News Release Cahill Weighs in With PSC on Central Hudson Filing

8/2/2019 News Release Cahill Weighs in With PSC on Central Hudson Filing

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For Immediate Release: Contact: Conor Bambrick

April 26, 2012 (518) 455-4436

CAHILL WEIGHS IN ON CENTRAL HUDSON ACQUISITION

CALLING RATEPAYER BENEFIT PROPOSAL INADAQUATELetter to Public Service Commission Calls for Strong Customer Protections;

Decline in Consumer Advocacy Requires Enhanced Level of Scrutiny

(Albany) Assemblymember Kevin Cahill (D Ulster / Dutchess), Chair of the Assembly EnergyCommittee released a letter to the Public Service Commission in response to the petition filed byCentral Hudson regarding acquisition by the Canadian-based entity, Fortis, Inc. He called the

proposed $10 million customer benefit fund a pittance when compared to other major utilitymergers. He demanded the inclusion of stronger ratepayer protections if the transaction isallowed to move forward.

The so-called $10 million community benefit fund should be renamed the shareholderprotection plan. It pales in comparison to the $275 million in ratepayer savings the PublicService Commission required the last time a major utility changed hands in New York, saidAssemblymember Cahill, referring to the 2009 sale of NYSEG and RG&E to Iberdrola, a largeSpanish owned utility. The Iberdrola settlement resulted in an average savings of $220 percustomer. Central Hudsons proposal is not even in the same ballpark, coming in at less than$35 for each ratepayer they serve. This is more than a little rounding error, Cahill said.

In addition to objecting the inadequate benefit fund, the letter noted the deep decline in state andindependent resources dedicated to consumer advocacy. Assemblymember Cahill called on theCommissioners to pay special attention to the impact the transaction would have on CentralHudsons customers and demanded the inclusion of strict accountability measures before theacquisition is approved.

In similar circumstances in the past the Consumer Protection Board, the Citizens Utility Boardand the Public Utility Law Project fought for and won significant concessions for residential andlow-income ratepayers. Unfortunately those important groups have been dissolved and de-funded leaving the average citizen without a voice during this process, said AssemblymemberCahill. If the sale is approved, the Public Service Commission has an even greater obligation tofill the void by demanding the inclusion of substantial consumer benefits and ensuring thatCentral Hudson customers receive fair and equitable treatment.

The Assemblymember also called upon the Commission to require specific workforcecommitments, detailed plans for infrastructure upgrades and accountability measures designed toprevent Central Hudson ratepayers from subsidizing other Fortis operations.


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KEVIN A. CAHILLAssemblymember 101

stDistrict

CHAIRAssembly Energy Committee

THE ASSEMBLYSTATE OF NEW YORK

ALBANY COMMITTEESWays and Means

Economic Development, Job CreationCommerce & Industry

Ethics and GuidanceHealth

Higher Education

April 26, 2012

Hon. Garry A. Brown, ChairNew York State Public Service Commission

Three Empire State PlazaAlbany, NY 12223-1350

Re: Case 12-M-0192 -- Joint Petition of Fortis Inc., FortisUS Inc., Cascade Acquisition SubInc., CH Energy Group, Inc., and Central Hudson Gas & Electric Corporation forApproval of the Acquisition of CH Energy Group, Inc. by Fortis Inc. and RelatedTransactions.

Dear Chairman Brown:

As you are aware, CH Energy Group, Inc., the parent corporation for Central Hudson Gas andElectric, recently filed a petition seeking Public Service Commission (PSC) consideration of itsproposed acquisition by Canadian owned utility Fortis Inc. If approved, only one major electricand gas utility would be owned and operated by an entity that maintains its corporateheadquarters within New York. This raises serious considerations in terms of ratepayeraccountability and infrastructure investment necessary to maintain system reliability.

