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PSEG Long Island customers face potential rate hike to fund upgrades elsewhere in New York State

PSEG electric transmission lines on Waltress Road in

PSEG electric transmission lines on Waltress Road in Ronkonkoma on Jan. 29, 2015. Credit: Heather Walsh

PSEG Long Island may be forced to collect $103 million from ratepayers over the next four years for upstate power-line projects that LIPA recently argued provide no benefit to Long Island customers.

In January, the Long Island Power Authority registered a formal protest with the Federal Energy Regulatory Commission seeking to dismiss what it called a "breathtaking" claim by five New York utilities seeking up to $245 million from Long Island customers in future years to pay for the transmission-system upgrades elsewhere in the state. FERC has yet to rule on the request.

If LIPA wins the case, the charges could go away or be reduced. Until then, PSEG must budget for the payments and collect money from ratepayers, starting with upward of $9.3 million later this year.

PSEG Long Island, in papers filed with its three-year, 4 percent rate hike, proposed setting aside more than $103 million for a budget line labeled "Transco." New York Transco is a group of New York investor-owned utilities devising projects to upgrade the state's high-voltage transmission system as part of Gov. Andrew M. Cuomo's Energy Highway initiative.

The costs would not be collected through the delivery charge that comprises PSEG's rate-hike request, but through potential future increases in customers' power supply charge. LIPA referred comment to PSEG.

Any funds collected from Long Islanders for the projects would be forwarded to the New York Independent System Operator, which oversees state power markets, to be allocated to the utilities completing the projects, said Paul Napoli, vice president of power markets for PSEG Long Island.

LIPA's protest remains pending, Napoli noted, "but until such time as it is acted upon, these are the known costs as of today that will be incurred by Long Island ratepayers."

Napoli added, "Hopefully if they [the FERC] rule in our favor these costs will go away or they may be less."

As reported in Newsday in September, Transco initially proposed at least one project that would have benefited Long Island by upgrading an undersea cable project originating at East Garden City. But that project has since been excluded from the roster.

Yet, according to the January filing by LIPA with FERC, New York Transco and five utilities -- Con Edison, Niagara Mohawk/National Grid, New York State Electric & Gas, Orange & Rockland Utilities, and Rochester Gas and Electric -- still expect LIPA to foot 16.7 percent of the $1.7 billion in projects they propose.

LIPA derided the request as "contrary to the legal regime" of FERC's original plan for the system upgrades.

Even as LIPA argues before the FERC that the projects have no benefit for Long Islanders, PSEG forecasts spending increasing amounts on the Transco projects between 2015 and 2018: $9.2 million, $21 million, $33.1 million and $39 million, respectively. Every $35 million of LIPA cost represents a roughly 1 percent increase on customer bills.


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