That $1,000 electric bill? It’s policy, not just winter

Don Scott

After two blizzards and what feels like two straight months of below-freezing temperatures, the mercury finally looks ready to climb above 50 degrees.

The ultra-cold weather caused electric meters to spin like slot machines, producing sky-high electric bills. And those bills don’t look like they’re going to decline anytime soon, with new rate increases on the way. Seniors on fixed incomes and young families are feeling the pinch. The pain is real.

In January, local, county and state politicians held a press conference at Bedford Town Hall. Several understandably angry constituents spoke, describing electric bills climbing above $1,000 — in some cases exceeding mortgage payments. Our elected officials urged residents to complain to the Public Service Commission, which is considering granting rate increases to Con Ed and NYSEG. But does pointing fingers at the PSC tell the whole story?

Utilities are regulated monopolies that apply to the PSC for rate increases. Those rates are designed to cover their costs plus an allowed return on investment, usually around 9–10 percent. However, only the delivery portion of your electric bill is regulated by the PSC. The cost of the electricity itself — the supply charge — is market-based and outside the utility’s control. Delivery charges include the cost of maintaining and upgrading infrastructure, integrating renewables like wind and solar, and complying with state-mandated programs and taxes. In recent years, those obligations have expanded significantly. Utilities are required to modernize aging poles and wires, harden the grid against storms, build new transmission to connect renewable generation, and implement state energy efficiency and electrification programs. Each of those initiatives may have policy merit. But none of them are free. They are long-term capital projects financed over decades and recovered through monthly bills.

The PSC regulates the utility’s return on investment. It does not write energy policy or legislate the mandates that drive many of the underlying costs. So what are those mandates, and where did they come from?

New York is among the most aggressive states in the country when it comes to rapidly transitioning away from fossil fuels. In 2019, the legislature passed the Climate Leadership and Community Protection Act (CLCPA). The law mandates a transition to 70 percent renewable electricity by 2030 and a zero-emissions power grid by 2040. Achieving those goals requires massive transmission and infrastructure upgrades.

The state also made the decision to close Indian Point, which had provided roughly 25 percent of New York City’s electricity. Author Robert Bryce cited a 2011 report prepared for the New York City Department of Environmental Protection by Charles River Associates, which concluded that the premature closure of Indian Point would “increase the cost to New York’s consumers under every feasible scenario” and estimated that power costs would rise by $1.5 billion to $2.2 billion by 2030 as a result. More recent legislation has also made it far more difficult for homeowners to convert to natural gas from oil or increasingly expensive electricity.

To be fair, not all recent increases are driven by state mandates. Natural gas price volatility, inflation in construction materials, and supply chain disruptions have also played a role. Utilities must maintain and upgrade infrastructure regardless of climate policy. But that reality does not eliminate the impact of the policy choices layered on top of those costs.

Electricity prices in New York are now roughly 58% higher than the national average, according to recent analyses. Over the past three years, residential electric rates in New York have risen significantly, outpacing much of the country. That trend did not occur in a vacuum.

The climate goals may be well-intentioned. But a rapid transition requires significant capital investment — an expense ultimately borne by ratepayers. And here is the question not addressed at the Bedford press conference: If you pass aggressive mandates, shouldn’t you acknowledge the cost implications? Energy policy is not free.

Residents deserve better than what they received at that press conference. They deserve transparency — not finger-pointing at the PSC. Finding a scapegoat may be politically convenient, but it is not helpful. We deserve an honest conversation about the trade-offs between our aggressive energy policies in New York and the costs that show up on our utility bills.