PSC reaches $64.59M settlement with Central Hudson over billing issues

Posted 6/26/24

The New York State Public Service Commission on June 20, approved a settlement valued at $64.59 million with Central Hudson Gas & Electric Corporation (Central Hudson), and up to an additional $2 …

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PSC reaches $64.59M settlement with Central Hudson over billing issues


The New York State Public Service Commission on June 20, approved a settlement valued at $64.59 million with Central Hudson Gas & Electric Corporation (Central Hudson), and up to an additional $2 million in stipulated payments if the company fails to deliver monthly meter readings on schedule. The agreement requires shareholders to pay the full cost of remedial actions taken to fix the billing system, as well as costs associated with a move to regular monthly meter reading and to implement recommendations made by an independent monitor. In addition, shareholders will pay $4 million to directly benefit Central Hudson ratepayers. As adopted, the $64.59 million settlement agreement resolves the Department’s ongoing investigation into past billing system failures by the company.

“Customers rightly expect to receive timely and accurate bills for their utility services,” said Commission Chair Rory M. Christian. “Our investigation and prudence review and audit found that Central Hudson wasn’t meeting this basic expectation. As a result of our investigation, the company has made and will continue to take corrective actions to resolve billing problems that have caused many customers great stress and confusion.”

The specific provisions of the agreement include:

• Shareholders must pay the more than $35.3 million spent over the last two and a half years to remedy problems with the company’s customer information and billing system.

• Shareholders will pay $4 million to directly benefit customers to be allocated by the Commission.

• The company will not challenge approximately $8.75 million in negative revenue adjustments as a result of missed customer service metrics, largely stemming from the billing system failures.

• Shareholders have incurred more than $8.2 million in costs associated with back-billing credits to customers that were related to the billing system problems. The company continues to be obligated to provide back-billing credits when warranted if future cases arise.

• Shareholders will pay costs incurred and projected to be incurred to implement monthly meter readings (estimated to be $6.3 million).

• Shareholders will pay up to $2 million in additional payments in the event the company does not implement monthly meter readings by October 31, 2024.

The settlement comes after a 123-page report issued by an independent monitor assigned to examine Central Hudson’s billing system and proposal to end bi-monthly billing estimates. After a thorough review, the monitor found that Central Hudson has resolved critical billing issues and reached a stable state. The Department of Public Service (DPS), the staff arm of the Commission, noted that in April of this year, complaints reported to the Department reached its lowest number since the company launched its new billing system: down 88 percent from its high in March of 2022.

As part of the agreement, Central Hudson filed a revision to its monthly meter read plan with a goal of reading the vast majority of customer meters every month by October 31, 2024, an acceleration of more than 14 months compared to the company’s initial plans (to reach this goal by February 2026). As noted, the settlement incentivizes completion of the meter reading plan by requiring the company to pay an additional $500,000 for each month of delay up to $2 million. If triggered, this incentivization remedy could bring the overall monetary value of the agreement up to $64.59 million.

In response to the PSC action, Central Hudson issued the following statement:

“Central Hudson has worked tirelessly to strengthen transparency and to rectify the billing issues our customers experienced due to the implementation of a new billing system. We’ve hired over 100 new professionals to better assist customers, hosted dozens of community meetings to address concerns directly, ensured affected customers were fully compensated, and rolled out monthly meter readings to largely eliminate bill estimates. As the billing system’s performance has improved and as we have grown our team of customer service professionals, customer service metrics have improved considerably.

“Today’s release of the independent third-party monitor report confirms our efforts have been successful, with the report stating Central Hudson has ‘resolved critical billing issues’ and that the billing system ‘has reached a stable current state.’

“The independent monitor provided a series of recommendations, which we committed to implementing, to ensure Central Hudson’s readiness for future system integrations and any unforeseen challenges.”

The PSC ruling drew praise from Assemblyman Jonathan Jacobson (D-Newburgh).

“I commend the Public Service Commission for holding Central Hudson accountable for its billing practices,” Jacobson said. “The utility must begin monthly meter readings in October or face an additional penalty of $500,000 per month.”

Jacobson recently sponsored two bills intended to curb late billing and also estimated billing by utilities.

Although PSC’s investigation is closed, Jacobson said his office will continue to monitor the utility and manage complaints from customers in his district.

The settlement doesn’t address Central Hudson’s application for a rate hike of 27.5% for electric and 33.2% for gas. Administrative Law Judges have recommended rate increases of 16.7% for electric and 21.8% for gas, but Jacobson opposes the increase. He continues to call for public hearings on the rate hike before a decision is made.

“The proposed increase is only for one year. We all know that Central Hudson will be asking for more next year,” Jacobson said, noting that the proposed electric and gas rate increases are more than 5 and 6 times, respectively, the rate of inflation.