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NYSEG PLAN TO FREEZE RATES AIRED AT PUBLIC HEARING

New York State Electric and Gas' parent company has proposed freezing electricity prices for NYSEG customers through 2008, and Mark Malonek likes the sound of it.

Malonek, executive director of the Eastern Niagara United Way, said the 15 not-for-profit groups funded by his organization are on tight budgets, and utility costs are a top expense, along with rent and salaries.

"We personally feel that program to do the freeze on bundled delivery and supply prices will help not-for-profits control their budget process," he said.

Malonek was one of about two dozen people -- including employers and consumers -- who attended a state Public Service Commission public hearing Tuesday in Buffalo to offer comments and ask questions about the NYSEG plan.

NYSEG's parent company, Eastern Energy, has proposed the seven-year price freeze as part of its $2.4 billion deal to buy RGS Energy Group, the parent company of Rochester Gas and Electric.

Kevin Schuler, executive director of the Niagara Business Alliance, said even though about 20 power generating plants have been proposed to be built in New York state -- which would increase capacity and presumably drive down electricity prices -- he's skeptical they'll come online any time soon, so he favors NYSEG's plan.

"We're not there yet, so the option of stable prices along with customer service and reliability seems like the way to go," Schuler said.

John Calcagni, business advocate with the Public Service Commission, noted that one plant is under construction in Athens on the Hudson River and work on another two or three in the state is expected to begin by the end of the year.

"How much of an effect those first three will have on prices, we don't know," Calcagni said, adding that some older plants are also being upgraded.

Some of the public hearing participants said they'd like to see changes in the NYSEG plan, such as lowering the rates before locking them in for seven years.

Calcagni said some observers believe that electricity prices will start dropping about three years from now when new power plants open and when competition in the industry becomes more widespread.

There's also a chance prices could rise, he said. "A lot of the plants are still subject to fuel costs. Gas has been very volatile over the last couple of years.

"So there's a certain amount of risk that anybody takes when you play the market, as with anything," he said. "And what NYSEG has essentially been doing is saying, we'll substitute seven years of price certainty and take that risk away."

The Public Service Commission is gathering comments from meetings around the state before entering negotiations about the NYSEG plan.

NYSEG's coverage area in Erie County includes Clarence, Cheektowaga, Lancaster, Alden, West Seneca, Elma, Marilla, Hamburg, Orchard Park, Aurora, Wales, Boston, Colden, Holland, Concord and Sardinia, and parts of Niagara, Wyoming, Cattaraugus, Chautauqua and Orleans counties.

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