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WPCNR THE POWER NEWS. By John F. Bailey. March 10, 2008: Con Edison quietly raised the cost of electricity 57% as of the first of this year from 8 cents per kilowatthour (8.3400 cents) to 13 Cents  ( 13.16 cents)to  residential customers in Westchester County, for electrical heat customers it is slightly lower.

The 5 cent increase (4.82 cents specifically) needed no Public Service Commission approval.

 It was automatically passed through to customers, to cover the cost of the electricity Con Ed buys from suppliers, according to a Con Ed spokesperson, Alphonso Quiroz.

Jim Denn, press spokesperson for the New York State Public service Commission told WPCNR, “The PSC regulates only the Delivery Cost, not the commodity cost, which reflects the change in the price of fuel.”

PSC Does Not Look at Suppliers’ Cost. Federal Government Does.

Asked if the Public Service Commission looked at Con Edison suppliers to assure they are passing along fair increases in the price of fuel to generate Con Edison electricity, Denn said the Public Service Commission did not oversee suppliers (creators of electric power), that they only acted in advisory capacity. He said the Federal Energy Regulatory Commission oversaw suppliers. He said he would followup with WPCNR to explain in more detail how the PSC participated in FERC regulation of supplier costs.

Denn noted that coincidently on this very day (Monday) the Public Service Commission was taking up approval of Con Edison’s most recent rate case, the request for increase in the Delivery Charge

More to Come?

The cost of the Delivery Charge per Kilowatthour this year has gone down 2 cents from 7 cents/kwh to 5 cents/kwh. However this still leaves the customer with a net 40% increase in their kilowatthour charge between the two usage charges (Supply Charge and Delivery Charge) that are calculated on kilowatt hours used.

Quiroz , speaking for Con Edison said the costs are passed on directly by Con Edison from the suppliers. He said Con Ed does not mark them up. Asked what was responsible for the 57% increase in supplier costs, Alphonse said it was “Due to other forces around the world and that’s (Con Edison) buying on the market.”

WPCNR asked Quiroz if Con Edison was attempting to use the least expensive suppliers and sources of electricity. He said he would find out and call WPCNR back.

School District Pays Less

The City School District, according to its Business Office is required by law to buy its power from the New York Power Authority, which WPCNR was told had lower rates for electricity.  The District will present its budget tonight in a public hearing called for a 4% increase in Utilities in its present Draft Budget of $184.8 Million. 

Curious, WPCNR  asked New York Power Authority Press Spokesperson Michael Saltzman where the New York Power Authority gets its electricity. He said they make it themselves and buy it from suppliers. He said he would get the cost per kilowatt hour the Power Authority charges for supply. Asked if the Power Authority uses different suppliers from Con Edison, he did not know.  He said he would get a list of energy suppliers the Power Authority uses, and how much their kilowatt hour prices had gone up.

County Does Not Monitor Electricity Makers

 The county, with the possible exception of Indian Point, does not monitor suppliers of electric power and their costs. Donna Green, a spokesperson for the Westchester County Department of Communications said the county does not maintain a list of electricity suppliers, and does not monitor their prices.

Regarding the Con Edison rate increase request in the delivery charge, County Executive Andrew Spano testified strongly against the Con Edison request  for an increase in the Delivery Charge in January, in a letter to Westchester consumers he wrote:

The proposal from Con Edison calls for an increase of approximately 33% on the delivery portion of its bills in the first year alone.  This would apply to all electric residential customers as well as businesses, non-profits, and governments in the Con Edison territory—irrespective of whether electricity is purchased from some other supplier.  Undoubtedly, this will have a huge impact on the electric bills that your business, school, and government agency will receive beginning April 1^st.  …….

I believe this is the largest rate increase ever proposed by Con Edison—a company that already has the highest electricity rates of any investor-owned utility in the continental United States and one which has been plagued by outages and communications issues.  

Con Edison is now asking ratepayers to pay a cumulative increase of more than 60% in delivery fees over three years when the general inflation rate is approximately 2% a year.  By no measure is this “just and reasonable,” the standard the PSC has long used in setting new rates.  Conventional wisdom says that the PSC will reduce the requested rate, but I believe that nothing less than an 80% reduction is acceptable. (Frankly, no increase is acceptable but under PSC guidelines, utilities are allowed a “reasonable rate of return.”)

Doubling the Bill.

Viewed in the knowledge that the pass-along increase is 40% net and 57% overall, Con Edison is looking at a virtual doubling of the rates if the PSC approves the Delivery Charge in addition to the pass-along ability Con Edison has already quietly passed on to Westchester and New York area consumers.

Con Edison Profits Up.

Con Edison reported to shareholders earnings of $3.49 per share in 2007, compared to $2.96 per share in 2006.

This Saturday, Con Edison will pay a  58 cents per share dividend to common stockholders.

This is the 34^th consecutive annual increase in the annual dividend for the Con Edison common stockholder.  Robert Hoglund, Senior Vice President and Chief Financial Officer stated in January that the dividend “reflects our commintment to offering a tangible reward to those who have invested in our company for the benefit of our customers, while retaining the balance of our earnings to reinvest in our system.”

The news release announcing the dividend notes, “After the New York Public Service Commission’s ruling in Con Edison of New York’s pending electric rate case, which is expected in late March 2008, the company intends to issue its forecast of 2008 earnings.

The announcement of the kilowatt hour increase in the service charge was not noticeable in the January Con Edison bill, nor was it announced in the media, or by any Con Edison press release to this reporter’s knowledge