Governor Hochul Announces PSC Takes Action on Her Plan to Measure Affordability of New York’s Electric and Gas Utilities in Effort to Rein in Costs

Governor Hochul announced that the Public Service Commission (PSC or Commission) today initiated a proceeding to implement several energy affordability initiatives she pushed this year. The PSC proceeding moves toward the establishment of a new Energy Affordability Index that will be used to evaluate energy affordability in New York State and further the State's goal to keep electric and gas utility expenses below six percent of household income. Today's Order provides interim guidance to utilities and stakeholders on how the law will be implemented in the short-term while this new proceeding develops further policy details with input from stakeholders.

Under Governor Hochul's plan that was included in the FY27 Enacted Budget, if a utility's Affordability Index exceeds this six percent target (three percent for electric and three percent for gas), the Commission may install an independent Affordability Monitor to provide additional scrutiny of utility operations and expenditures. The Monitor would report to the Commission with an assessment of the cost drivers impacting affordability and recommendations for lowering costs. The Affordability Index will also be linked to performance incentives used in executive and senior management compensation, aligning executive decisions with energy affordability for customers.

"I have made it a top priority to ensure we keep the lights on and costs down for all New Yorkers and the PSC's action today builds on those efforts," Governor Hochul said. "Just this week alone we announced that $1 billion in energy rebate checks will start going out to 8.2 New Yorkers beginning September 21 and we began an aggressive education and enrollment effort so the 2.5 million households eligible, but not enrolled, for utility bill credits of up to several hundred dollars a year can take advantage of the savings."

PSC Chair Rory M. Christian said, "Ten years ago this Commission established the nation-leading Energy Affordability Program to help lower New Yorkers' energy burden by requiring utilities to provide discounts to income-eligible customers, and this year we expanded eligibility to households up to State Median Income. Just this week Governor Hochul directed the Department of Public Service to begin an aggressive education and outreach effort to sign up more people. This new Affordability Index will improve stakeholder understanding of energy affordability across the State's major utilities with a consistent metric, incentivize executives to address affordability concerns, and inform the Commission's rate case decisions going forward."

The Affordability Index for each utility will be included in an annual report issued by the Commission providing a comprehensive statewide look at the affordability of utilities and giving policy makers and consumers an important new tool to track utility affordability over time.

Today's PSC Initiating Order provides interim guidance to utilities to calculate their Affordability Index for upcoming rate cases and for their first annual affordability filings, which are required by February 1, 2027. The information provided in those filings will be used in the first annual affordability report to be issued by July 1, 2027. The interim Affordability Index will be calculated by dividing a utility's median annual residential electric or gas utility expenditure by the State Median Income (or Area Median Income for Con Edison and National Grid downstate).

Governor Hochul's Energy Affordability Agenda

Throughout her time in office, Governor Hochul has targeted relief for energy ratepayers.

Post-COVID, the Governor announced $1.17 billion in one-time funding to allow nearly half a million residential customers and 56,000 small businesses to pay off unaffordable past utility bills, the largest utility customer financial assistance program in state history.

Since taking office in 2021, Governor Hochul has prioritized making life easier for New Yorkers. That includes more than $6.6 billion (not including the $1 billion energy rebate checks being sent out this fall) that has been provided to participating households in direct utility bill relief, and an additional $1.4 billion to support residential weatherization, energy efficiency and renewable energy projects that will help lower energy usage and bills for participating households.

This year, Governor Hochul also put in place an Energy Affordability Agenda that puts New York families ahead of big energy companies to help address rising utility rates. At the heart of this effort to modernize the State's approach to regulating utilities is a commitment to ensuring energy remains affordable. Energy profits will be tied to a company's ability to perform where it matters most: people's wallets. Utilities will be prohibited from passing the costs of lobbying, glossy PR campaigns, political donations, and luxury travel to New York ratepayers. Utility CEOs will have their salaries benchmarked to achieving energy affordability goals set by the Public Service Commission (PSC). And if a utility makes excess profit, that money will be returned to ratepayers.

The Governor's Ratepayer Protection Plan will:

• Stop disruptive price hikes before they take effect in the first place by demanding unprecedented fiscal discipline and transparency from utility companies. When requesting a rate increase, utilities will have to prove that their capital projects are absolutely necessary and that they've left no stone unturned in the pursuit of zero-emission options. They'll also have to present a budget-constrained option that keeps their operating costs below the rate of inflation.
• Ensure a fair fight by requiring 14 months to examine rate requests by utility companies and the PSC will be able to set multi-year rate cases when they make sense for consumers. The State's regulators will also heavily scrutinize the fees that utilities run up during the process of determining new rates. The goal is to ensure customers aren't shouldering any costs associated with utility rate cases that aren't legally required.
• Require the establishment of a new energy affordability index that will expose the true impact of utility rates on everyday New Yorkers, benchmarking utility performance here against those in the rest of the nation. Going forward, utilities will be required to demonstrate exactly how any proposed rate hike will impact this index - and if a rate case pushes the average household energy burden above 6 percent, the State will be able to deploy an independent Affordability Monitor directly into the utility's boardroom.