“Where a community – a city or county or a district – is not satisfied with the service rendered or the rates charged by the private utility, it has the undeniable basic right, as one of its functions of Government, one of its functions of home rule, to set up, after a fair referendum to its voters has been had, its own governmentally owned and operated service.”
—FRANKLIN D. ROOSEVELT, 1932

Please note: The Hudson Valley for Public Power coalition hosts a monthly orientation on the bill during which Assemblymember Shrestha’s office participates in the Q&A portion open to the public. The next orientation is on March 27th, at 7:30pm: https://bit.ly/hvpa-101

Claim: “HVPA supporters claim that taking over Central Hudson will lower costs, improve reliability, increase wages”

TRUE. Public ownership is not just an end, but also the means—and the first necessary step—in creating a model utility that functions in the service of public well-being. The public ownership model comes with built-in benefits, such as the elimination of the profit motive and access to low-cost financing, which is why we’ve seen rates immediately drop upon the formation of publicly-owned utilities—even in the case of the Long Island Power Authority, which was only partially public. However, it’s not enough to stop there. Additional guardrails must be in place to create a model utility, which is what our bill does: it enshrines the requirements and goals into the creation of the new state authority instead of leaving it up to the decisions of the board or the PSC. For example, our bill subjects HVPA to internal mandates like community oversight, regular public meetings, accountability, low rates, labor protections, environmental justice, and more.

Claim: “Much of HVPA’s financial model relies on grants and other funding sources that are not fully secured.”

FALSE. Nowhere in the bill does it outline grants as the basis of HVPA’s financial model. Qualification for federal grants is an additional cost-saving mechanism. As is standard for publicly-owned utilities across the nation, HVPA’s costs of operation are recouped through bills paid by ratepayers, and like most corporations, public or otherwise, including Central Hudson, it finances its upfront costs by issuing corporate bonds. The difference is that unlike Central Hudson, HVPA can access low-interest rates and issue tax-exempt bonds because it’s a public benefit state corporation, which makes its overall cost of operation cheaper. Public corporations also have other cost-saving mechanisms such as not having to pay certain federal taxes or shareholder income. A recent analysis from Tom Konrad, Ph.D., CFA, found that switching to public power would lead to expected savings of 6.6% of revenue, which translates to $45 million.

As for “funding sources that are not fully secured,” Central Hudson says in its latest rate increase request that “With the change in the arrears and uncollectible landscape, there is significant uncertainty surrounding future customer payment behavior.” The company admits it has no clue if it will be able to collect the revenues it’s supposed to collect, and its solution is to force other ratepayers to make up the difference through a rate increase. Central Hudson’s financial outlook is already uncertain in the company’s own words. For context, Central Hudson’s residential 60-day arrears grew by 1,481% to $133 million in four years.

Claim: The estimated $1.2 billion acquisition cost is not publicly verified.

FALSE. No official acquisition cost exists, or has ever been released. The number being referenced here is an informal evaluation.

Claim: “If HVPA struggles financially, residents could be forced to cover shortfalls.”

MISLEADING. Ratepayers are already on the hook to cover Central Hudson’s entire cost of operation, shareholder dividends, and financial shortfalls. When the company sees a downgrade in its bond ratings, as it recently has, and when it takes out long-term debt at a high interest rate, as it recently has, the ratepayers already cover the higher cost of operation as a result.

Claim: “If HVPA struggles financially local governments could be forced to cover shortfalls.”

FALSE. Nowhere in the bill does it put local governments on the hook to cover HVPA’s financial shortfalls. One of the reasons HVPA is created as a state corporation, and not a municipal-owned utility, is precisely to insulate local governments from any risks.

Claim: “The HVPA coalition cites Massena, NY, as a public power success story – but Massena’s customers are now facing a tripling of rates due to increased costs and renewable mandates.”

MISLEADING. Unlike Central Hudson’s increases which are for delivery rates, Massena was facing a potential increase on the supply side, and not on its own delivery rates. Still, Gov. Hochul responded by ordering the New York Power Authority, its supplier, to rethink the increases to “the lowest rates in the nation,” and the proposal is currently on hold. This reveals how much more publicly-owned utilities are able to prioritize low rates before anything else, compared to investor-owned utilities, and it also shows that for utilities like Massena, such rate increases, even if just on the supply side, are an exception, not the norm, because as a publicly-owned utility, they are NYPA’s preferential customers and are insulated from skyrocketing supply prices.

