(Bloomberg) — New York’s utility regulator proposed a revenue increase for Consolidated Edison Inc. that’s 80% below the utility’s request as sensitivity over consumer power bills mounts.
Staff of the New York Public Service Commission recommended ConEd collect an increase of $319 million in revenue, or about $1.3 billion less than the amount ConEd wanted, according to a filing Friday. The regulatory staff also proposed ConEd earn a 9.3% return on equity, lower than the 10.1% requested by the utility. Analysts at Citigroup Inc. had predicted staff would recommend a 9.2% return.
The recommendation Friday comes as utilities are facing increasing pressure from customers and politicians over rising electricity bills. Power companies say the increased spending is needed to fortify and expand their systems to meet anticipated increased electric demand from data centers and other industrial sources.
“There is no question that there is a lot of sensitivity in New York about increasing electricity rates,” said Paul Patterson, a utility analyst for Glenrock Associates. “But it’s important to note that this is just a staff recommendation and that rate cases in New York often result in settlements between the utility, staff and other parties.”
ConEd’s initial proposal would have resulted in total residential bills increasing as much as 13.7%.
ConEd representative Carolyn Vadino said in an email the company is sensitive to consumer prices and plans to keep negotiating its rate request.
The final decision on the utility’s rate of return — which will partly determine how much customer bills rise — will be made by the state’s Department of Public Service.
Regulated utilities including Con Edison periodically ask regulators to collect funds that cover the cost of bolstering their infrastructure in addition to a specific return on that investment.
–With assistance from Tope Alake and Bill Haubert.
(Adds details of revenue recommendation in second paragraph)
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