Probe sought of high electricity prices faced by upstate consumers - The Buffalo News
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Probe sought of high electricity prices faced by upstate consumers

WASHINGTON – Western New York families are suddenly facing dramatically higher electric bills, and Sen. Charles E. Schumer wants to find out why.

Schumer, D-N.Y., on Wednesday called for a Federal Trade Commission investigation of the unexpected spike in prices, which in the case of National Grid – which serves a wide swath of upstate New York – are up 60 percent to 75 percent statewide.

Steve Brady, a National Grid spokesman, produced a chart showing the price spike is actually only about 20 percent in Western New York, where ample power production facilities and transmission lines tend to keep prices lower than in the Albany area, where the price hikes have been far greater.

Still, Schumer said there is plenty of reason for a federal probe, given that double-digit price hikes are being reported at utilities across the state. For example, he said prices have increased 10 percent to 15 percent at NYSEG, Western New York’s other main power supplier.

“We need to make sure that customers are not being overcharged, and we need to make sure this same situation does not happen again,” Schumer said.

But Brady said the price hikes aren’t the utilities’ fault. Instead, he blamed a demand-driven spike in the price of natural gas, which produces much of the electricity in the region.

“We welcome this review,” Brady said regarding Schumer’s call for an FTC probe. “We believe our prices stand up to any scrutiny.”

Nevertheless, Schumer produced anecdotes that indicated National Grid’s local price spike to be much higher than that 20 percent average that Brady cited.

The senator cited the complaint of one National Grid customer in Erie County who saw a 49 percent higher electricity bill in March, and another who customer complained of an 80 percent higher electric bill for his entire apartment complex.

“These bills have gone up so much that we need to take a good, hard look at what is really going on here; and that is why I am calling on the Federal Trade Commission – the authority when it comes to consumer protection and anticompetitive business practices – to launch an investigation into these exorbitant price hikes,” Schumer said.

In the case of National Grid, prices spiked at a far higher rate in the Albany area, Brady said. That’s because the Capital region lacks the ample electricity production facilities and transmission lines that Western New York has.

Brady said National Grid’s cost for delivering electricity – the part of the electric bill over which the company has some control – actually fell this year. Meanwhile, though, the price for natural gas skyrocketed, meaning the price National Grid paid for electricity generated from natural gas skyrocketed as well.

Gas prices increased dramatically because the cold weather increased demand for gas, Brady said.

In addition, pipelines were filled to capacity, further limiting the amount of gas getting to the utilities.

But Schumer said the increase in electricity rates far exceeds what utilities have to pay for energy.

“As the thermostat went down this winter, electric bills shot up,” he said. “It is typical for electric bills to go up during the winter months, but this year’s sky-high increases are higher than anyone has ever seen and more than what would be expected.”

Schumer spelled out his concerns in a letter to Edith Ramirez, chairwoman of the Federal Trade Commission. He asked her agency to join with the Federal Energy Regulatory Commission to investigate the rate increases – and to involve the U.S. Department of Justice if need be – to make sure that customers were not overcharged.

The New York State Public Service Commission previously asked FERC to investigate the rate increases, and the state’s utilities – including National Grid – have also asked FERC to look into the reasons behind higher gas prices.

Schumer said either the utilities could have artificially inflated electric bills through overcharging, or natural gas providers could have boosted prices by withholding gas from the market.

He asked the FTC to look into such possibilities.

“Though there is no question this winter has put a significant strain on the power system, the FTC must ensure that these exorbitant increases in the price of natural gas and electricity, especially when it comes to ratepayers bills, are consistent with competitive practices and not driven by any wrongful conduct,” he told Ramirez.


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