Regardless, nowhere do we claim that publicly-owned utilities will never see a rate increase—the energy sector is part of the economy and will always respond to the underlying trends in the economy, such as geopolitical events and disruptions to the supply chain and the climate. Our claim, on the contrary, is that a for-profit monopoly model for utilities makes the rates higher than what is necessary. Even if Massena hypothetically raised its rates by three times, it would still be nowhere as high as its neighboring for-profit monopoly, National Grid’s. In fact, a new report finds that over the last three years, investor-owned utilities’ residential electricity rates have increased by 49% more than inflation nationwide, while that of publicly-owned counterparts have increased only by 44% less than inflation.

Claim: “HVPA’s proposal does nothing to address the real reasons energy costs are rising – namely, state mandates, infrastructure costs, and market pressures.”

CONFUSED CLAIM. This is not a bill written to magically make climate change, geopolitical issues, and supply chain issues go away – no such option exists. However, it is written to shield ratepayers from the full impact of challenging circumstances in the global economy to the maximum extent possible. For example, the bill incentivizes cost-saving mechanisms and maintenance work that are currently disincentivized because they make no profits. It also creates a model where HVPA can make upfront investments on the grid that further insulate its ratepayers from the whims of the market and effects of extreme climate events that investor-owned utilities are vulnerable to.

Claim: “HVPA’s bill includes funding a study to wind down Central Hudson’s gas division, which serves 90,000 households.”

MISLEADING. The bill does not fund a study, but rather requires the newly formed HVPA to come up with a report within two years of its formation on how it would wind down its gas division, given that zero-emission targets need to be met according to science, and per our climate law, and given that maintaining the gas infrastructure is a substantial source of rate increases. On average, every mile of gas pipe replacement costs a ratepayer $60,000, spread out over time. Currently, some ratepayers who switched to heat pumps are already reporting lower bills. As more and more people inevitably move to electrification, the total cost of the gas infrastructure will be shared among a shrinking group of gas ratepayers, which means their cost will go up significantly. In many instances, and increasingly so, it could be cheaper for the utility to cover the cost of electrical appliances for a new house rather than to spend money on a new gas hook-up. Additionally, gas workers can be easily transitioned to alternative forms of energy: all gas utilities in New York, including Central Hudson, are working on Thermal Energy Networks (TEN) pilots, which can use the same skills and workforce as gas utilities to provide heating and cooling services sustainably.

We believe it would be unwise for a utility to not do the research ahead of time on what it would take to phase out its gas infrastructure so that it can do so in a planned way instead of a haphazard way. Investor-owned utilities like Central Hudson are already implementing a Leak-Prone Pipe Elimination Program on a voluntary basis where instead of spending money to replace a stretch of leak-prone pipe, they switch the small number of natural gas customers to alternate forms of energy, including electricity. However, such initiatives are currently not prioritized at the scale and scope needed.

Claim: “Eliminating gas service without a cost-effective alternative, especially in the light of Canadian tariffs on electricity, could dramatically raise electric bills and strain the grid.”

CONFUSED CLAIM. HVPA does not mandate a gas phaseout, it simply asks for a report, precisely so that an accurate assessment can be made of what is possible. It should be noted that the spokesperson of NY Energy Alliance also opposed the Build Public Renewables Act in 2022, a law written to build publicly-owned and affordable local renewable energy, which reduces our reliance on Canadian imports.

Claim: “The proposed HVPA structure lacks representation from experienced engineers, industry professionals, and union workers.”

FALSE. Working under HVPA’s Board of Trustees would be the management and the technical experts—it is not unlikely that the same engineers and industry professionals who currently work at Central Hudson would also work at HVPA. Additionally, such engineers and professionals can also be appointed to the board or to the oversight body. As for union workers, not only does the bill put a representative of the union on the Board of Trustees itself – which Central Hudson currently doesn’t do—it also puts two union reps in the community oversight body, and bans the hiring of non-union contractors as a cost-saving method.

Claim: “Public utilities still face financial pressures, debt constraints, and rate hikes – they are not immune to the same challenges investor-owned utilities face.”

TRUE. And we have never claimed otherwise! However, the risks are considerably lower compared to private utilities because of lower cost finance, elimination of the profit motive, some insulation from the fluctuations of the private market, and additional protections from the state, such as preferential access to cheap publicly-owned renewable energy.