Public Power Push Spreads to the Hudson Valley

State lawmakers are set to introduce a sweeping proposal for a public takeover of Central Hudson, the region’s scandal-plagued gas and electric utility.

Colin Kinniburgh   ·   May 16, 2024
Sarahana Shrestha holding a sign that says "Public Power Now"
Assemblymember Sarahana Shrestha at a rally in Kingston against Central Hudson rate hikes and billing errors. | Office of Assemblymember Shrestha

Hudson Valley lawmakers are introducing a bill to mount a public takeover of the electric and gas utility Central Hudson, replacing it with a new Hudson Valley Power Authority.

The goal? To turn the smallest of the state’s major utilities — and its most unpopular, according to one survey — into a democratically controlled force for greening the state’s economy. The legislation, sponsored by Assemblymember Sarahana Shrestha and Senator Michelle Hinchey, seeks to rein in rate hikes, capping bills at six percent of customers’ incomes. And, according to a draft reviewed by New York Focus, it aims to promote a just transition for workers, not least by ensuring that current, unionized Central Hudson workers retain their rights if the new authority takes over.

It’s an expansive proposal that could take the baton of the public power movement as similar efforts have hit a wall. In Rochester, a local public power campaign has stalled after the county legislature voted for the second time against funding a study on a possible takeover. Downstate, a push to cut out the Long Island Power Authority’s third-party management company has lost steam in the state legislature. And in Maine, voters last November rejected a ballot initiative to take the statewide grid public after the incumbent utilities mounted a nearly $40 million opposition campaign.

Shrestha, who is spearheading the Hudson Valley push, says Central Hudson is an unusually ripe target.

“Just instinctively, energy feels like a service that people expect to be reliable, to be affordable, to be on their side,” Shrestha said. With Central Hudson, “that’s not the experience people have.”

The utility, which is owned by a Canadian holding company, has been plagued by billing issues since 2021. The problems have fueled widespread outrage, leading state regulators to take the rare step of appointing an independent monitor. The company is nevertheless moving forward with major rate hikes that will likely take effect this summer. Judges overseeing the case recently recommended hikes of 17 percent on electric bills and 22 percent on gas.

The hikes come as Central Hudson customers already face a collective $127 million in unpaid bills. That’s an average of about $2,000 for every customer in arrears — the highest among New York utilities. Consumer advocates say that’s because many customers faced bills far higher than they should have in the first place.

And Central Hudson is collecting on those debts. After a four-year freeze, it recently announced it would resume shutting off power to customers, claiming that the billing issues have been resolved.

“The billing system is performing at levels better or similar to our previous system in many key metrics,” said Central Hudson spokesperson Joe Jenkins. “We are confident in its current performance and we expect a report from the independent third-party monitor to reflect that we have addressed the issues we encountered following system implementation.”

But customers are still getting jolted by huge bills. Kingston-area resident Janet Weissman has been living in her house for 45 years, and said she’d never received a bill over $300. Suddenly, this March, she received a bill for $1,500, she said, followed by $500 the next month. Weissman, a retired psychotherapist, called Central Hudson several times and said they have refused to budge. She said the utility is blaming a heat pump she installed last year, even though her bills this winter — when she was running the heat pump full blast — were normal.

“They’re broken, they’re untenable and inconsistent with any degree of service,” she said of Central Hudson. Weissman isn’t very politically active, but the idea of an energy system “by the people, for the people” resonates. “What we have is not working,” she said.

In a statement, Central Hudson opposed a public utility overhaul.

“As New York undergoes a transformative period in its energy landscape, we strongly believe that municipalization is not a solution,” Jenkins said. “A change in ownership would carry a substantial cost that would ultimately fall on residents in our communities.”

Residents at a town hall
A woman holds up her Central Hudson bills at a town hall on energy issues, New Paltz, September 2023. | Office of Assemblymember Shrestha

Like other public power campaigns past and present, the effort to take over Central Hudson faces resistance from the union that is likely to be most affected: the International Brotherhood of Electrical Workers (IBEW) Local 320, which has represented Central Hudson workers since 1945. Steve Carroll, the local’s president and business manager, said he has had limited discussions with Shrestha’s office to date and isn’t convinced that taking the utility public would benefit its customers or workers.

“We’ve had 79 years to negotiate fair contracts, which results in safer and reliable service for the customers,” Carroll said. “If the goal is to make it beneficial for the customers, there’s gonna have to be a lot more explanation to what the plan is before they probably get any support.”

The wider labor movement could be friendlier to the bill. The northeast branches of the United Auto Workers have already come out in support.

“We stand in solidarity with all that will help create unionized public utilities that will invest in a green energy transformation here in New York,” said Dan Maloney, president of UAW Local 1097 in Rochester and chair of the union’s state legislative committee. “We can create good-paying union jobs while rebuilding our crumbling power grid and, at the same time, save money for ratepayers.”

The early endorsement from the autoworkers’ union echoes the 1970s public power fight in the town of Massena, where the UAW played a key role in tipping the scale toward municipalization.

