Governor Kathy Hochul today announced that the New York State Public Service Commission (PSC) has initiated a comprehensive review of utility management compensation following her direction on Tuesday for the Department of Public Service (DPS) to move forward with the audit. This audit follows years of work by DPS to examine utility management structures and seeks to align utility priorities with State objectives, including affordability, reliability, safety, and a cleaner environment. This is part of a comprehensive effort by the Governor to combat rising utility costs and protect consumers, and it builds upon her direction for DPS to reject Con Edison’s rate proposal and her demand that the New York Power Authority suspend its proposed rate increase.
“New Yorkers deserve fair and transparent utility rates,” Governor Hochul said. “This audit will ensure that utility compensation structures are working for New Yorkers, not rewarding expected behavior. We will hold utilities accountable and ensure their focus is where it should be: delivering reliable, affordable, and high-quality service. At a time when families are facing rising costs, we are taking decisive action to ensure every dollar that customers pay is justified and that utility companies are prioritizing the needs of the people they serve.”
The audit will focus on compensation for non-union utility management employees statewide and the results will inform future rate cases to protect New Yorkers from unfair rate hikes. Numerous recent management and operations audits of large, investor-owned electric and gas utilities have highlighted meaningful concerns with how utilities administer their programs.
In a recent audit of Central Hudson, the auditor concluded their bonus structure rewarded financial performance, but only set reliability and service quality metrics at the bare minimum. In the case of NYSEG and RG&E, auditors had to recommend that the companies set performance standards that encourage service improvements. And in other recent audits, including of Con Edison, O&R, and National Grid, auditors found that companies should update their compensation structures to focus on ratepayer-centric goals.
Commission Chair Rory M. Christian said, “This audit is about accountability. Management compensation is a reflection of a company’s values, and we expect utility values to mirror our own and be focused on providing quality, affordable service to ratepayers.”
The audit will examine compensation practices at 13 major utilities, including Con Edison, National Grid, Central Hudson, NYSEG, RG&E, and Veolia Water New York. Investor-owned electric and gas utilities have a total of 12.4 million customers in New York State. Findings from the audit will influence future rate cases, providing the PSC with insights into best practices and potential cost-saving measures.
Over the last four years, Governor Hochul has prioritized energy affordability by:
- Affordability policy enhancements to expand eligibility in the Energy Affordability Program and creating the Energy Affordability Guarantee, the first-in-the nation pilot program that ensures low-income New Yorkers participating in the EmPower Plus program never pay more than 6 percent of their incomes on electricity and incentivizes them to fully electrify their homes.
- Budget appropriations to reduce ratepayer costs of EAP that provides critical utility bill relief to low-income New Yorkers.
- Providing arrears forgiveness of more than $1 billion.
- State procurements of renewable generation to offset ratepayer costs of developing new clean generation resources
- $300 million to create power-ready sites for attracting new businesses through the Promote Opportunity with Electric Readiness for Underdeveloped Properties (POWER UP) Fund.
Assemblymember Didi Barrett said, “As utility rates continue to soar it is imperative that we take a close look at utility company salaries to ensure our constituents across the state are not shouldering the burden of inflated salaries. I thank Governor Hochul for her focus on energy affordability and the Public Service Commission for their support of this audit.”