Dive Brief:
- New York electric and gas utilities fear they could be on the hook for "potentially unlimited financial obligations" if they are required to provide customer credits and reimbursements for prolonged, widespread outages "without the opportunity for cost recovery," they told the state's Public Service Commission in comments filed Friday.
- A 2021 law requires utilities to compensate customers and in April a New York Department of Public Service staff proposal outlined how refunds could be implemented. They include $25 credits for each 24 hours of service outages during prolonged interruptions, reimbursement for prescription medications and up to $540 for spoiled food.
- The Public Utility Law Project of New York, or PULP, filed comments recommending more "granularity" in some parts of the proposed rule, including the definition of a "widespread" outage, and called for flexibility in how customers must report their losses. But the watchdog group said the proposed rule puts customers first and is "in alignment with the public interest."
Dive Insight:
The proposed customer refund rules were required by lawmakers following Tropical Storm Isaias in 2020, which left more than a million customers without power — in some instances, for more than a week.
Some utilities did provide reimbursements to customers. Consolidated Edison, New York State Electric & Gas, and Orange and Rockland reimbursed customers for food and prescription medicines when they lost power for at least two consecutive days or more, according to the PSC. PSEG Long Island, a subsidiary of Public Service Enterprise Group, reimbursed customers after three days.
Isaias "reinforced the reality that the state neither possesses a uniform process for awarding reimbursements nor a uniform policy of seeking and awarding such reimbursements," PULP said in its comments.
That led to legislation signed at the end of last year by Gov. Kathy Hochul, D, requiring the PSC to develop standard processes and policies for customers who experience a “widespread prolonged outage.”
Staff's proposal defines a widespread and prolonged outage as an event impacting "at least 20,000 customers at the same time and having one or more customers who remain without power for 72 hours or more due to utility-owned equipment unable to provide power." For gas customers, the threshold would be 500 customers for the same duration.
New York investor-owned utilities filed jointly to propose some clarifications to staff's definitions, but the first concern enumerated in their comments is the lack of cost recovery in the proposal.
Staff's proposal does say utilities may petition the commission for a waiver of the credits/reimbursement requirements within 14 days of the emergency event. "The utility must demonstrate that granting the waiver is fair, reasonable, and in the public interest," according to the proposal.
The commission should "clarify that a utility may seek a waiver specifically to allow for cost recovery," the utilities said. Otherwise, the new rule "imposes potentially unlimited financial obligations on utilities ... Under the staff proposal, this would be true regardless of whether a utility bears any fault for the outage."
Consolidated Edison's tariff, the utilities noted, does not require it to reimburse customers in several instances, including when outages result from issues with higher-voltage equipment, deficiencies in generation or transmission facilities, and conditions beyond the company’s control.
The utilities said they proposed the commission use a similar standard "not to avoid reimbursing customers, but only to obtain cost recovery where the utility was not primarily responsible for the outage." As the rule is currently proposed, "this is tantamount to making the joint utilities insurers against major storms and the more frequent heat waves that may result from climate change," they wrote in their May 20 comments.
The joint utilities include Central Hudson Gas & Electric, Consolidated Edison, National Fuel Gas Distribution, New York State Electric & Gas, Orange and Rockland Utilities, Rochester Gas and Electric, and National Grid.
Both PULP and the utilities want to see changes in how "widespread" is defined.
The staff proposal "does not provide any reasoned basis for its proposed definitions," the utilities said.
The 20,000-customer threshold "appears to be derived from a threshold used for reporting purposes under staff’s estimated time of restoration protocols included in utility electric emergency response plans, and staff has not shown that it is an appropriate basis for assessing what is effectively a penalty on utilities, even where storm performance is not in question," the utilities said.
Instead, the utilities recommended a widespread outage be defined as one "that affects 10% or more of the customers in the utility’s service territory or, in the case of companies with more than one division, more than 20% of an operating division due to utility-owned equipment being unable to provide power."
PULP said the proposed definition of widespread "may be problematic because the major, investor-owned utilities vary in how many customers they serve and how large their service territories are."
The consumer advocate said it would prefer to see "a more granular approach of dividing the utilities into tiers or using some other factor(s) to group the utilities so that a logical and reasonably uniform set of standards and procedures can identify" widespread prolonged outages.
Reply comments are due June 13. Municipal utilities are not required to comply since the costs should not be recoverable from ratepayers, the PSC said.
