New York utility regulators have opened a proceeding to create an affordability index that will measure electric and gas costs against household income and influence future rate cases.
The Public Service Commission's action provides interim instructions for utilities as the state works toward a goal of keeping combined household electric and gas expenses below 6% of income, Gov. Kathy Hochul's office announced Thursday.
The plan was included in the state's enacted fiscal 2027 budget. It sets separate targets of 3% of household income for electricity and 3% for gas service.
Utilities face new reporting requirements
Each major utility will calculate its own affordability index for upcoming rate cases and its first annual affordability filing, due Feb. 1, 2027. The commission plans to issue its first statewide affordability report by July 1, 2027.
For most utilities, the interim index will divide median annual residential electricity or gas spending by the statewide median income. Con Edison and National Grid's downstate operations will use area median income instead.
The annual report is intended to give regulators, policymakers and consumers a consistent way to compare utility affordability and track changes over time.
If a utility's index exceeds the 6% combined target, the commission may appoint an independent affordability monitor to examine operations and spending. The monitor would report cost drivers and recommend ways to lower customer expenses.
The index will also be tied to performance incentives used in executive and senior-management compensation. PSC Chair Rory Christian said the measure is intended to make affordability part of utility leadership decisions and provide information for rate-case rulings.
Rate cases and customer costs face added scrutiny
The broader ratepayer plan requires utilities seeking increases to explain why proposed capital projects are necessary and to present a budget-constrained option that keeps operating-cost growth below inflation. Companies must also show how proposed increases would affect their affordability index.
The state will allow 14 months to review utility rate requests and may use multiyear rate cases when regulators determine they benefit consumers. Regulators will also scrutinize expenses utilities seek to recover from customers during rate proceedings.
The enacted policies prohibit utilities from charging ratepayers for lobbying, political donations, certain public-relations campaigns and luxury travel. The governor's office said excess utility profits may be returned to customers.
The new index builds on the state's Energy Affordability Program, which requires discounted service for income-eligible customers. Eligibility was expanded this year to households with income up to the state median, according to the PSC.
State officials are conducting outreach to an estimated 2.5 million eligible households that are not enrolled in existing utility-bill credits. Those credits can reduce annual bills by several hundred dollars, the governor's office said.
The state also plans to begin distributing $1 billion in energy rebate checks to 8.2 million New Yorkers on Sept. 21. Those checks are separate from the affordability index and the recurring bill-credit program.
Since 2021, participating households have received more than $6.6 billion in direct utility-bill relief, not counting the new rebate checks, according to the governor's office. The state has also directed $1.4 billion to weatherization, energy-efficiency and renewable-energy projects intended to reduce household energy use and costs.
Earlier post-pandemic assistance included $1.17 billion used to address overdue utility bills for nearly 500,000 residential customers and 56,000 small businesses.
The commission will use stakeholder input to develop additional details while utilities prepare their first filings under the interim guidance.
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