PSEG Long Island to reduce June power supply charge

The first fleet of PSEG logo service trucks

The first fleet of PSEG logo service trucks come out from the service yard to begin work under the new utility at National Grid in Hicksville on Jan. 1, 2014. Photo Credit: Newsday / J. Conrad Williams Jr.

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PSEG Long Island Friday said the monthly power supply charge portion of electric bills will drop 20 percent in June, after increases in seven of the past eight months.

Average customers using 775 kilowatts of power will see a reduction of around $16 for the month.

The power supply charge, which makes up roughly half of electric bills, will drop to 8.52 cents per kilowatt hour in June, from 10.6 cents in May. Rising gas and electric costs through a record-cold winter were largely responsible for the increases.

The move comes as PSEG examines strategies to reduce the volatility of bills, which had several large spikes during the fall and winter as natural gas prices soared. PSEG is also examining LIPA's balanced-billing program, which had a series of unusual adjustments this winter, an official said. Balanced billing aims to stabilize bills by averaging costs over a year and holding bills relatively steady, but cost increases or decreases of greater than 10 percent can lead to additional adjustments.

In a financial report released Thursday, LIPA noted that as of April's end, it had spent $177 million more for fuel and power purchases for the year than budgeted. It said a winter that was 13 percent colder than normal resulted in 59 percent higher average natural gas prices so far this year, along with 3.6 percent higher electricity demand on Long Island.

David Daly, president of PSEG Long Island, said the company is working on two different tracks to address customer issues with bills and costs. It is looking at LIPA's current fuel-hedging strategy to see if it can be improved to level out costs, he said, as well as the monthly fuel-cost adjustment portion of bills. A review of the balanced-billing program is a separate part of the review.

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Daly said he wasn't able to say what changes, if any, would be made. PSEG takes over LIPA's power markets group on Jan. 1, 2015.

PSEG customers have been railing against high winter bills for months. PSEG has blamed much of the hike on higher natural gas prices tied to the polar vortex-related cold weather. Customers who saw their bills jump to some of their highest levels over the winter flooded PSEG call centers, officials said, though volumes have since subsided.

PSEG spokesman Jeff Weir declined to predict whether the power supply charge would remain at its current rate through the summer.

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