NEW YORK STATE — Customers in upstate New York could see their electric and gas bills continue to rise, despite calls from the public and from elected officials for the state’s utilities to cut back on increasing rates. 

New York State Electric and Gas Corporation (NYSEG) and Rochester Gas and Electric Corporation (RG&E) submitted a request for a rate increase on Monday, June 30. The two companies belong to the same parent company, Avangrid. 

The one-year rate proposal—covering May 1, 2026 to April 30, 2027—would see the average residential customer face increases of between 22.2% and 33.5% on their monthly bills (See chart for details.)

NYSEG and RG&E claim in their filings that the increases are “necessary and unavoidable.” They say the costs of making needed improvements, adhering to new regulations and more mean they are forced to increase rates by factors beyond their control. 

Elected officials representing customers of these companies disagree, calling the increases excessive and calling on the Public Service Commission (PSC) to scrutinize the companies heavily. 

Why increase rates?

NYSEG and RG&E laid out the case for the increases in a filing with the PSC on Monday, June 30. The PSC is responsible for reviewing and approving all proposed utility rate increases in New York. 

NYSEG and RG&E claim that their current rates are insufficient to make up for prior years of underfunding. 

“The rates established in the 2023 rate order returned rates to a level consistent with the cost of providing service  following the extended period of artificially low rates approved in the prior rate case (as necessitated by the impacts of the COVID-19 pandemic),” the companies wrote. “That said, the companies' current rates do not adequately address the cumulative effects of prior rate cases, which have resulted in a significant shortfall in recovering major storm costs, uncollected customer arrears and other obligations.”

The companies have a laundry list of costs they say aren’t borne out by their current finances. 

The companies need to replace thousands of miles of aging infrastructure—pipes and wires and the stations that tie them all together. Investments need to be made in letting customers track and understand their billing, with improvements needed to the customers’ service and digital tools. Changes to the public service law require all utilities' call centers to be located within the utility’s service territory, not outsourced.

Besides these and other specific investments, NYSEG and RG&E claim the influx of money is needed to fix their financial status. 

The companies claim in their filings that their current financial metrics put them at risk of getting their credit score downgraded. If that happens, the companies will find it harder and more expensive to borrow money to finance needed improvements, they say. 

“Maintaining strong credit metrics… is essential for NYSEG and RG&E to access and secure affordable capital for the over $19 billion in planned infrastructure investments that support safe, reliable and modern electric and gas service… If credit metrics deteriorate, investors may demand higher returns or impose stricter terms, raising financing costs that are ultimately borne by consumers,” they say. 

While the current request is for a one-year rate increase, the companies have expressed a willingness to discuss a five-year plan, to give all parties involved stability. 

The companies also requested to renegotiate the metrics used to evaluate their systems’ reliability, specifically the System Average Interruption Frequency Index (SAIFI). That metric measures the average number of interruptions a customer experiences during a given period. 

NYSEG and RG&E say their SAIFI metrics are improving. “However, the data used to establish the targets for these operational metrics have not been adjusted since 2002 and therefore do not reflect current system conditions—a system that is aging faster than upgrades and experiencing more frequent storms,” they say. 

“In the end, the companies’ requested rate increases are necessary and unavoidable with a large portion due to legacy issues and other factors beyond the companies’ control,” they say. 

NYSEG customers meet with company representatives during a February workshop about rising bills.

Putting it in context

Elected officials representing NYSEG and RG&E customers have slammed the rate increases as “unacceptable,” “a slap in the face” and as part of a “pattern of abuse.” (See sidebar for a collection of statements.)

The rate increases come amid calls for investigations into the companies’ billing practices, and following an audit which concluded with 128 recommendations for improvement. 

A consulting group hired by the PSC, Northstar Consulting Group, completed an audit which released on May 19. According to that audit’s executive summary, it revealed significant issues within the companies’ operating structure. 

The way things operate with Avangrid—NYSEG and RG&E’s parent company—creates problems, as the overall focus of operations goes toward securing corporate profits for Avangrid rather than toward the good of the company’s New York State customers, the audit concluded. 

The Avangrid “corporate and governance structure does not protect NYSEG and RG&E customer interests,” reads the executive summary. “Many key governance processes are performed at the Avangrid Networks level; this includes strategic planning, enterprise risk management, finance and budgeting decisions, as well as the allocation of resources among regulated affiliates.”

The interests of New York’s ratepayers are not adequately protected if tradeoffs and decisions are made on behalf of NYSEG and RG&E by an unregulated affiliate for Avangrid, Inc.,” reads the executive summary. More bluntly, it says, “Avangrid prioritizes corporate earnings, not the needs of NYSEG and RG&E.”

NYSEG and RG&E raised issues with some of the audit’s methods and conclusions, saying in a May 19 response document there was limited communication with Northstar and describing the consulting company ultimately as “sarcastic and hostile.”

“While audits should identify opportunities for improvement, the final report presents and overwhelmingly negative tone,” writes NYSEG and RG&E.

There’s another stakeholder that has taken an ‘overwhelmingly negative tone’ toward NYSEG and RG&E—the companies’ customers. 

Over the winter, NYSEG customers in Sullivan County began to raise an outcry over their soaring electric bills. Residents saw their bills double and triple, leading them to organize over social media in groups such as “My NYSEG bill doubled.”

The increased bills came from a number of different factors, according to NYSEG employees and energy experts.

Shelly Cohen, NYSEG director of communication, said the increases came from a combination of colder weather—increasing energy usage, and therefore energy bills—as well as from increasing costs of energy supplies. 

These factors are outside of NYSEG’s control. However, customers have also experienced the impact of rising delivery rates, as set during the companies’ previous rate cycle. 

In 2023, the PSC approved a three-year rate plan that ultimately increased NYSEG’s electric delivery rates by 62% and its gas delivery rate by 17.8%. The final part of that rate increase went into effect this May. 

Sullivan County residents met with NYSEG in February, at a workshop organized by New York State Sen. Peter Oberacker and Assemblymember Paula Kay. Over a hundred residents showed up to discuss their bills with NYSEG representatives. 

One resident, leaving the meeting, said that his energy bill had tripled and surpassed the cost of his mortgage. “It’s all smoke and mirrors,” he said, adding, “If it stays like this, I’m going to have to move.”

The Sullivan County Legislature passed a resolution in March urging the PSC to scrutinize proposed delivery rates in the future, not just from NYSEG but also from other area power providers such as Orange and Rockland and Central Hudson. 

On June 11, Oberacker called for a full investigation into the practices of utility corporations like NYSEG, calling mandatory and fully itemized utility bills, clear labeling of estimated bills and procedures for correction and a ban on utility companies passing along lobbying and PR costs to ratepayers.