Central Hudson Rate Increase – What Gives?

Two press releases popped into my mailbox this week that got me thinking about how utility company set their rates. First, I got a release from Central Hudson, explaining that they have filed with the Public Service Commission for a rate increase beginning in June, 2009. The second was from the PSC proudly announcing that they have fast tracked millions of dollars in financial incentives for utility companies to help consumers learn to conserve energy.

Strange…the Central Hudson release seemed to be saying that they needed a rate increase partly because customers weren’t using as much energy….yet here was the PSC giving them about a million dollars to help us use even less.

What gives?

Smelling a good story, I called John Maserjian over at Central Hudson to get to the bottom of it. John is one of the company’s designated spokespeople and a pretty straight shooter. It was a good place to start.

Central Hudson, as many folks know by now, no longer actually produces any of the energy it delivers to peoples’ homes and businesses. It only owns and maintains the infrastructure to get it there. That delivery charge comprises about one third of the total bill you get from Central Hudson. The other two thirds is for the natural gas and electricity you buy.

Even though all those gas pipes, strung wire, poles and transformers have been up for generations, they require maintenance year ‘round, John explained. Costs to the utilities to buy copper wire, plastic, steel, anything they need to string new wire, lay new pipelines and keep the system functioning have more than doubled since their last rate increase in 2007. The fuel use to power all those trucks and cars they use has also soared so far off budget predictions that – like everyone else -  they are also having trouble paying to run their vehicles.

OK, so far, it was looking like we could blame the inflation bubble for the proposed increases that, by the way, are estimated to cost each household another $3.50 per month.

Then, he threw me a curve. Maserjian explained that Central Hudson also use a pretty complicated formula for calculating what each household is going to pay for its delivery services based  on three main things:

·         The total cost is to maintain the system

·         The number of households and businesses in the system

·         The relative amount of energy that is used (by household or business)

So, said John, the need to increase rates has come about, not just because their operations costs ar eout of sight – but because energy use is actually down a bit.

So, you might ask…as I did…why is the PSC allocating millions of dollars to push conservation programs and why is it in anyone’s interest to cut their energy use…if it’s just going to result in higher delivery prices?

Well, global warming, the end of carbon-based fuel and all that other stuff aside, it seems that the more folks are able to conserve and the more they are able to take advantage of some good programs all the utilities are pushing now, the lower their bills actually will be. In other words, the lines of customer use and delivery cost needs do cross fairly early in the graph and (with conservation and increased efficiency) peoples’ bills could go down, even as their delivery costs are going up.

What can you do to successfully conserve – and what programs are out there? Go to www.centralhudson.com and then click on the “energy answers” button on the left side of the home page to read some excellent information on saving energy and saving money, even if your delivery rates are about to go up.