New York State Climate and Environment

Amid Billing Fiasco, Hudson Valley Utility Pushes for Steep Gas and Electric Rate Hike

Hudson Valley legislators and advocates are urging the state to reject the double-digit hike, arguing it could illegally stick customers with the bill for the company’s own mess.

Julia Rock · November 14, 2023

A group of people with signed saying "no rate hikes"

Kingston residents and local legislators outside a hearing on the Central Hudson rate case, October 2023. | Augustus Artschwager / Courtesy of Assemblymember Sarahana Shrestha

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Dozens of Hudson Valley residents showed up at public hearings last month and described an ongoing fiasco at Central Hudson Gas and Electric: inexplicable spikes in their energy bills, no bills for months and then multiple at once, automatic bank account withdrawals for thousands of dollars, and a customer service department that wouldn’t return their calls.

“It’s time for me to sit back and enjoy my life, and getting a $500 bill is insane,” said Pam O’Reilly, who is in her late 60s and lives on a fixed income, at an October town hall in Catskill. “Am I supposed to plant money and make it come from a tree?”

Now, Central Hudson is pushing for a steep rate hike that would cost its customers an average of $30 on both their gas and electric bills each month. Ratepayer advocates are urging regulators to reject the hike, arguing that it could illegally stick customers with the bill for the company’s own mess. They also cite a practical issue: Customers are refusing to pay bills that they still doubt are accurate.

“How can Central Hudson accurately charge more if they can’t accurately charge now?” asked Thomas Hayden, a mechanical engineer, at a Poughkeepsie town hall. Hayden said his account is “still screwed up”: The company has sent him multiple conflicting bills at the same time and hasn’t responded to dozens of customer service requests. “I expect you folks at the Public Service Commission to freeze Central Hudson costs until they behave like a responsible company,” he said.

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The problems date back to 2021, when the utility switched to a new billing system that a state investigation later found “was riddled with Company missteps” and “contained hundreds of programming errors and defects that resulted in billing overcharges and delays for thousands of customers.”

The utility claims the bugs are largely fixed and that the rate hike will fund physical infrastructure upgrades and other routine costs.

“While a very small percentage of customers may still receive delayed bills or bills that require adjustments, we have resolved many of the issues and nearly all customers are now receiving on time and accurate bills,” said Joe Jenkins, a spokesperson for Central Hudson, which delivers gas and electricity to nearly 400,000 customers. “The system now is performing at, or very close to, the levels of our legacy system prior to cutting over.”

But Hudson Valley residents have continued to report maddening issues.

“In May of 2023, one constituent saw eighty transactions in one day, with twenty-six bill reversals, twenty-five actual bills, seventeen other charges, and twelve credits,” wrote Assemblymember Sarahana Shrestha, who represents the Hudson Valley, in a recent motion asking regulators to reject the rate increase. “She has no confidence in paying what she has been told she owes until her bills have been verified to be correct.”

“It’s absolutely unacceptable for Central Hudson to raise costs on our hard-working families, who are already under serious financial pressure, especially until it fixes every one of its billing issues,” said Pat Ryan, who represents the Hudson Valley in Congress.

The September 2021 rollout of Central Hudson’s new customer information system was botched from the start.

The utility spent over $88 million on the new system, including more than $21 million passed on to customers. Senior company leadership had known about issues before the system launched, but decided to implement it anyway.

“idk what they are doing and why…I just know sept is coming close and I am def not ready for go live,” one employee said in a company chat published in a December 2022 report from the Department of Public Service. “like at this point we should have all training done and doing proficiency to sharpen up prior if it were me running this. but what do I know lololol.”

Kingston residents pack the room at an October hearing on the Central Hudson rate case. | Augustus Artschwager / Courtesy of Assemblymember Sarahana Shrestha

After the system launched, more than 8,000 accounts were overcharged. Some customers saw huge sums of money automatically withdrawn from their bank accounts based on “erroneous billing calculations.” One customer, typically billed for about $500, saw withdrawals from two bank accounts for about $12,000 and $16,000.

