Central Hudson customers should anticipate an increase in their monthly utility bills after state officials adopted a three-year rate agreement for the Hudson Valley utility company Thursday afternoon.
The state Public Service Commission voted Thursday afternoon to approve a three-year rate plan for Central Hudson Gas & Electric Corp., based in Poughkeepsie.
Electric rates will decrease slightly about 0.25%, or an average of 33 cents per month for customers for the first year, or through June 30, 2022, in households with average electric usage of 640 kilowatt hours per month, Central Hudson spokesman John Maserjian said Friday.
“Normally, a new plan would take effect at the expiration of the old plan, but there were delays with how the process rolled out,” Maserjian said. “COVID-19 had impacted how this new plan was filed and developed.”
Rates for the average residential electric bill will increase $3.54, or about $1.72 per bill, per month starting next July 1, and then increase an additional $1.82 per bill starting July 1, 2023.
The plan will take effect retroactively from July 1, 2021 and expires June 30, 2024. The prior rate plan expired June 30.
The company filed the rate increase proposal in August 2020.
“The approved rate plan is the result of months of extensive discussions with the Department of Public Service Staff, consumer advocates, environmental organizations, local community groups and other stakeholders,” Central Hudson President and CEO Charles A. Freni said in a statement. “This new rate plan will allow us to modernize our electric, natural gas and information technology systems, reinforce the provision of safe and reliable energy services and further protect against cyber security risks while helping our customers with the challenges faced by the COVID-19 pandemic.”
Households using natural gas will see an average monthly increase of about $5.31 over the next three years, with an initial $1.64 hike through June 30, 2022; an additional $2.17 starting July 1, 2022; and increases of $1.50 per month in the plan’s final year through June 30, 2024.
The rate hike estimates assume an average household using 870 ccf, or hundred cubic feet of natural gas annually, Maserjian said.
Central Hudson’s electric delivery revenues will decrease $1.1 million in the first year and increase $8 million and $8.7 million in the second and third years, respectively, according to the commission.
The gas delivery revenue increases will be $3.9 million in the first year, $3.9 million in the second year, and $4 million in the third year.
The newly approved rate plan will impact Central Hudson’s delivery charges used to operate and maintain the company’s energy delivery system, and is unrelated to supply chain issues and increasing market costs of heating oil, natural gas and propane.
The company rate hikes were proposed last summer — before the inflated gasoline, diesel and other fuel costs — and are not related to the ongoing projected market increases, Maserjian said.
“This rate plan is focused only on those delivery rates, and the supply charges are market-based,” he added. “Those prices will continue to vary depending on market conditions.”
Home heating oil is expected to rise 40%, and propane about 50%, according to a report last month from the U.S. Energy Information Administration last month, impacting businesses and household budgets.
“There’s a worldwide surge in demand for energy and supplies and products, and this is what’s driving a lot of the inflationary pressures that we’re seeing on the costs of all goods,” Maserjian said. “These higher prices will still be lower than what prices were in 2006, 2007 and 2008, for example.”
A recent report by the state Public Service Commission estimates natural gas costs will increase 20%, and electricity will rise 13% in the 2021-22 winter season compared to 2020-21.
“Prices in the previous season were unusually low,” Maserjian said of last winter’s prices. “
Central Hudson initially proposed delivery rates that were designed to produce an annual electric delivery revenue increase of approximately $32.8 million and an annual gas delivery revenue increase of $14.4 million, resulting in base delivery revenue increases of 8.4% and 12.1%, respectively, or total bill increases for an average residential customer of 6.2% and 8%, according to the commissi
The company will postpone certain capital projects to replace or bolster aging infrastructure, including utility poles, wires and pipelines to carry energy to consumers.
“We’ll continue to improve and enhance the energy infrastructure both for resilience for the increasingly severe storms and also to accommodate the many renewable energy systems that are being built in the region and to allow them to interconnect to the local grid,” Maserjian said. “We’re working as rapidly as we can, but also, we have to do so affordably.”
The company will invest $31 million in bill discounts to eligible low-income customers for the next three years.
The commission approved and adopted a three-year rate plan for Central Hudson customers in a joint proposal signed by the utility company, department staff and environmental and business groups.
“The joint proposal provides sufficient funding for the companies to maintain safe and reliable service, while moderating rate impacts during the term of the rate plan and mitigating the impacts to ratepayers suffering the financial consequences of the pandemic,” Commission Chairman Rory M. Christian said in a statement. “The joint proposal is also consistent with our nation-leading clean energy initiatives, as well as our social and economic policies. This agreement is in the public interest and it comports with New York’s clean-energy goals.”
The company will pay $150 to each household that turns in an older, working refrigerator to recycle the high-energy machine in an effort to push consumers to have more energy-efficient appliances.
Central Hudson serves about 309,000 electric customers and 84,000 natural gas customers in Orange, Ulster, Dutchess and Greene counties and in parts of Putnam, Sullivan, Columbia and Albany counties from New York City suburbs north to the Capital Region.