A potential rate increase from the New York Power Authority in hydropower brings with it some concerns for the Jamestown Board of Public Utilities and local customers and businesses that may be affected.

During the December meeting, BPU General Manager David Leathers updated the board on the potential increase coming from NYPA. Leathers said there are 51 systems in the state that get preference power allocation for hydropower and NYPA is starting a rate case process with the intent to increase rates from 2025 to 2029. He highlighted some areas of the report that had been received that are both of big importance and some concern.

“We’ve been doing our due diligence with our state association and New York State Association of Public Power through the last six months, asking questions in a process with NYPA representatives,” Leathers said. “What they’re proposing is; there’s a blended rate, communicated as an effective rate, that is the demand and energy charges roll up into a dollars per megawatt hour rate.”

The last rate case from NYPA was in 2011, which Leathers said covered 2012 to 2014, and that May of 2014 was the last time a rate increase occurred. With the current proposed rate increases over the next four years, the rate is planned to end up at $33.05.

“We communicate that as almost tripling the current rate,” Leathers said. “But really, it’s more than 2.5 times the current rate, which is an unheard of type of increase when you look at the utility asks, whether that be investor owned utilities or municipal utilities that are going to the public service commission looking for rate adjustments, I think typically you hear something in the range of 20 to 30% if there hasn’t been a rate adjustment in many years. Then that usually goes into a process and gets reduced down into something more manageable over like a three or four year period.”

Leathers said taking this rate to an increase of two and a half times or more than the current rate is very concerning. Additionally, in 2029 he said NYPA is communicating that the rates would likely return to the $24.26, but that is not part of their rate plan, but rather an estimate.

“So the rate plan gets the rate to $33.05 and then if that rate needs to be adjusted after that then another rate case would have to occur,” Leathers said.

With this planned rate increase, Leathers noted that all municipalities under NYPA’s hydropower allocation are different but for a regular residential customer, this would mean an increase of $13 to $30 a month more for power. For commercial businesses and industrial customers, he noted that this is also a very significant increase.

Marie Carrubba, community representative, said that National Grid is also looking to increase their electric rates over the span of three years. Council Representative, Jeff Russell, noted that this large of an increase is going to push businesses out of the state.

“Someone roll up to Cummins and tell them their electric rate is going to triple by 2028 and see what happens,” Russell said.

Leathers said the public comment period for the rate increase is open for 60 days, with NYPA planning two public hearings on Jan. 29 in Niagara Falls and one Feb. 4 in Albany. He added that the BPU and State Association has the ability to work through and comment on the entire process, and that they will continue to work with NYPA representatives and other state electric associations.

“I don’t think there’s really a deep understanding of the rate stabilization reserve, but this is a process that we’ve been using for years,” Leathers said. “Their 2014 rate provided a cost of service total number and then every year they look at what their actual cost of service number is compared to that test year of 2014. The rate stabilization reserve is if they’re over-recovering or under-recovering compared to the actual cost of service and it’s in a bandwidth called the RSR plus or minus 25 million and as long as they remain in that bandwidth, they really can’t pursue a rate increase process.”

For the last 10 years Leathers said they have stayed in that bandwidth, mainly due to the credit to the cost of service which is capacity payments received for hydropower. That came to an end in 2023, which is why NYPA is looking at a rate increase now.

Leathers said the BPU is a partial customer because while they get their hydropower from NYPA, the rest is managed on their own.

“The true fact is, if the state is moving in the direction to electrify everything, this is a thing of the past,” Leathers said. “If you’re going to have your electric vehicles and you’re going to charge your electric vehicles and you’re going to have electric heat and electric hot water, now you’re talking two, three, four thousand kilowatt hours a month, and that only makes that rate much, much higher.”

Various municipal utility systems in NYPA are calculating that this could be hundreds of dollars a month for some businesses and even some residents, Leathers said.

“We have questions and concerns that we have been communicating and will continue to do that, but we’ve talked at the staff level here that we communicate very proudly reliable services and affordable rates, and from an electric standpoint that’s not the reason why people and businesses are here, but it’s one of the reasons why people and businesses are here,” Leathers said. “If we’re working toward tripling our hydropower rate within our variable fuel adjustment charge, that’s super concerning.”