Under pressure from local and federal lawmakers, Central Hudson’s board of directors ousted the company’s CEO earlier this year. The Public Service Commission conducted an additional audit and made recommendations for improvements, including that Central Hudson read meters monthly, rather than bimonthly, to improve accuracy, and that the company develop plans to measure and improve customer service. In July, Central Hudson agreed to pay for a state-appointed independent monitor to oversee the correction of billing system errors.

Just a few days later, the company filed a request for a rate hike — an approximately 16 percent increase on electric bills and 19 percent for gas. That’s about the size of the rate hike state regulators approved for Con Edison in July, and what the state’s largest utility, National Grid, is currently seeking. Much of Central Hudson’s request was for infrastructure upgrades, but “key elements” of the rate plan also include customer service improvements and the switch to monthly meter readings.

The Public Utility Law Project (PULP), an advocacy group for low-income and rural ratepayers, filed a motion with regulators laying out a series of legal and practical reasons to block the rate case altogether.

First, PULP alleges that the data Central Hudson has provided to regulators is not reliable because it does not acknowledge the impact of the billing fiasco on the company’s income. One area that raises watchdogs’ eyebrows: Before the new customer service system launched, Central Hudson residential customers held just under $20 million in arrears; two years later, they owed “an unprecedented $109.2 million.” The company attributes that increase to COVID-19 and increased energy prices, but PULP notes that arrears grew far faster than for other utilities facing the same headwinds: The share of Central Hudson customers in debt, which had previously been below that of other utilities, jumped to nearly double the statewide rate.

Second, the organization points out that the independent monitor assigned to Central Hudson has not concluded that the billing issues have been corrected.

“I am def not ready for go live. like at this point we should have all training done and doing proficiency to sharpen up prior if it were me running this. but what do I know lololol”

—Central Hudson employee in customer chat, 2021

And third, it argues that the state needs to investigate whether the company’s requests related to customer service and billing would improperly charge ratepayers for its own “imprudence.”

Legally speaking, shareholders — not ratepayers — are required to eat the costs of a company’s mismanagement. The Department of Public Service concluded that the company’s expenditures on the upgrades “were clearly imprudent” in its December 2022 report, and asked the Public Service Commission to open a “prudence proceeding” to assess which of the company’s expenditures could legally be passed on to ratepayers. The PSC has not yet done so.

“They want more staff to help with customer service cases. They have a whole question about IT costs. What are these costs? Are you trying to enhance the system you have, or are these costs being used to fix the system?” asked Laurie Wheelock, PULP’s executive director and general counsel. “Should the ratepayers be paying for that?”

Jenkins, the Central Hudson spokesperson, said those expenses weren’t related to the billing issues. “Our proposed rate case is designed to meet business needs looking forward,” he said. “The additional customer service staff and IT upgrades are to meet those needs and not to make up for expenses associated with the implementation of our billing system.”

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The Department of Public Service has argued that the Public Service Commission should evaluate each of these concerns in the course of the rate case, rather than blocking the case altogether, as PULP and local legislators have called for. “Nothing about a utility’s rate case is taken for granted or assumed,” Department of Public Service spokesperson James Denn said, defending the rate case process as the best way to resolve disputes over requested hikes.

In its own response, Central Hudson called PULP’s arguments “replete with speculation and conjecture” and “fatally flawed.”

Multiple Central Hudson customers, meanwhile, submitted sworn affidavits testifying to their ongoing issues with the utility.

“This has been a battle that has gone on for the past few years,” wrote one customer. “When my bill topped $1k, I received assistance from social services, people for people, and community action to pay off my bill. By this time, everyone was complaining and Central Hudson was still denying there was a problem.”

“They have ignored my [pleas] for reason,” the customer continued, “[and] should not be rewarded for their crimes.”