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The 5 percent increase the New York State Electric & Gas Corp.'s residential customers will start paying in January to bring electricity into their homes won't be the last price hike they'll see under the utility's new rate plan.

Residential customers also will see the cost of NYSEG delivering electricity to their homes rise by another 5.7 percent during the final two years of the five-year rate plan beginning in 2005.

The second rate increase, which was spelled out in documents detailing the rate agreement approved last week by the state Public Service Commission, would bring the total increase in delivery charges for residential customers to 11 percent over the five-year period.

The commission said the delivery rate increase for residents is needed to meet its goal of bringing rates closer in line with the actual cost of providing service to certain types of customers. A NYSEG study estimated that residential delivery rates before the latest revision to its rate structure were 22 percent below their actual cost.

By shifting more of the price burden to residential customers, who historically have been paying rates that are less than the cost of the services they use, NYSEG will be able to reduce delivery charges for other types of business and commercial customers.

"Economic development in NYSEG's territory should be a priority, and that goal will continue to be hampered by rates which require some business classes to pay more than their fair share of utility costs," the commission said.

Exactly how the second rate increase will affect commercial and industrial delivery rates won't be known until NYSEG files revised rates sometime around October 2004. Proposed delivery rates outlined in the latest commission filing would reduce delivery charges for one class of small commercial customers by 11.3 percent over the final two years of the agreement.

The rates affect just the cost of delivering electricity to the homes and businesses of NYSEG customers, who are being asked to pick from a handful of electricity supply options before the end of the year.

The new rates will not increase the revenue that NYSEG receives from delivering electricity to its residential and business customers, but they do change the way the company, which cut its rates by 13 percent in March, charge different types of consumers for its services.


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