Inside the Fight to Kick Out Rochester’s Power Company

Residents at the March meeting said they were tired of pleading with regulators for relief. One after the other said they wanted lawmakers to take matters into their own hands — with a public takeover.

In the third-largest city in New York, an ascendant public power campaign proposes that the municipality buy out the utility — a subsidiary of the holding company Avangrid, which is itself a subsidiary of the Spanish energy giant Iberdrola.

“RG&E uses our money to enrich the shareholders of its parent companies instead of investing in a reliable grid for residents,” said Mohini Sharma of the local group Metro Justice, which is leading the public power fight. “The only way to do something about it is to take back control of the grid and our ratepayer dollars by turning RG&E into a public utility.”

Last Tuesday, three months after the county meeting, the Rochester City Council unanimously committed $500,000 to study whether, and how, a public overhaul would work. It was a significant milestone for the nearly four-year public power campaign, but the proposal still faces an uphill battle. The city funding relies on the county or state to take the lead in commissioning and paying for the study, estimated to cost $1.5 million in total. The county executive has so far refused; the state has kept mum.

The study itself would just be the first step. If experts recommend municipalization, as such a public takeover is called, residents will still need to vote to approve it, and it’s hard to tell how popular the proposal would be once it’s put to the full city or county. But it has clearly struck a nerve. If it were to pass, RG&E would likely fight it in court.

The company has made its opposition to public power clear, while issuing a string of mea culpas over the billing issues and promising to fix them with the help of more than 200 new hires by the end of this year. But many residents have run out of patience with their grid’s private owners — and the existing mechanisms for oversight.

Regulators deem many of the high bills erroneous, but residents have still attempted to pay them. While those regulators have opened an investigation into billing errors from RG&E and its Hudson Valley partner, New York State Electric & Gas, for many Rochester customers, the investigation isn’t enough.

A proposed rate hike has added fuel to the fire. The campaign has captured some of the momentum of a wider public power fight that recently gave new, state-owned renewables a foothold in the clean energy transition. And like that fight, it has divided unions: The service workers’ union 1199SEIU is on board with the Rochester campaign, but the union representing RG&E electricians is opposed.

Local public power organizers have their eyes on the long game. They see the campaign in the vein of movements like the Fight for 15, which doubled New York’s minimum wage after years of protests and strikes. If they win, Rochester’s could be the largest public takeover nationwide in decades — though a ballot initiative in Maine is racing for the title. And it could have ripple effects across New York’s entire energy system as the state races toward its climate deadlines.

As the pandemic ebbed, residents’ woes only worsened. Last year, while utility debt spiraled across the state, RG&E customers began reporting stunningly high bills. Darryl Ballard, who works at a car dealership, was paying about $150 a month on average for his home in Rochester’s Dutchtown neighborhood. But in January 2022, he said, things went “haywire.” His bill quadrupled to more than $600, then nearly quadrupled again to $2,200 that March.

Ballard also owns a fixer-upper house nearby, which he’s been renovating little by little in the hopes that his kids can one day live there. He rarely turns on more than a light or two, he said, but the house has been receiving bills of $200 a month. He eventually worked out a payment plan with RG&E, but was still struggling to pay off the inexplicably high bills when New York Focus visited this spring.

Veronica Dasher, regional manager of government and community relations at RG&E, said the company couldn’t comment on an individual customer’s situation, but acknowledged that billing issues have been widespread. She blamed them on a confluence of pandemic-related factors: The company was unable to enter many residents’ homes to check their meters out of health precautions, forcing them to rely heavily on estimated bills. Dasher said the company had often guessed too low, so it hiked bills up when workers were finally able to read the meters.

And like many employers, RG&E faced staffing shortages, leading to a backlog of complaints when customers started calling about their higher bills. The company has since hired more than 100 new customer service reps and made progress in addressing the backlog, Dasher said, reducing the share of customers with estimated bills by 63 percent in a year. (A spokesperson did not reply when asked to clarify before-and-after figures.)

Some residents said they hadn’t seen much progress. Others said it was simply too late. Ballard, for one, had gotten frustrated enough to start asking whether the city needed RG&E at all.

“I got tired of screaming at them,” he said. One day, when he was home fuming over his bills, he turned on the TV and saw a report about a town hall organized by Metro Justice. He started volunteering with the public power campaign, including taking a bus to Albany to take the group’s demands to their state reps.

He’s also one of the many Rochester residents who took their complaints to the state Public Service Commission, leading regulators to open an investigation into RG&E’s billing practices. The investigation comes just as the commission is weighing steep rate hikes sought by RG&E and its Hudson Valley affiliate. A proposed settlement released in mid-June would see the “delivery” side of RG&E bills — which covers infrastructure upgrades and operating expenses — increase roughly 10 percent per year through 2025.

