New York 2025-2026 Regular Session

New York Assembly Bill A06951 Latest Draft

Bill / Introduced Version Filed 03/18/2025

   
  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.