Upon initial review of the filing, the customer benefit proposal submitted by Central Hudson is,frankly, a pittance when compared to what was required of Iberdrola when the Comissionapproved its acquisition of Energy East in 2009 (Case 07-M-0906). In that order, the $275million ratepayer assistance fund amounted to $220 per electric customer in the areas served byNew York State Electric and Gas and Rochester Gas and Electric. In contrast, the $10 millionfund proposed by Central Hudson would amount to a mere $33 per electric customer. While thissmall amount may benefit the respective companies shareholders it does not do nearly enough toserve the public interest. The financial health of this cooperate entity is attributable directly andexclusively to its ratepayers over the 100 plus years of its existence. It is fitting therefore, that ifthis sale is authorized, those same ratepayers should receive fair recompense.

Further, the Public Service Law requires the PSC to make a determination that the acquisition isin the public interest, meaning customer benefits must outweigh any potential detriments. In


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February, you participated in a budget oversight hearing conducted by the Energy Committee onthe subject of the new Utility Intervention Unit (UIU) within the Department of State (DOS). Itrust you agree that, based on the testimony offered by the witness designated to represent theDOS, the UIU is incapable of handling the immense responsibility of representing utilityconsumers. The impact of the precipitous decline in state advocacy funding has only been

compounded by the loss of strong independent voices like the Citizens Utility Board and theinvaluable Public Utility Law Project, leaving New Yorks consumers voiceless, powerless andwithout representation in important proceedings before the Commission. In your testimony, youindicated that the Department of Public Service has recently focused more resources on theinterests of residential, small business and non-for-profit ratepayers. Absent a significant shift inthe consumer advocacy landscape, it is incumbent on the Commission to pay special attention tothe impact this potential sale will have on the average Central Hudson costumer.

In view of the primary fiduciary obligation owed their shareholders, highlighted by the morethan $2 million windfall the CH Energy Chairman is in line to receive, reliance solely on thebeneficence of Central Hudson would be misplaced. It is therefore incumbent on the PSC to

place a strong emphasis on safeguarding consumer interests in a complex acquisition transactioninvolving numerous factors and considerations would seriously jeopardize them.

In the case of the Iberdrola acquisition of Energy East in 2009, the PSC, with the input of thenow defunct Consumer Protection Board, correctly imposed strong conditions designed to ensureaffordable and reliable service for the customers of NYSEG and RG&E. In the order, it wasdetermined that the sale would only be in the public interest if Iberdrola agreed to certainconditions, including:

$275 million to lower customer rates; $100 - $200 million investment in wind power or a $25 million economic development

fund;

significant investment in infrastructure;

increased reliability standards / penalties

a twelve month moratorium on rate filings; and strict financial reporting standards due the complexity of Iberdrolas international

operations.

While the wind provisions were an exceptional provision given the international utilitysleadership in the industry, the circumstances surrounding the Central Hudson acquisition by aforeign-based entity are otherwise quite similar. Fortis, a company with a broad portfolio thatincludes a real estate holdings division, raises some of the same financial stability concernsexamined in the Iberdrola case.

Therefore, the current proposal deserves a comparable level of scrutiny and conditions to ensurethe interests of Central Hudson ratepayers are protected. In addition, any order of approvalshould require specific workforce commitments, detailed plans for infrastructure upgrades, asubstantial increase in the proposed consumer benefit package and accountability measuresdesigned to prevent Central Hudson ratepayers from subsidizing other Fortis operations.

I appreciate your close attention to this matter. I intend to monitor this proceeding closely.Please do not hesitate to contact me if need any additional information.


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Sincerely,

Kevin A. CahillChair of the Assembly Energy Committee

cc: Honorable Patricia L. Acampora, CommissionerHonorable James L. Larocca, CommissionerHonorable Robert E. Curry, Jr., CommissionerHonorable Maureen F. Harris, CommissionerHonorable Jaclyn A. Brilling, Secretary

Documents

News Release Cahill Weighs in With PSC on Central Hudson Filing