Start budgeting more for your utility bills.
New York State Electric & Gas Corp. and Rochester Gas & Electric Corp. reached a tentative settlement with New York regulators on a rate increase starting in May.
Details will not be released until late March, but a document filed with the Public Service Commission on Tuesday reveals an agreement in principle has been hammered out after nine months of negotiations.
Under the proposal submitted last year, the price NYSEG customers pay for electric delivery would rise by 23.7%. The dent in your wallet: $10.17 a month, according to utility estimates, bringing the average bill to more than $53 monthly.
RG&E customers would be hit with a smaller increase in electric delivery rates in the original proposal — 5.4%, or $2.86 a month, raising the average bill to about $53.
It's likely regulators and the utilities reached a compromise on the increases, but the exact numbers won't be known for at least a month as other parties are briefed on the settlement.
If the new settlement follows past form, rate increases may be phased in over a multi-year agreement.
Executives at Avangrid, parent of the two utilities, were reluctant to outline rate agreement details to analysts Wednesday morning during an earnings conference call. They did say the deal will bring the company's return in line with the approximate allowable return of about 10%. Under the current pricing structure, the combined return on investment has shrunk to between 5% and 6%, executives said.
“NYSEG and RG&E have notified the secretary to the NYPSC that the companies and some parties to our rate case have reached an agreement in principle and have initiated the collaborative process of drafting a settlement," said Michael Jamison, an Albany-based spokesman for Avangrid. "Additional information will be released once the settlement is filed.”
A portion of the revenues raised with the increase, scheduled to take effect in three months, will be devoted to girding both utilities' distribution systems against storm damage to limit power interruptions.
In December, the two upstate utilities agreed to a combined $10.5 million settlement with New York over their response to major storms in early 2018.
Cuomo ordered investigations into NYSEG and its sister company, RG&E, following powerful snow, wind and thunderstorms that left about 300,000 homes and businesses without power across the state last year. Some residents were without power for over a week in winter temperatures.
Driving the increase in NYSEG electric rates is a robust vegetation management program being initiated by the utility.
NYSEG and RG&E President Carl Taylor has said the utility is making significant investments in its electricity delivery infrastructure and vegetation management to make the system more far more reliable, particularly in violent storms.
Avangrid executives said the rate agreement "will go a long way to mitigating our outage costs."
In addition to electric increases, customers will be paying more to get natural gas to their homes, too. The original proposal included a 4% rise, or $1.56 a month, for RG&E customers to bring the monthly bill to $43; for NYSEG customers, 1.9%, or $1.05 a month, resulting in an average $56 monthly bill.
In the last rate case approved in 2015, NYSEG electric delivery rates increased by 12.8% over the three-year term, and natural gas 23.5%; RG&E electric rates 11.7% and natural gas 15.6%, according to securities filings.
Since the restructuring of the electric industry in New York about 20 years ago, NYSEG and RG&E are responsible for the delivery of electricity and natural gas across the service territory. As the only owner of pipes and wires in the territory, they must seek rate approval from regulators.
Supply is not subject to regulation and is now governed by market forces, with customers selecting their own independent company to provide the commodity. However, because of the often convoluted and daunting process involved in choosing an electric supplier, many residential customers have defaulted to the resident utility for electric and natural gas supplies.
NYSEG has 900,000 electric customers and 260,000 natural gas clients over a patchwork area of New York covering 20,000 square miles, about 40% of the upstate New York region. RG&E has 375,000 electric connections and 308,000 natural gas customers in a service territory covering 2,700 square miles in a nine-county region centered around Rochester.
After Tuesday's market close, Avangrid reported 2019 calendar year earnings of $700 million, $2.26 a share, on revenues of $6.3 billion, compared with net income of $595 million, $1.92 a share, on revenues of $6.5 billion in 2018.