Kingston, NY – On Nov 21, Tuesday, Assemblymember Shrestha was among the intervening parties who, along with the staff of the Department of Public Service, filed their initial testimonies in the Central Hudson rate case. Shrestha also met with Central Hudson’s CEO Christopher Capone, and Senior Vice President of Customer Services & Gas Operations, Anthony Campagiorni, that same afternoon.

The Assemblymember’s testimony is attached in full as PDF, with comments below:

“It’s rare for state legislators to join a rate case as an intervenor because it’s a demanding commitment, but as I explain in my testimony, a legislator can bring insight to the rate case that otherwise may not be present. First, our office is in regular contact with many constituents, so we have a pulse on what their overall needs are. We’ve also been phone banking and knocking doors to reach folks who hadn’t contacted our office yet, so we know there’s a wider concern around utility bills than what has been officially registered as public comments or complaints.

As a legislator, I’m also familiar with the policy landscape of everything else affecting my constituents, ​​whether it’s housing costs or a diminished value of a senior’s fixed income, so it allows me to make a case for them as whole human beings with different needs, and not as just ratepayers. And of course, the rate case allows me to go under the hood to see in what ways we can act legislatively to protect ratepayers while ensuring necessary investments for a just energy transition and a safe and reliable service.

The biggest constraint we’re working with in this investor-owned model is that ratepayers are legally on the hook for most of the costs, including around 49.8% of an Executive salary. In 2022, then Executive Vice President Christopher Capone made $1.4 million and ratepayers paid $707,000 of that. This model also pits ratepayers against Central Hudson employees, because the employees’ needs can’t be met without adequate revenues from ratepayers. In reality, it’s not ratepayers vs. workers, it’s all of the working class vs. shareholders, which is why our office is exploring possible pathways to a model of public ownership.”

On the impact of billing errors on our district:

“A few weeks ago, we filed a motion in support of the Public Utility Law Project’s motion to deny the rate case filings, and in our testimony we continue to argue that it is not in the public’s interest to have a rate case without seeing a resolution in the billing errors. Of the 222 constituent cases our office has opened since I took office in January of 2023, 99 of them have been about a utility issue, which is 44.6%. Since 2019, the average arrears for residential customers in our district have at least doubled in each municipality, with a high of 4.9 times in the Village of Red Hook. From September 2021 through September 2023, ratepayers in our district have received 120,668 adjusted bills—that’s more adjusted bills than the 61,042 residential and 11,636 commercial electric and gas customers combined. The trend in adjusted bills does not support the Company’s claim that they have fully resolved the billing issues. There were 77,180 adjusted bills in 2022, and 27,944 adjusted bills in 2023 through September.”

Our recommendation:

“The current circumstances of large-scale billing errors and an affordability crisis on multiple fronts have created an exceptional need to keep rates as low as possible. The Commission’s task is to approve just and reasonable rates that allow for safe and reliable service. We argue that to be just is to be morally right and fair, and to be reasonable is to show sound judgment. While it is customary for the PSC to approve rate increases, Central Hudson’s negligence revealed through the billing error crisis brings to question if even the current rates are justified. Investor-owned utilities have a perverse incentive to increase their rate base because it is a critical driver of the amount of profit a utility can expect to earn. Given the scope of the energy transition ahead that needs to be fair and the multiple crises that customers are facing and given that decisions of this rate case sets precedents for future ones, we recommend the PSC not reward negligence, and to its best ability address the contradiction of public well-being and an investor-owned utility’s drive to expand its profits by expanding its rate base.

We also make several recommendations against specific proposals we don’t think are in line with the spirit of the state’s climate goals. Central Hudson’s interest in a new market for hydrogen and its continued expansion of an expensive gas infrastructure are examples of the Company’s drive to increase revenue requirements that are not in spirit of the state's climate goals. We recommend that Central Hudson ensures that new investments in gas infrastructure are minimized to prevent ratepayers from being stuck with the costs of these stranded assets, and instead, maximize investments in thermal energy networks, heat pumps, and energy efficiency measures. We also scrutinize their capital plans to prioritize maintenance over capital expansion, which drives up the rates. On some of the initiatives the Company wants to take to be a good role model on climate, we ask them to do so without ratepayers having to bear the cost.

Fortis paid out $1.0 billion in dividends in 2022, has had dividend increases for 49 consecutive years, and projects annual dividend growth of 4-6% through 2027. While Central Hudson has been struggling, Fortis has excelled, and it has the financial strength to make things right in the Hudson Valley. The PSC can reduce Central Hudson’s return on equity and require the company to continue providing safe and reliable service as it builds infrastructure to help the grid meet the goals set in the CLCPA and keep rates affordable.”

On monthly meter readings:

“One of the things I brought up with CEO Capone and am hoping to understand better through the rate case proceedings is how monthly meter readings are going to proceed. The cost estimated by Central Hudson for this is $4.4 million annually, but since the investigation for billing errors is not yet complete, and the need for monthly meter readings came from that billing fiasco, we need a further discussion on how much of that cost ratepayers should pay for. We also have some constituents who think their actual meter readings are wrong, so we have flagged a few examples with the CEO and his team because we need a better sense of how accurate actual readings are right now. Our office has been steadily closing out some cases, and we hope to see more of them resolved soon.

Lots of testimonies were filed last week, which sets the stage for where the final determinations are headed next as we move onto the next steps. In the testimony filed by Utility Intervention Unit, which is part of the Division of Consumer Protection, they suggest a new customer service performance indicator for estimated bills, which would measure the percentage of occurrences when Central Hudson has to render an estimated bill. Since utilities are penalized for failing to meet certain service metric targets, the idea is that they should be held accountable for how quickly they transition to monthly meter readings. As the rate case proceeds, we’ll find out if this proposal is adopted.

Then there’s the question of what the Company’s longer-term plan is for smart meters. Our office’s position is that people should be able to opt-out, but smart meters also have benefits if there’s wide adoption, including accurate reading without a huge recurring cost. Con Edison says it has already installed 5 million of such meters, but Central Hudson has only installed about 1,161 for residential customers, which is 0.43% of the residential population in its service territory. We understood from our conversation with Anthony Campagiorni that upfront costs would be quite high and alternate ways of funding are being explored, and there’s no plan for a broad smart meter installment in the next three years.”

Central Hudson’s rebuttal to initial testimonies is due on December 19th. The Assemblymember’s office will continue to provide updates.