PSC, NYSEG at odds over finances

Another showdown appears to be brewing between the state Department of Public Service and Energy East Corp.

An attorney for the department believes Energy East, parent of New York State Electric & Gas and Rochester Gas and Electric, is doing OK despite the recession and credit crunch.

But officials from NYSEG and RG&E apparently feel otherwise.

According to letters from the department and its general counsel, Peter McGowan, NYSEG and RG&E wanted an unspecified and temporary rate increase at the end of 2008. The utilities also plan to cut their capital spending plans by 50 percent.

In letters from McGowan, obtained by the Democrat and Chronicle newspaper in Rochester through a Freedom of Information Law request, it is clear that the 2008 battle over the $4.6 billion purchase of Energy East by Iberdrola SA of Spain won't be the last.

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Letters to the New York Department of Public Service indicate that Rochester Gas and Electric Corp. and sister company New York State Electric and Gas Corp. are weighing temporary rate hikes and cuts in capital spending.

That has the department’s general counsel questioning why parent company Energy East Corp. is down in the mouth about its earnings in 2009.

In letters sent to attorney David L. Schwartz, who represents NYSEG and RG&E, the department said a temporary rate hike in the time frame requested was unlikely given New York’s regulatory requirements. The request appears to have been aimed at getting approval by the end of 2008.

“In light of this procedural framework and considering the limited information you provided to us, it seems highly unlikely that the commission would be able to act on a request by NYSEG or RG&E for a temporary rate increase within the end-of-the-year time frame you outlined in our meeting,” wrote Peter McGowan, general counsel for the DPS.

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In his first annual address to legislators last week, Gov. David A. Paterson said, “The state of our state is perilous.” Yet his energy platform promises to visit more peril upon the Empire State.

The centerpiece is Paterson’s “45 by 15” plan for New York “to meet 45 percent of its electricity needs through improved energy efficiency and clean renewable energy” by 2015. The idea is to decrease overall electricity usage 15 percent in six years through efficiency measures.

Meanwhile, policymakers would increase the state’s “renewable portfolio standard” — the amount of the state’s power that would come from renewable energy sources — to 30 percent from the previous target of 25 percent.

Neither is likely to happen, but we are guaranteed to spend a lot of money learning some hard lessons. The state economy is already fairly energy efficient, partly because high prices have driven heavy manufacturing out of state. So the likelihood of finding substantial gains there is slim. The only realistic hope for reducing energy consumption is not efficiency, but a lengthy economic downturn, which nobody wants.

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