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PSEG Long Island power supply charge drops again

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 plans to cut another 15 percent from the power supply charge in April, the fourth straight month of decline, even as the scope of its 4 percent rate-hike request is about to broaden.

PSEG in a statement yesterday said lower natural gas prices were the primary driver in the reduction, which could cut average customer bills by more than $11 this month. Actual costs depend on customer usage. LIPA in its year-end financial report released in March also disclosed that it ended 2014 with $40 million in excess power-supply charges, which must be returned to customers this year.

The reductions come after four months of increases at the end of last year. The charge this month drops to 7.74 cents a kilowatt hour, from 9.18 cents.

The move comes as two administrative law judges overseeing PSEG's three-year, 4 percent rate-hike request ruled that the scope of the rate proceeding can be expanded to include the impact of three programs that LIPA and PSEG plan to implement.

In their ruling Monday, administrative law judges Michelle Phillips and David Van Ort ordered that the rate proceeding include effects of three programs: Utility 2.0, revenue decoupling and a cost-recovery mechanism for energy efficiency programs.

The ruling is significant because each of the programs has the potential to affect rates during the period PSEG and LIPA propose to hike the delivery charge portion of bills by just under 4 percent.

Utility 2.0, a program that proposes using green-energy technology and devices to reduce customer electricity demand, had a price tag of $345 million when PSEG revised it in October. LIPA trustees have yet to vote on the latest iteration of the program, which has been under review by the Long Island office of the state Department of Public Service.

The judges also allowed the potential effects of revenue decoupling to be included in the scope of the rate case. Decoupling is a mechanism that will allow LIPA to increase rates beyond the 4 percent hike when its sales fall below projected levels due to cooler weather, green-energy programs and economic conditions. The mechanism also paves the way for customer credits if sales come in above projections. LIPA in the past three years has seen sales shortfalls of more than $180 million, although it has seen swings of sales above expectations in prior years.

The utilities also allowed that parties in the rate proceeding can examine the impact of energy efficiency programs in the rate case.

"We are pleased with the clarifications the administrative law judges have made," PSEG spokesman Jeff Weir said.

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