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PSEG raises power supply charge again

Towers carrying PSEG Long Island transmission lines are

Towers carrying PSEG Long Island transmission lines are silhouetted by the setting sun in Centereach on Thursday, May 26, 2016. Credit: Newsday / John Paraskevas

The power supply portion of Long Island electric bills rose again in July, capping a cumulative six-month increase of nearly 35 percent as the utility works to stabilize bills amid rising natural gas prices.

Average residential customers will see July bills that are $13.76 higher than they were in January, when the power supply charge hit a record low.

The 2016 increases come as Long Island ratepayers move into the summer air-conditioning season, historically the time of heaviest usage.

PSEG has blamed “higher-than-expected” fuel costs, particularly natural gas, for the bulk of the increase this year, but it was small comfort to customers facing total bills that are up over 15 percent this year due to increases in other charges.

“That’s a big chunk,” said Charlotte Grande, 84, a Port Jefferson ratepayer living on Social Security. “It presents a burden. It means I have to cut back on everything else.”

The power supply charge, which represents around half of customer bills, has crept up steadily in 2016, hitting 7 cents a kilowatt hour in July, up from 5.2 cents in January. For July a year ago, the power supply charge was 6.3 cents a kilowatt hour. The charge hit a 12-month high in December of 8.6 cents.

PSEG spokeswoman Kristina Pappas said that beyond higher natural gas prices, the increase was in part tied to a January charge that was “artificially low” because PSEG that month returned a portion of fuel-cost overcharges from 2015.

She said the company has reduced volatility in the power supply charge, “with each month having minimal changes from the prior.”

This year’s gradual increase comes in the same year LIPA and PSEG instituted a separate increase in the delivery charge portion of bills of just under 1 percent, or about $. 65 a month, LIPA said. Delivery charge increases of more than 3 percent are set for each of the next two years.

Ratepayers also are paying a new decoupling charge this year, on average about $1.69 a month. The charge lets the utility recoup expenses when customers use less electricity than projected, because of green energy initiatives or moderate weather.

PSEG and LIPA in recent months have been on a public-relations campaign to show Long Island electric rates are lower than four or five select regional utilities, including Con Edison.

A Newsday analysis last month found LIPA had the fourth highest rates compared with a J.D. Power & Associates list of the top 17 northeast utilities in 2015, when PSEG/LIPA was ranked last in the nation for customer satisfaction. PSEG has since increased the satisfaction score.

Last month, local leaders including State Sen. Kenneth LaValle (R-Port Jefferson) received a letter from PSEG highlighting what the utility called the “lowest rates in the region.” As Newsday’s analysis found, among the hundreds of lower-priced utilities across the nation was PSE & G, PSEG’s New Jersey sister company, and upstate National Grid, which previously managed the LIPA system.

LaValle said despite the utilities’ claims, he remains “focused on how we are accumulating debt, on what things and how is that affecting our rates.”

LIPA ended 2015 with $7.6 billion in debt, an amount it expects to increase to $8.2 billion by 2018. LIPA’s interest expense in 2015 was $361.7 million, compared with $358.5 million in 2014.

“Ratepayers need to understand that we still have an exceedingly high amount of debt and that is a factor in their rates,” said LaValle. LIPA’s debt amounts to more than $9,000 per customer, among the highest in the nation. LIPA has worked to reduce interest rates by refinancing older debt.

LIPA trustee Matthew Cordaro said the increase in the power supply charge points to the difficulty in comparing rates.

“It underscores the fact that no matter what we say about rates, a significant portion is out of our control,” Cordaro said. “That’s why it’s not judicious to try to tout the fact that our rates are better than many people think they are.”


PSEG’s power supply charge is up 33.7 percent since January.

Month Charge:*

January: 5.272

February: 6.2937

March 6.1329

April 6.2196

May 6.2559

June 6.966

July 7.048

*Cents per kilowatt hour

Source: PSEG Long Island

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