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NYSEG asks more to deliver power, gas Request made to state as rate freeze expires

Rebuffed in its request for a rate increase of nearly 10 percent earlier this year, New York State Electric & Gas Corp. is seeking state permission to raise the rates it charges for delivering electricity by as much as 18.6 percent and rates for natural gas delivery by as much as 17.4 percent.

NYSEG and its sister company, Rochester Gas and Electric, have petitioned the state Public Service Commission to allow the higher charges now that a one-year moratorium on such requests has expired. NYSEG provides electric service, and some natural gas service, to 175,000 customers in suburban and rural portions of Western New York.

The companies say the proposed increases could boost a typical residential electric bill by as much as $12 a month and a typical gas bill by as much as $25 a month.

The commission had refused to even consider a January request to increase NYSEG electric rates by 9.9 percent and gas rates by 8.8 percent. The company, the commission ruled, had failed to show that it was in such dire financial straits that it should be able to ignore a yearlong rate freeze that was part of the conditions imposed when the state approved the acquisition of Energy East, NYSEG's parent company, by the Spanish power utility Iberdrola SA.

"Now the time is up, and the utilities are allowed to submit a rate filing," said James Denn, commission spokesman.

The newest rate request triggers a review that will include expert testimony and public hearings. The commission then can approve, reduce or reject the requested increases. Any rate change is not expected to take effect until late next summer.

"All of the points that the utilities are making in their filing will be fully vetted and reviewed," Denn said.

The request covers the charge for delivery. The price of the commodities themselves, which is passed through to consumers, varies, and company spokesmen held out hope that decreases in electricity and natural gas prices could moderate, or even erase, the higher delivery charges.

The proposed rate structure also continues and expands a NYSEG program that helps low-income families with their energy costs by providing monthly credits of up to $15 per meter.

In a statment released Friday, Michael Conroy, senior vice president and chief operating officer of NYSEG and RG&E, said neither company had raised its rates for more than 10 years, and despite salary and hiring freezes and other attempts to limit costs, both needed the higher rates to maintain and upgrade their delivery networks.

"The expenses necessary to provide safe and reliable service to our customers have climbed year after year," Conroy said. "These ever-increasing operating and maintenance costs make this rate request essential in order for us to continue providing the level of service our customers expect and deserve."

Clayton Ellis, the NYSEG spokesman, said that since 1996, the company's gas rates have been flat and its electric rates actually have gone down. He also argued that the merger of Energy East with Iberdrola has benefited customers, since the parent companies have assumed debt, infused capital into the operations and taken no dividend payments since the Iberdrola deal was finalized.

The company also points to the fact that its higher costs and restricted income have caused Wall Street to reduce its bond rating -- from "A" to "BBB" -- which could harm the its ability to finance its operations.

Gerry Norlander, who heads the Albany-based watchdog operation Public Utility Law Project, said the rate request was not a surprise and that he expected it to go through a long and detailed review that could wind up with the state granting a smaller increase than the companies are seeking.

"They rarely get what they ask for," Norlander said, "but they almost always get something."

Norlander also praised the utilities for expanding their program to ease the burden of energy costs on low-income families, saying NYSEG was a pioneer in such efforts.

"For most of us, it's just another insult to our pocketbooks," Norlander said of energy rate hikes. "For poor people, it may mean food on the table."


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