Prohibits the public service commission from approving a rate increase that entails a return on equity for capital projects that is above the prevailing ten-year treasury rate plus one percent.
Summary
This bill amends the Public Service Law to add a new section limiting how the Public Service Commission may approve utility rate increases tied to capital projects. Specifically, it bars the commission from approving a rate increase that includes a return on equity above the prevailing 10-year Treasury rate plus 1 percent. The bill defines the 10-year Treasury rate as the annual interest rate paid by the federal government on a 10-year Treasury note.
In practical terms, the measure would cap the allowed return on equity for utility capital investments at a benchmark closely tied to federal borrowing costs, rather than allowing a higher utility-specific return. The bill applies to rate increases occurring on or after its effective date, which is 60 days after enactment, and authorizes any necessary regulatory changes to be completed in advance of implementation.
Impact
The bill would directly constrain the Public Service Commission’s discretion in setting or approving utility rates under the Public Service Law by establishing a statutory ceiling on the return on equity component for capital projects. This could affect regulated utilities seeking rate increases for infrastructure investment, potentially reducing the amount they can recover from customers through rates and altering how capital projects are financed and priced. It would also likely require PSC implementation through updated rules or rate-setting practices.
Sentiment
No committee transcripts or recorded votes were provided, so there is no direct evidence of debate or formal support/opposition in the available record. Based on the bill’s text and caption, the measure appears aimed at consumer rate relief and tighter regulation of utility earnings, which would generally appeal to ratepayer advocates and fiscal watchdogs. At the same time, utilities and other stakeholders reliant on capital recovery may view the proposal as restrictive because it limits the return they can earn on infrastructure investments.
Contention
The main point of contention is likely the proposed cap on return on equity for utility capital projects. Supporters would likely argue that tying allowed returns to the 10-year Treasury rate plus 1 percent protects customers from excessive rate hikes and keeps utility profits in check. Opponents, especially regulated utilities and possibly labor or infrastructure advocates, may argue that the cap is too low, could discourage investment in needed infrastructure, and may make it harder to attract capital for long-term projects.
Same As
Prohibits the public service commission from approving a rate increase that entails a return on equity for capital projects that is above the prevailing ten-year treasury rate plus one percent.
Prohibits the public service commission from approving a rate increase that entails a return on equity for capital projects that is above the prevailing ten-year treasury rate plus one percent.
Enacts the "fair authorized investment returns act"; sets a default authorized return on equity equal to the ten year US Treasury rate plus two hundred basis points; provides such default authorized return shall reset annually; establishes a competitive equity auction through which the cost of equity for a covered utility may be determined on a market basis, whether initiated by the utility or ordered by the commission.
Provides that gas, electric, or combination gas and electric corporations shall not be permitted to retain revenues derived from their actual return on equity in excess of authorized rates of return on equity.
Provides that gas, electric, or combination gas and electric corporations shall not be permitted to retain revenues derived from their actual return on equity in excess of authorized rates of return on equity.
Requires certain investor-owned gas or electric corporations to refund ratepayers when their achieved return on equity exceeds authorized rates of return by fifty percent.
Requires that any sanction or civil penalty imposed by the public service commission be returned to the rate payers by means of a direct bill credit, as soon as practically feasible or no later than ninety days.
Requires that any sanction or civil penalty imposed by the public service commission be returned to the rate payers by means of a direct bill credit, as soon as practically feasible or no later than ninety days.
Relates to the members of the public service commission; prohibits commissioners from having been employed within the last two years by an electric, gas, steam, telecommunications, or water utility that is regulated by the commission; requires that new appointments ensure that commissioners represent certain areas of education and training.
Increases the number of commissioners on the public service commission to 7; requires that one commissioner have not less than 10 years of demonstrated, operational experience in the utility industry.