EDITORIALS
Switching off a rate hike
Authority’s freeze brightens picture, but Albany surcharge plan dims it
The New York Power Authority, under pressure, did the right thing in backing off a projected rate hike that would have hit hardest where it would have hurt the most—upstate.
Authority President Richard Kessel instead will recommend to his board that rates be frozen for all customers through the end of April 2010 and the bonuses known as “variable pay” once again will not be extended to employees.
Kessel, who has made significant changes in the way the authority does business and interacts with the public during his initial year in office, has said a thorough review of compensation practices already was planned. That’s a good thing, and the idea of “variable pay”—an incentive with some solid advantages—should be part of that review and not automatically excluded.
The victory won for consumers in derailing the rate hike, which would have cost a bit more than 70 cents a month for New York State Electric&Gas and National Grid customers, may be small comfort indeed if Gov. David A. Paterson succeeds in his ill-advised plan for a utility surcharge that will drive up rates far higher for consumers who already pay some of the highest electricity bills in the nation.
That’s especially galling here, where the benefits of a local treasure—Niagara Falls and its hydropower—are sent out of the region and out of the state.
But it’s a victory nonetheless. Some customers would have had their rates increased by 8 percent in May for some power produced at hydroelectric plants in Niagara Falls and Massena. The rate freeze will wind up saving customers $16.5 million—a small but important savings on an individual level, especially in a recession.
Kessel, whose agency earlier had said it was compelled to institute the rate hikes by law mandating that it pass along rising production costs, said the recession seems reason enough to declare the freeze as an emergency measure through next April, the end of the rate year. Paterson had sent a message to the authority requesting that both the planned rate hike and bonuses totaling $3.4 million be halted. (To listen to excerpts from Kessel’s meeting with the editorial board, go to www.buffalonews.com/audio ). Rep. Brian Higgins of Buffalo, though, also has a valid point in claiming the freeze and the suspension of bonuses did not go far enough for an agency that reaps 56 percent of its profits from its vast Niagara Power Project and sends 86 percent of the low-cost hydropower benefits elsewhere. The larger issue of power allocation still needs to be addressed.
There is reason to believe the authority now is much more focused on upstate economic development. Kessel has been to this region several times to take its economic temperature since his appointment half a year ago. He has begun cost reductions and efficiency improvements and has several new initiatives under way. The long practice of variable pay, not truly a bonus but a team-building incentive program for departments and units that meet production goals and benchmarks, still deserves consideration as a useful tool in those efforts.
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