The Partial Observer by Robert E. Curry Jr.

New York’s Public Service Commission—Addressing the Challenges Ahead

To most New Yorkers who see their utility bills rising, it’s hard to understand why. The reasons are complex and the process too technical for most folks to want to learn and understand.

That’s why there’s a New York Public Service Commission—to balance the interests of all the participants. The commission’s job is to ensure safe and adequate service at just and reasonable rates. While the language is straight forward, it’s a very complex and difficult process to reach those goals, year in and year out.

Recently, the commission decided on rate cases from National Grid and Central Hudson Gas and Electric. It is still juggling cases from ConEd, Long Island Power Authority, New York State Electric and Gas, and Rochester Gas and Electric which, taken together, will have a sweeping impact on New York’s electric grid for decades to come. It’s a tough job.

Since I left the commission, it’s gotten even more complicated. Why?

• New laws have been passed that require reaching specific environmental goals by certain dates. Even though the governor now acknowledges that many such targets are unachievable, the laws which the commission has a hand in enforcing have not been changed to reflect this reality.
• The nuclear generation at Indian Point, providing 25 percent of New York City’s electricity, has been eliminated.
• Large AI and bitcoin miners last year used up more than 6 percent of all the electricity generated in New York State.
• New demands for electricity, such as widespread electric vehicle adoption, artificial intelligence creation, etc., have yet to fully ramp up in New York.

As always, New York’s energy landscape is changing. In addition to the changes noted above, we face storms of increasing severity and frequency and demands to increase capacity, and dependence on electricity continues to grow. Yet, even with all these added complexities, in 2024 the average cost of a residential kilowatt hour in New York was roughly 30 percent less than in England.

To ensure the grid continues to serve New Yorkers with safe and reliable power, substantial investments are needed to create a resilient system. That’s a tough task for the PSC and its staff, who must balance three, often competing, priorities:

• Customer affordability
• Ensuring that utilities are healthy and capable of attracting cost-effective capital
• Obeying the well-intentioned new laws requiring achievement of renewable goals on a timetable, even if, realistically, these timetables can’t be met.

The PSC, through its staff of 500 professionals, will meticulously examine each request by a utility for new rates with a fine-tooth comb to ensure that all factors are considered. Onlookers often dismiss the need for rate cases by saying “we can’t afford it,” or rush to the media lamenting “profit-driven motives.” But often, these are the same individuals and organizations that have passed the laws which contribute increased costs to the rate case being criticized.

At the end of the day, it is the charge of the PSC to do what’s best for all New Yorkers and it’s a responsibility that commissioners and staff take incredibly seriously. The decisions they make are ultimately based on thousands of pages of records and hundreds of hours of sworn testimony. It’s a challenging job to determine the appropriate level of investment without compromising the reliability of our electric grid.

From my six years serving on the PSC and a career thereafter in electric policy with clients like New York City, I readily observe that in a healthy regulatory environment, the result should not be a choice between “state policy or the customer or the company,” but rather “state policy and the customer and the company.” In many ways, these three factors should be harmonious.

Proper capitalization allows utilities to borrow capital at lower rates and make more efficient infrastructure investments. A healthy financial structure, including predictable returns, supports credit strength, which benefits customers through improved reliability and affordability. Strong power quality attracts more businesses and residents, which spreads the costs of service across a larger customer base.

Unfortunately, the opposite is also true. When the regulatory framework is unhealthy—when regulators perceive company benefits as being in conflict with customer benefits, the consequences can be far reaching. A weakened regulatory environment can erode a utility’s credit rating, leading to higher borrowing costs, reduced investment, and ultimately, higher rates and diminished reliability for customers. When that happens, everyone loses.

The PSC has historically done well balancing the demand for affordable power, state policy requirements, and the health of its utilities. Doing a thorough job processing the many rate cases currently before the commission is the first step in the execution of that outcome.

New York’s—particularly Upstate New York’s—electricity grid is aging and in dire need of investment. This is not only for reliability and resiliency in the face of storms that hit harder and more frequently, but also to meet the increasing demands including AI-driven data centers and the electrification of buildings and transit. Simply put, people are more dependent on electricity than ever before, and as the state continues to electrify, this demand will only increase. Investment plans—and a utility’s rate request that incorporates those plans—are a necessary part of the solution.

The PSC has a great staff to manage these rate cases—the primary instrument at its disposal to regulate the energy industry—and I am confident the result, as always, will be a fair and balanced outcome that will benefit the ratepayers, the companies, and New York.

Robert E Curry Jr. was a commissioner of the New York State Public Service Commission from 2006 to 2012 and, for five years during the Obama Administration, a member of the Electricity Advisory Committee of the U.S. Department of Energy.