Schumer: The Decision By NYISO Is A Step In The Right Direction For Hudson Valley Ratepayers, But Not Good Enough -- I Will Fight Until The Rate Increase is Zero

Press Release

Today, U.S. Senator Charles E. Schumer announced that, after his push, the New York Independent System Operator (NYISO) has decided to revise its proposal for an "electric capacity zone" in the Hudson Valley. Under NYISO's new proposal, which it has submitted to the Federal Energy Regulatory Commission (FERC) for approval, the proposed rate increase is slashed from 10% to 4% this year, with no rate increases proposed in the two subsequent years. This is a major reversal from NYISO's original proposal, which would have made electric rates rise as high as 10% in year one.

FERC is currently rehearing an order, first proposed by NYISO, that would establish a new capacity zone in the Hudson Valley, with increased rates on consumers, in the hopes of attracting more power generation. A decision from FERC on this "capacity zone" is expected by Thursday, and Schumer is urging FERC to reject the "capacity zone" altogether. Schumer has strongly opposed the new capacity zone since the beginning, arguing that any rate increases on consumers at a time when electric prices are already high, without any guarantee of new power generation, would be misguided and unfairly burden consumers.

"NYISO's decision to scale back its requested rate hikes is a step in the right direction for Hudson Valley ratepayers, but it is still not enough. Hiking rates now, after a winter of skyrocketing prices, would be painful and unfair, and I will continue to push FERC, which is the ultimate decision-maker on this issue, to reject the new "capacity zone,'" said Schumer. "The fact that NYISO has revised its proposal and scaled back its requested rate hikes is a clear sign that the powers-that-be are coming to understand that this "capacity zone' would have a severe impact on consumers, and this should weigh on FERC's decision. We have much better ways to increase power supply and reduce consumption in the Hudson Valley, rather than doing so on the backs of ratepayers."

"This reversal shows the entire capacity zone is misguided and being rushed through at the expense of local rate payers," said Jennifer Metzger, Chair of Citizens for Local Power. "Although a decrease in rate increases is a positive step -- and Senator Schumer should be commended for this -- we need to work together to scrap this entire plan, and I look forward to working with Senator Schumer on doing so."

Schumer wrote a letter to FERC Chairman Cheryl LaFleur in March urging her to completely undo the rate hikes. Schumer also attended an event in Albany earlier this month with LaFleur, NYISO Chairman Robert Hiney and NYISO Executive Director Steve Whitley where he personally reiterated his opposition to the proposed capacity zone in the Hudson Valley. Schumer underscored his argument that the new zone was not necessary and would raise rates too high on Hudson Valley consumers, after a winter of already-skyrocketing prices. Furthermore, he said the FERC order was not structured in a way that would actually attract more power generation over the short-term; so consumers would be shouldering increased costs in the short-term without any benefit.

Last year, NYISO proposed, and earlier this year, FERC approved, a new capacity zone in the power grid that stretches from New York City to Albany that would raise rates in an attempt to lure new power generators to the Hudson Valley. The initial NYISO proposal, approved by FERC last August, raised the tariff on the new capacity zone by $350 million dollars annually. After a subsequent rehearing, FERC approved the order again in January, this time with an annual tariff of $230 million, which Schumer said is still unacceptable. Currently, there is a surplus of cheaper power generated in Upstate New York that does not reach energy-needy areas in the Hudson Valley and New York City in an efficient manner due to a transmission bottleneck near Albany. If the zone moves forward, it would effectively impose a tariff on the entire region; with this FERC-approved annual increase of $230 million. Initial estimates based on NYISO's initial proposal suggested that customers in Hudson Valley Counties could see increases of between 5 and 10%. The New York State Public Service Commission (PSC), the New York Power Authority (NYPA) and towns throughout the Hudson Valley are also fighting the impending rate hikes.

Schumer said he wholeheartedly supports finding new energy sources for Hudson Valley residents, but he does not support doing so on the backs of ratepayers if, as in this case, other options exist to deliver the needed power more efficiently and cheaply. Schumer expressed concern these large rate hikes could have on small businesses, employers and residents throughout the Hudson Valley who are just coming off of a long winter where record low temperatures drove up energy costs. For many companies, such a large spike in energy costs could decrease job creation and expansion efforts at a time when the local economy is on track for economic growth.

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