Four Big Ideas for Tackling Electricity Affordability That Weren’t in the State of the State (but Should Have Been)

During Tuesday’s State of the State, Governor Hochul said that “New Yorkers deserve reliable energy at a price they can afford.” As utility customers, we couldn’t agree more. Right now, we have a real problem—the cost of electricity is increasing all over the state. New renewable energy and storage projects could bring down bills for all electricity customers, and smarter rate design could save money for everyone, but energy development is bogged down by delays and structural changes have yet to happen. In the meantime, new large demand customers are putting reliability strains on an already constrained grid.

The Utility Customers Association knows that there are solutions to these problems. The Governor has many tools at her disposal to bring utility bills under control and lay the groundwork for more reliable, affordable electricity in the years to come. Below are four ideas that the Governor could adopt to take on high electricity bills. 

  • Lower People’s Bills Right Away

Governor Hochul can take actions under existing law that utility customers would experience as lower bills in the near term. She should not hesitate to use her power.

  • Lower utility profits. Utilities make a profit based on their return on equity. That means that any time the utilities build more infrastructure, they charge a premium on all the customers for that infrastructure. The Governor can direct the Public Service Commission to establish a lower return on equity for utilities across the state, which would show up as lower charges on customer’s bills. Rather than focus solely on executive compensation, this would confront the exorbitant profits of the utilities as a whole, with greater savings on New Yorkers’ energy bills.

  • Sign customers up for discounts automatically. As the Governor noted, we already have programs on the books to help ratepayers who are struggling with high electricity costs. We can go a step further than the Governor’s proposal to improve awareness of the Energy Affordability Program (EAP)—we can automatically enroll low income customers, which would be the most effective way to ensure mass participation in these programs.

  • Batteries (and DER) Lower Bills: Make Them Ubiquitous

Batteries and Distributed Energy Resources (DER) reduce costs in two important ways - lowering peak power demand and reducing the need for expensive upgrades. The more energy storage we build, the less dependent we are on the costliest and dirtiest generation sources to meet peak power demand, and the less the utilities have to invest in distribution infrastructure. Governor Hochul can spur a beneficial battery buildout in two ways: 

  • Public Interconnection. The Governor can declare New York’s grid open for business by publicly financing interconnection for storage and DER assets through cap and invest, the New York Power Authority, or other public sources. This would immediately take a major line item off of the costs that ratepayers see on their bills every month and remove a major hurdle for new projects.

  • State Coordination. Governor Hochul can appoint a state entity to both coordinate the buildout of new DER assets and work with the Independent System Operator to manage when and where these assets discharge power to the grid. This would ensure that customers are seeing the highest possible affordability gains from these resources. Similar to the Governor’s proposal for statewide aggregation of smart technologies, state aggregation and coordination of DER and batteries will help get us to a more reliable, renewable, and affordable electric grid that saves money for all customers.

  • An Equal Playing Field for Ratepayers

When utilities go to the regulators to request more money, they do so with huge financial resources, analysts, and lawyers to make their case. If we really want to lower bills for ratepayers, we need to ensure that regulators and ratepayers alike have the resources they need to protect ratepayer interests in these proceedings. 

  • Staff Capacity. Ratepayers who are struggling with their electric bills should have a real voice in the ratemaking process. Governor Hochul can boost staff capacity at the Public Service Commission to investigate proposed rate structures and make sure that no stone is left unturned when looking for ways to save customers money, helping the PSC conduct their own analyses so that they aren’t relying on data from the utilities that they are supposed to regulate.

  • Intervenor Funding. The Governor should support and sign legislation to guarantee intervenor funding, so that community organizations and ratepayer advocates have the same ability to participate in ratemaking processes as the utilities themselves.

  • Heat Pumps Help Everyone

If more ratepayers start using electricity for heat during the winter, it spreads out the costs of maintaining our electric grid and reduces costs for ratepayers overall. The Governor can ensure a smooth and affordable transition to affordable clean heat in the winter via the following measures:

  • Bulk Purchasing Heat Pumps. We should expand the winter rate base for electricity consumption through a state program to directly purchase heat pumps for customers. 

  • Lower Rates for Heat Pumps. Under the guidance of the Governor, the PSC can also implement a new rate class for heat pumps that is cheaper than what customers would otherwise pay for gas heat, incentivizing more customers to make the switch. Doing so would be a win for ratepayers and a win for the climate—we can simultaneously lower emissions, and make sure that customers are paying less for their heat during the winter. 

Costly electricity bills are not inevitable. From a technological perspective, the solutions listed above represent clear and viable pathways to a cheaper, cleaner electric grid. Governor Hochul is right to identify the problem as a priority, and should look to a more ambitious set of solutions to help utility customers this year.