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New York State Senate passes utility regulation bills

New York state is poised to hit utility companies where it hurts the most — the corporate checkbook.

Senators passed a series of bills aimed at forcing utility companies to better handle severe weather and related service outages and to pay a potentially heavy cost if they don’t. The centerpiece of those bills, S.4960, was the subject of a pointed debate between Sen. Shelley Mayer, D-Port Chester, and Sen. George Borrello, R-Sunset Bay. The legislation passed the Senate 43-20 in a party line vote.

Mayer’s legislation aims to incentivize better regulatory compliance by utilities through increased flexibility by the Public Service Commission to assess penalties on utilities for violations of the public service law. The bill also expands emergency response plan requirements.

Mayer argued that it is important for the Public Service Commission to be able to impose big penalties in order to prompt utility companies be proactive in limiting service outages. The Public Service Commission will be able to consider the scope of damages caused by a utility’s violation Public Service Commission orders; each individual act or omission that led to the violation; whether the violation was knowing or willful; whether the violation had been recurring or the subject of a previous Public Service Commission finding; whether the violation violated orders to protect human safety or contributed to a person’s death or injury; if the violation affected the reliability of a utility’s service; the economic losses of ratepayers; whether the violation was caused by a failure to maintain or replace o ld equipment or materials; the degree to which a utility didn’t prepare for a storm or other event of which there was notice; and other mitigating factors. Expanding emergency response plan requirements should also make sure utility companies spend more time planning ways to avoid outages as well.

Borrello’s biggest issue with the legislation is the lack of statutory cap on fines and penalties as well as the removal of the word “reasonable” from Section 25 of the Public Service Law. Removing the word reasonably from the statute, Borrello said, could lead to fines or penalties even if a utility or telecommunications company couldn’t have foreseen the problem that led to a lengthy outage.

“First, there must be a finding of a violation,” Mayer said. “What we have seen historically is violations have been basically minimized because the utilities come in and say it was a reasonable violation. … There is more than adequate protection here for the companies, but we need to build in the protection for the consumers and ratepayers, and that’s what this does by taking away what has been an excuse of reasonableness as applied to violations.”

Borrello agreed that the state should do more to protect customers and ratepayers, but said he is worried about unintended consequences of giving the Public Service Commission a blank check to fine utility companies. He noted George Latimer, a former Democratic state Senator and current Westchester county executive, has said a simpler, more defined way of holding utility companies accountable is needed. Borrello argued that what Mayer’s proposal actually does is give Gov. Andrew Cuomo more power over utility companies given the large degree of control Cuomo exerts over the Public Service Commission.

“Instead of really digging into this issue and advancing proposals that would improve utility response and provide a straightforward and simple, like he said, fine structure, this body is choosing the exact opposite and is moving to vote on a piece of legislation that hands unfettered power to the executive, to the governor,” Borrello said. “I can’t believe we’re passing the bill right now, in this current environment, that’s going to hand more unfettered power to this governor. That’s really the issue here. The governor will have the ability to fine companies at an unlimited amount for a pretty much unlimited amount of reasons. That could very easily be abused. I think we’ve learned a lesson recently that this governor has a propensity to utilize that type of power in an abusive manner. So handing this power to this governor at this moment in time, I think, is particularly irresponsible.”

Last year, in the wake of Tropical Storm Isaias, Cuomo threatened to revoke the franchise licenses for Con Edison and PSEG Long Island because the companies weren’t able to restore power quickly enough after the storm. Cuomo’s comments came while the Public Service Commission was investigating the company’s response. Mayer replied to Borrello’s statements by saying state’s previous attempts to hold utilities responsible in the wake of severe weather events haven’t done enough to increase utility reliability.

“Nine years ago my district and many, many constituents suffered through Superstorm Sandy,” Mayer said. “In testimony after that storm I that Sandy made clear our infrastructure staffing and standard of accountability is simply ill-prepared to respond to these increasingly common and powerful storms. Ironically, after Superstorm Sandy, the Legislature passed section 25a that we’re talking about today. It was supposed to be a tool to ensure that utility companies actually responded to the legitimate demands of ratepayers and customers. But it has not worked. Tropical Storm Isaias hit our region hard, but it wasn’t the worst storm we have seen or will see. We will see worse as we have seen in Texas. We will see very serious climate change effect in all of our communities. These companies statewide have acted in derogation of their duties and the fact is the current law has not held them responsible. We have seen the fines and penalties as the cost of doing business and a cost that unfortunately is not changing their behavior.”

Other bills passed by the state Senate on Tuesday include:

¯ S.3784, which requires utility companies to reimburse consumers in the event of a prolonged power outage. The legislation passed unanimously.

¯ S.1544, which requires a compensation statement by certain public utility corporations and service providers with a gross operating revenue of more than $1 million. Borrello voted against the legislation.

¯ S.1199, which requires that at least one commissioner of the public service commission have experience in utility consumer advocacy. It was approved 50-13 with Borrello voting against it.

¯ S.968, which requires service providers to prepare and submit emergency response plans. It was approved unanimously.

¯ S.929, which provides a reimbursement to small businesses and residential consumers of certain utilities for failure to provide contracted services and requires the Long Island power authority to do the same. It passed 62-1 with Borrello voting in favor.

¯ S.931, which defines medical needs for essential electricity and requires certain service providers to have outreach plans for customers with essential electricity medical needs. The legislation passed unanimously.

The package of legislation still needs to be approved by the state Assembly before it can be sent to Cuomo for his signature.

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