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Hike in monthly LIPA bills will be twice as large as estimated

A residential meter in Smithtown, shown on April

A residential meter in Smithtown, shown on April 14, 2015. Photo Credit: Newsday / John Paraskevas

Long Islanders will see considerably larger increases in their electric bills in January than LIPA previously had forecast, after days of talks with contractor PSEG led the utilities to agree on a larger number.

Residential customers who in December used 775 kilowatt-hours of energy — an amount officials long had considered the average — will see a $7.57 increase in January, or a total bill increase of 5.4 percent, PSEG Long Island said.

For customers using 762 kilowatt-hours, an amount the Long Island Power Authority says is now the projected average, bills in January will increase by $6.44.

LIPA previously had said the bill for the average user would increase by $3.25 in January. PSEG said “updates and revisions” led to the higher numbers.

The complexity surrounding the PSEG bill has increased considerably this year with a series of adjustments that can add or subtract costs from different parts of the bill.

In addition to the long-established power supply charge and delivery charge, bills now have revenue decoupling charges and a delivery service adjustment.

The new charges, most implemented in 2016 when the state approved a three-year rate plan, allow LIPA to recoup revenue when factors such as weather, green energy and expenses such as labor agreements fluctuate year over year. A new labor contract last year will increase union pay around 3 percent.

LIPA also recently shifted a large portion of costs formerly associated with the delivery charge into the power supply charge.

For some PSEG/LIPA customers, the increases are a too-familiar refrain.

“The bottom line is we’re still paying more, it’s going to be a real shock,” said Elizabeth Conlon, a resident of the all-electric Leisure Village community in Ridge. “That $7.57 increase is a lot to people who live here. It could be a prescription, it could be groceries.”

Added Jamie Noonan of Massapequa, “I don’t understand why it fluctuates so much. It’s up and it’s down so much I don’t get it.”

LIPA in Newsday stories starting in mid-November provided a series of steadily increasing figures for the projected January bill impact.

When the budget was released Nov. 14, the bill impact was listed in budget documents as $2.56 for average customers. Then on Dec. 21, while trustees were approving the budget, LIPA instead told Newsday the average bill impact was $3.25.

Each of those totals assumed customers use the lower figure of 762 kilowatt-hours a month. Now for customers using that amount, bills will go up $6.44 between December and January, according to PSEG.

LIPA for years had used 775 kilowatt-hours as the standard for average electric use, and that holds true for residential customers in 2016. But PSEG is now projecting that the total average residential use will decline next year to 762 kilowatt-hours.

Customers using 775 kilowatt-hours will see the following changes to their bills:

  • The revenue decoupling charge will decline from $3.87 in December to $1.64 in January, a $2.23 drop. The delivery service adjustment will go from zero in December to a credit of 54 cents for customers.
  • The power supply charge will increase from $57.70 in December to $83.86 in January. Most of that increase — $20.33 — is the result of LIPA shifting costs out of the delivery charge. Excluding that amount, the power supply charge is increasing a projected $5.82 in January.
  • The delivery charge for those same customers will decline from $79.59 in December to $63.78 in January. That’s $15.81 lower. Excluding the charges shifted over to the power supply charge, the true delivery charge increase is $4.52.

PSEG spokesman Jeff Weir said the power supply charge increase is based on anticipated higher natural gas charges in 2017.

“Following a year of record-low fuel and purchased power costs in 2016, the power supply portion of the bill for 2017 is also projected to increase,” he said. “This charge, which is largely dependent on the fluctuating spot market price of natural gas, is projected to increase less than 4 percent from the lows of 2016 and to remain below 2015 levels. Customers will pay only the actual costs for fuel and purchased power each month.”

Two board members who voted for the budget said the amount of the increase was far larger than previously disclosed.

“I’m surprised the number is different from what I was briefed on,” said trustee Mark Fischl.

But he said he was “comfortable” with the amount of the increase given the amount of investment LIPA is making to improve the system, and the fact that LIPA rates are still generally lower than other regional utilities. He also noted the delivery rate is slightly lower than that approved by the state in 2015.

Trustee Matthew Cordaro called the higher figures “very surprising.”

“In no way did I have a sense that would go to this level in the budget we approved.”

He expressed regret that “I wasn’t diligent enough to make a case of what the rate impacts were going to be. The board discussion centered on what the budget was.” In retrospect, he said, “It would have been a lot more useful to have a clearer idea of what the rate impacts were.”

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