire State Plaza
Albany, NY 12223-1350

Dear Chairman Brown:

I write to express my reservations regarding the Recommended Decision before the Commission pertaining to the petition by Central Hudson Gas and Electric Corporation to once again raise rates for the delivery of gas and electric services. As I have expressed to you repeatedly I am strongly opposed to the utility's rate filing. Given the recent volatility of energy costs, the severe economic downturn and an unprecedented number of New York households already behind on their utility bills the timing of a rate hike could not be worse.

New Yorkers are struggling right now and increases to their utility bills will only perpetuate the current economic conditions. I recognize the need for Central Hudson to be able to raise revenue for critical investments in infrastructure and to keep pace with rising costs associated with property taxes, state assessments, pensions and employee benefits. However, beyond what is necessary to meet those expenses, I find any additional increases difficult to justify during these tough times.

The ten percent return on equity and the forty-seven percent common equity ratio included in the Recommended Decision is excessive and well above what most investors could reasonably expect in today's economic climate. I urge the Commission to carefully examine the proposal to determine which costs are essential to maintaining service integrity and those implicit to the value of Central Hudson's stock and then modify the Recommended Decision accordingly. While I respect the needs of shareholders to secure a good return on their investments, those financial decisions are not without risk and the necessity to contain costs at this time is more compelling.

Additionally I am troubled by a number of the exceptions Central Hudson filed subsequent to the issuance of the Recommended Decision. I find the utility's overarching contention that the Administrative Law Judges overemphasized ratepayer concerns illustrative of a disconnect between the corporation's interest in serving shareholders and the economic realities with which their ratepayers are struggling. In that same vein, the utility's continued advocacy for bonus allowances is unacceptable, as is Central Hudson's insistence on a separate legal fund to challenge assessments on their property. Ratepayers must not be forced to pay even more for bonus compensation or so their utility can try to avoid carrying their fair share of the local tax burden. I urge the Commission to reject these proposed exceptions.

The Public Service Commission was established for the paramount purpose of protecting and enforcing the rights of the public with regard to public utilities and is charged with reviewing and regulating the costs of the utilities that should be borne by ratepayers. As the Commission acknowledges, a primary rationale for regulation is that it protects consumers and the broader public interest. Regulation in New York has historically promoted universal availability and affordability and sought to eliminate market distortions, pricing irregularities and unreliability in essential services. By deciding to fully litigate the present case, the Department has thus far met those obligations, especially given the underwhelming involvement of other governmental and consumer advocacy groups. The magnitude of the proposed increases, especially during these severe economic times, demanded the complete review.

I urge that the Commission remain committed to this mission by striving to ensure that Central Hudson will continue to have the resources to maintain a safe, reliable and efficient system while mitigating the financial impact on ratepayers to the fullest extent possible.

I appreciate your consideration.

Sincerely,

Kevin A. Cahill
Member of Assembly