The commission and the company have touted the settlement as a fair compromise in light of economy-wide inflation and clean energy demands; the utility originally wanted double the increase. The rate hike will also slightly increase the company’s profits, to a guaranteed rate of 9.2 percent. RG&E returned close to $100 million to investors in each of the last two years, according to financial statements.

For public power backers, cutting those profits out of the equation is an obvious way to save ratepayers money. Nationally, public utilities charge about 13 percent less on average than their privately owned counterparts, according to the American Public Power Association. In New York, the gap can be far wider, thanks to an arrangement that gives municipal utilities preferential access to cheap, state-owned hydropower. Residents in the town of Massena, for example, generally pay about a third as much for electricity as their neighbors served by National Grid.

The desire for lower rates and greater local control has fueled a handful of municipalization efforts around the country in recent decades, with mixed results. Winter Park, Florida, successfully bought out its grid from a private utility in 2005, and has since seen rates drop and reliability improve. (It paid back its loan for the upfront costs of the takeover within a decade.) Boulder, Colorado — population 104,000 — waged a high-profile municipalization fight throughout the 2010s, but ultimately shelved the idea in exchange for a variety of concessions from the utility, including burying power lines and meeting strict climate targets.

This year, Maine voters are deciding whether to buy out the state’s entire grid from its two main utilities and hand the reins to a new public entity, which would contract with a private company for day-to-day operations. (New York has a version of this arrangement in the Long Island Power Authority, which has outsourced operations to New Jersey-based PSEG since 2014.)

Some public power veterans are skeptical that a city like Rochester could pull off such a takeover today. Eugene Nicandri, who served as Massena’s town counsel during its seven-year fight with Niagara Mohawk, notes that New York tightened its eminent domain laws not long after Massena won, making it harder for a municipality to buy out an incumbent utility.

“I think it’s a lot harder today than it was” 50 years ago, Nicandri said. “The investor owned-utilities didn’t want to see a lot of this happening across the state [and] got the condemnation law of the state of New York changed.”

It’s also unclear whether Rochester would benefit from the main mechanism that keeps rates in Massena so low: cheap hydropower from the New York Power Authority. The bulk of NYPA hydropower is already allocated to small towns and businesses around the state, and diverting some to a much larger city could prove legally and politically fraught.

Sharma, of Metro Justice, said it’s too early to rule out NYPA hydropower for Rochester. And she pointed to NYPA’s fresh mandate to build renewables as an opportunity to expand the base of clean energy available to municipalities throughout the state.

But the details of how, or whether, a public utility might be able to secure cheaper, cleaner energy for Rochester remain speculative. For now, campaigners are focused on passing a study that could begin to answer those questions — and some fear that their recent win at the city level may only have led to a new impasse.

Mary Lupien, vice president of Rochester City Council and a longtime supporter of public power for the city, worries that Mayor Malik Evans only conceded to Tuesday’s vote because he expected the proposal to hit a wall at the county level.

“It seems like it was a way to appease the activists, but not actually move forward,” she said.

For months, the mayor has argued that, “as one of the poorest municipalities in the state,” Rochester shouldn’t bear the burden for studying the public takeover — the state and surrounding counties should. Asked to comment after Tuesday’s vote, Evans’s office said he had not signed the resolution backing the study and deferred to the city council.

On Wednesday, County Executive Adam Bello announced his opposition.

“Creating a public utility is an extremely complex issue that is beyond the scope of Monroe County,” he said in a statement, citing RG&E’s $100 million contribution to local tax coffers and the billions of dollars in expenses that municipalization could entail. (Metro Justice argues that the figures are misleading, imagining a much larger-scale takeover than the campaign actually envisions.)

Sabrina LaMar, president of the Monroe County legislature, said she was disappointed by Bello’s statement. The county legislature is narrowly divided between Republicans and Democrats, and the proposal has yet to win majority support; LaMar said it’s hard to see holdout Democrats banding together to overcome GOP opposition unless Bello changes his mind.

“I think that they’re listening more to RG&E than they are to the citizens of Monroe County, and it’s just not fair,” she said of Bello, a fellow Democrat.

Republicans, meanwhile, remain broadly opposed. The county legislature’s majority leader Steve Brew told New York Focus a study would likely cost far more than the $1.5 million that activists are demanding, and would waste taxpayer dollars.

“Don’t throw the baby out with the bathwater,” he said of RG&E’s recent billing snafus. “The utility can right the ship.”