Meanwhile, the IBEW’s longstanding aversion to public power is rippling downstate. Assemblymember Fred Thiele, who is sponsoring a bill to establish full public control over the Long Island Power Authority, said the lack of labor support has dissuaded his colleagues from signing on. That bill still has not been introduced in the Senate, which all but dooms the effort to cut out third-party operator PSEG before its contract comes up for renewal at the end of 2025.

“Public power is something that’s not going to happen by the end of 2025,” Thiele said of the Long Island bill. “But we shouldn’t foreclose that option. … We may have to take an alternative route, and that may take some more time.”

“There is no accountability, and people are fed up with it.”

—Jess Mullen, Communities for Local Power

There was one part of Thiele’s bill that the IBEW liked: preserving members’ current contracts, pensions, and right to strike. The Hudson Valley bill adopts similar language.

Proponents see this and other labor protections — including an IBEW seat on the new Hudson Valley Power Authority’s (HVPA) nine-member governing board — as one of the bill’s key strengths. They also highlight the authority’s model of democratic governance, particularly the creation of an independent “observatory” to act as a citizen watchdog in place of state regulators. The observatory is modeled after a group created in Paris when the city reclaimed its water infrastructure from a private company more than a decade ago, which succeeded in reducing rates and improving water access for the poor and vulnerable.

“Just because a utility is formally public or cooperative, doesn’t mean that it’s actually controlled by the people it serves,” said Sandeep Vaheesan, legal director at the anti-monopoly Open Markets Institute and author of a forthcoming book on public power. “You really need to get the institutional details right, and Assemblymember Shrestha did that in crafting this bill.”

Vaheesan, who advised Shrestha’s office on the bill, said the democratic structure would support the bill’s two other core aims: increasing affordability and going green.

The proposal would allow the HVPA to buy out Central Hudson, through eminent domain if necessary, if it can demonstrate that the takeover would save customers money on their monthly bills. (An initial estimate by the Center for Public Enterprise think tank put the cost of a buyout at anywhere from $560 million to $1.2 billion or more, to be financed through tax-exempt bonds.) The new authority would be charged with keeping bills at six percent or less of customers’ monthly incomes.

It would aim to achieve this in part by overhauling rates. At the moment, the more energy a household or business consumes, the less they pay per unit. This gives an advantage to industrial users and wealthier households, which tend to consume more energy than those less well off. Shrestha and Hinchey’s bill would flip that on its head, instead rewarding residents for energy efficiency.

That’s one of a slew of measures in the bill designed to spur the state’s energy transition. The HVPA would also be allowed to build and operate its own renewables, just as its would-be cousin the New York Power Authority (NYPA) now can. And NYPA would be required to collaborate with the HVPA, helping it build transmission lines and giving it access to cheap hydropower.

Apart from these initiatives, proponents say there’s a fundamental reason that public utilities are better equipped than their private counterparts to advance climate goals while saving customers money: They’re not seeking profits.

Investor-owned utilities in the United States make money largely by building big infrastructure, on which state regulators approve a certain rate of return. That means “they’re more incentivized to build than they are to repair,” said Johanna Bozuwa, executive director of the Climate and Community Project, a think tank.

That’s made US utilities slow to adopt relatively low-cost upgrades that could make the grid significantly more efficient. Such technologies have been taking off in Europe, but stateside they’re only just getting their first big trial run — at the hands of a not-for-profit electric cooperative in the Midwest.

“Grid-enhancing technologies” may not be top of mind for many Hudson Valley residents, but anger at Central Hudson is. A 1,400-member Facebook group continues to simmer with new complaints.

“I am pissed!!!” wrote one commenter of the utility’s pending rate hikes. Although the increases that judges recommended are substantially lower than the roughly 30 percent the company initially sought, many residents find any hike hard to justify, particularly while the state’s review of Central Hudson’s billing failures is ongoing.

The independent monitor’s report was due at the end of February, but has yet to be published, despite pressure from local lawmakers including US Representative Pat Ryan.

The Public Service Commission, which is responsible for overseeing utilities, says the report on the company’s billing system will be published imminently, and is only one of multiple ongoing investigations into Central Hudson.

But that may not be enough to tamp down the anger the company has unleashed.

Jess Mullen, executive director of the Kingston-based group Communities for Local Power, is still fuming after a personal encounter with Central Hudson’s erratic billing. She owns a three-unit building in Kingston, where for the last decade or so she has typically paid less than $50 a month to cover electricity for the common areas. Then about a year ago, she said, her balance started jumping by hundreds of dollars a month, eventually reaching more than $1,400.

“There is no accountability, and people are fed up with it,” she said. “The most effective way for Central Hudson to be held accountable is for them not to be allowed to do business anymore.”

Update: May 16, 2024 — This story has been updated to include a statement a Central Hudson spokesperson sent after publication.

Colin Kinniburgh is a reporter at New York Focus, covering the state’s climate and environmental politics. Over a decade in media, he has worked in print, television, audio, and online news, and participated in fellowship programs at CUNY’s Graduate School of Journalism and… more
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