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Utility wants to hike rates: NYSEG says it will also cut spending to save money

New York State Electric & Gas Corp., acquired last fall by a large Spanish utility, wants to increase rates and plans to reduce capital spending this year as it faces serious financial issues. ...It is unclear how any rate increase sought by NYSEG would be impacted by the $275 million that the PSC has ordered Iberdrola to return to upstate customers as a condition of the merger.

ALBANY-- New York State Electric & Gas Corp., acquired last fall by a large Spanish utility, wants to increase rates and plans to reduce capital spending this year as it faces serious financial issues.

Details of the utility's plans -- and concerns -- are in letters from the state Public Service Commission to NYSEG and its attorneys that were obtained by the Times Union.

Based in Rochester, NYSEG is one of the largest utilities in upstate New York with hundreds of thousands of customers. There are 45,000 in the Capital Region.

The company was acquired in September by Iberdrola SA as part of the $4.5 billion purchase of Energy East Corp., which owned utilities from New York to Maine.

The PSC's approval of the merger was contentious at times, but the deal received widespread support from state political leaders -- including Gov. David Paterson -- who extolled the deep pockets of Iberdrola and its desire to spend $2 billion in New York on wind farm projects.

Letters sent to NYSEG and its attorneys on Dec. 4 and 31 by PSC General Counsel Peter McGowan show the company and its sister utility, Rochester Gas & Electric, were planning to seek an emergency rate increase... more [truncated due to possible copyright]  

ALBANY-- New York State Electric & Gas Corp., acquired last fall by a large Spanish utility, wants to increase rates and plans to reduce capital spending this year as it faces serious financial issues.

Details of the utility's plans -- and concerns -- are in letters from the state Public Service Commission to NYSEG and its attorneys that were obtained by the Times Union.

Based in Rochester, NYSEG is one of the largest utilities in upstate New York with hundreds of thousands of customers. There are 45,000 in the Capital Region.

The company was acquired in September by Iberdrola SA as part of the $4.5 billion purchase of Energy East Corp., which owned utilities from New York to Maine.

The PSC's approval of the merger was contentious at times, but the deal received widespread support from state political leaders -- including Gov. David Paterson -- who extolled the deep pockets of Iberdrola and its desire to spend $2 billion in New York on wind farm projects.

Letters sent to NYSEG and its attorneys on Dec. 4 and 31 by PSC General Counsel Peter McGowan show the company and its sister utility, Rochester Gas & Electric, were planning to seek an emergency rate increase late last year.

RG&E serves the Rochester area, while NYSEG has more widespread upstate operations.

"Such relief should be limited to cases of financial emergency, where denial would place the utility in jeopardy of not being able to fulfill its statutory obligation to provide utility service to its customers," McGowan wrote Dec. 4.

Getting a temporary rate increase approved by the commission by the end of 2008 was "likely infeasible," he added. The increase was never sought.

However, a Dec. 31 letter from McGowan to NYSEG President James Laurito indicated the utility still plans to seek a rate increase this year and also expects to "significantly reduce" capital spending.

"This strategy appears to be based, at least in part, on what you consider to be a precipitous decline in earnings," McGowan wrote.

He added that the conditions of the PSC's Sept. 9 written approval of the Iberdrola acquisition require that a rate increase application should be made only if the utility can show its finances hinder its "ability to provide safe and reliable service."

Officials from NYSEG and Iberdrola could not be reached for comment.

NYSEG has not made a formal request for a rate increase, said PSC spokesman James Denn. He said no other utility in New York has sought an emergency rate increase. He declined to comment on the letters.

McGowan said the PSC's "greatest immediate concern" is NYSEG and RG&E's plans to "nearly halve its capital spending targets for 2009." He also requested detailed plans of the spending reductions.

It is unclear how any rate increase sought by NYSEG would be impacted by the $275 million that the PSC has ordered Iberdrola to return to upstate customers as a condition of the merger.

However, the PSC has said the money would be considered in the context of a future rate request by Iberdrola in order to reduce any rate volatility for NYSEG and RG&E customers.


Source: http://timesunion.com/AspSt...

JAN 16 2009
http://www.windaction.org/posts/18639-utility-wants-to-hike-rates-nyseg-says-it-will-also-cut-spending-to-save-money
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