NYSEG AND RG&E ASK PSC FOR PROMPT ACTION TO ADDRESS EFFECTS OF CREDIT CRISIS
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Proposals Outline Important Investments in Infrastructure, Reliability,
Growth, Low-Income Aid and Energy Efficiency
FOR IMMEDIATE RELEASE
Rochester, NY, January 27, 2009 – NYSEG and RG&E have filed rate requests asking the New York State Public Service Commission (PSC) for an increase in rates for electricity and natural gas delivery service. The rate requests would ensure that the companies have sufficient cash flow for infrastructure investment and the continued provision of safe and reliable service.
The companies are forecasting a significant shortfall in cash needed to make required infrastructure investments. For NYSEG and RG&E these liquidity challenges have been intensified by the companies' “BBB” level credit ratings, which are the lowest bond ratings of any major electricity or natural gas utility in the state. While considered "investment grade," in the current credit crisis these ratings have meant dramatically higher costs and periodically lower availability of essential capital.
Historically, the PSC has preferred having New York State utilities maintain “A” level credit ratings. NYSEG and RG&E share this goal, and have designed the rate requests in a manner that would begin moving the companies toward the achievement of an “A” level credit rating and a reduction in borrowing costs.
If approved, the rate requests would also provide for significant investment over a two-year period to improve reliability, enhance and accelerate energy efficiency programs, help low-income customers, increase renewable energy generation, stimulate regional economic growth, and ensure that safe and reliable service is not jeopardized.
The companies' investment plans call for:
• Potentially investing more than $800 million in capital investment to improve reliability, expand infrastructure and increase the generation of renewable hydropower. These investments would significantly boost regional economic development and move New York closer to Governor David Paterson's goal of having New York meet 45% of its electricity needs through improved energy efficiency and clean renewable energy.
• Increasing by more than $20 million the operating companies' support for aid to low-income customers, a need that is burgeoning in the current economic decline.
• Developing enhanced energy efficiency programs with a goal of reducing customer bills through less energy consumption.
• Committing $50 million annually to continue the environmental clean-up of manufactured gas plant and other sites in cooperation with the state Department of Environmental Conservation (DEC).
• Improving reliability by implementing an enhanced vegetation management program.
The increase in the average NYSEG residential electricity bill would be approximately $8.80 per month (9.9%) and the average NYSEG residential natural gas bill would increase approximately $12.20 per month (8.8%). The increase in the average RG&E residential electricity bill would be approximately $8.80 per month (11.9%) and the average RG&E residential natural gas bill would increase approximately $7.88 per month (7.4%).
NYSEG and RG&E's electricity delivery rates have not increased since 1996, and have been decreased twice since then. Natural gas delivery rates have been essentially flat since 1994.
NYSEG and RG&E have asked the PSC to consider and approve the requests by July 1 in recognition of the significant financial harm caused by the global credit crisis and the fact that the utilities face a significant cash shortage due to an increase in uncollectible bills, reduced sales due to a decrease in economic activity, property taxes that have long been among the nation's highest, and other steadily increasing business costs such as pensions and health care. Collectively, these factors are undermining NYSEG and RG&E's ability to fund infrastructure investments needed to keep service safe and reliable.
About NYSEG and RG&E: NYSEG and RG&E are subsidiaries of Energy East Corporation, a super-regional energy services and delivery company in the Northeast. NYSEG serves 872,000 electricity customers and 256,000 natural gas customers across more than 40% of upstate New York. RG&E serves 360,000 electricity customers and 297,000 natural gas customers in a nine-county region centered on the City of Rochester. By providing outstanding customer service and meeting customers’ energy requirements in an environmentally-responsible manner, NYSEG and RG&E will continue to be valuable assets to the communities they serve. For more information, visit nyseg.com and rge.com.
Contact: Matthew Maguire