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Electric bills to see subtle changes

Workers replace poles with taller ones on Toilsome

Workers replace poles with taller ones on Toilsome Lane in East Hampton. Credit: John Roca

Electric bills and the rules governing the collection of rates are about to undergo a series of subtle changes that will allow the Long Island Power Authority to recoup debt refinancing costs tied to Gov. Andrew M. Cuomo's LIPA reform act while funding new system improvements.

PSEG Long Island, which operates the system under contract to LIPA, said the changes won't materially affect the amount customers pay for electricity but will help fund needed upgrades.

One of the new rules would allow PSEG Long Island to continue to collect $26 million a year from customers for a state revenue tax, even though the 2013 LIPA reform act exempted the utility from paying it.

LIPA trustees will vote Thursday on a series of changes to the rate-making rules, called the LIPA tariff. In addition to the revenue tax, they also will vote to allow PSEG to continue collecting $6.9 million annually for a charge that allowed LIPA to delay paying the state assessment in 2009, even though the charge has been paid off. Had PSEG let the two payments expire, utility bills could have dropped 1 percent this year.

Jeff Weir, a PSEG Long Island spokesman, acknowledged the changes but said the money would be used to allow the company to make needed system improvements. He said the otherwise largely cosmetic bill changes will result in the utility collecting a total of $800,000 less from customers this year -- a net savings for most customers of less than $1. Around 35,000 residential customers will see an increase of less than 50 cents in total for the year.

LIPA since 2010 had been collecting the $6.9 million to pay off its 2009 decision to delay by nine months a state utility tax levied that year. Although the charge was paid off last year, the new rate plan proposes to continue collecting it "so there is no increase or decrease in current rates," according to the tariff proposal on LIPA's website.

Also, while the LIPA act exempted the authority from paying a 0.75 percent state assessment on its $3.5 billion in annual revenue, it plans to continue to collect the revenue tax and put it in the delivery and systems charge.

Weir said the overall changes result in "pennies less" for most customers, but added, "While that's happening we're making improvements to the system. We're getting a better outage management system, enhancing resiliency and reliability and improvements" to the storm response process.

New to the bill starting in April will be a so-called securitization charge. This includes costs for the refinancing of $2.1 billion in long-term debt as part of the LIPA reform act. All costs of the transaction must be recouped through rates, including $25 million in upfront costs and unspecified ongoing costs. LIPA expects to save $131 million from the refinancing.

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