AARP Report: Why New York Consumers are Losing the Utility Rate Hike Game

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Jan 16, 2014, 01:22 ET

Utilities Charge Customers $10M/Yr. to Push Regulators for Some of Highest Rates in Nation; Consumers Lack Seat at Table, AARP Says Watchdog Needed

NEW YORK, Jan. 16, 2014 /PRNewswire-USNewswire/ -- New Yorkers pay the highest average residential electric rates in the continental United States, and when it comes utility companies pressing for even higher rates, the cards are always stacked against consumers. A new AARP report released today details just how unfair the equation is, showing not just how much utility companies spend to push through utility rate hikes, but just how much power providers bill the consumer to do so. All the while, consumers lack a seat at the table. That's something AARP says needs to change.

Unlike ratepayers in 40 other states, New York's residential utility consumers have virtually no one looking out for them at the regulatory table. That's the bottom line finding of a new AARP Report: "David v. Goliath; Why consumers are losing New York's utility game."

AARP says it's time for New York to look out for its ratepayers by creating an independent utility consumer advocate office with the power to sue over unfair rate hikes.

"It's like facing double jeopardy with no defense lawyer," said Beth Finkel, director of AARP in New York State. "Keeping the heat and lights on is a basic necessity that's getting harder to afford, especially for older New Yorkers who are often on fixed incomes. Whenever utilities push for rate increases, consumers need to be able to push back. It's shameful that New York, which has some of the highest utility rates in the nation, is one of only 10 states without an independent utility consumer advocate."

Essentially, ratepayers are paying to propose and defend increases in their own rates. In contrast, ratepayers have little to no representation during rate proceedings before the state's utility-regulating Public Service Commission. Independent utility consumer advocate offices in other states, which have the power to sue over rate hikes, save ratepayers far more than they cost. Connecticut's office reported $243 in rate reductions for every dollar spent, while California's reported a 153-1 return on investment.

"This is about protecting New Yorker's kitchen table economies, which for many are already in a fragile state," added Finkel. "For older New Yorkers, when their utility bills go up, they are forced to make hard choices, sometimes between paying the bills and filling a prescription. They need a voice to represent their interests for this most basic of necessities."

Many low- and moderate-income seniors and families are falling behind in making payments for high-priced utility service in New York, where rates are 56 percent above the national average and second costliest in the nation, behind only Hawaii. Many hard-pressed New York ratepayers incur additional late payment charges and face shutoff of essential electric or gas service as a bill collection measure. New York utilities shut off power to about 284,000 households in 2011.

Last summer, Gov. Andrew Cuomo's Moreland Commission on Utility Storm Preparation and Response recommended creation of a Citizens Utility Board, a vehicle to ensure independent consumer representation before the PSC.

The state Assembly passed a bill last year sponsored by Assemblyman Jeffrey Dinowitz (D-Bronx) to create a similar independent utility consumer advocate office. The state Senate's Independent Democratic Conference, part of a governing majority coalition with the chamber's Republicans, supports the bill as part of its 2014 agenda. The Senate version is sponsored by IDC member Diane Savino of Staten Island.

AARP is urging Governor Cuomo to adopt his Moreland Commission's recommendation as part of the 2014-15 Executive Budget he proposes next week and work with state lawmakers to create an independent utility consumer advocate office – giving residential ratepayers the meaningful seat at the regulatory table they need.

AARP is a nonprofit, nonpartisan organization, with a membership of more than 37 million, that helps people turn their goals and dreams into real possibilities, strengthens communities and fights for the issues that matter most to families such as healthcare, employment and income security, retirement planning, affordable utilities and protection from financial abuse. We advocate for individuals in the marketplace by selecting products and services of high quality and value to carry the AARP name as well as help our members obtain discounts on a wide range of products, travel, and services. A trusted source for lifestyle tips, news and educational information, AARP produces AARP The Magazine, the world's largest circulation magazine; AARP Bulletin; www.aarp.org; AARP TV & Radio; AARP Books; and AARP en Español, a Spanish-language website addressing the interests and needs of Hispanics. AARP does not endorse candidates for public office or make contributions to political campaigns or candidates. AARP Foundation is an affiliated charity of AARP that is working to win back opportunity for struggling Americans 50+ by being a force for change on the most serious issues they face today: housing, hunger, income and isolation. AARP has staffed offices in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. Learn more at www.aarp.org.

SOURCE AARP New York