What's New

Zack Hutchins
Director of Communications

October 23, 2000

State considers significant new charge on energy bills
Council questions proposed increase, extension to 'systems benefit charge'

An extra energy charge that is due to expire next June would be extended for five years and increased 78 percent under a proposal being advanced by the state Public Service Commission.

The Business Council is asking its members for their reaction to the proposal, which would boost most business's electric bills by between 0.08 and 0.142 cents per kilowatt-hour.

The state's Public Service Commission (PSC), which regulates energy utilities, proposed the increase and extension to the "systems benefit charge" (SBC), a tax on energy, in the Sept. 27 issue of the New York State Register. The PSC will not make its final decision on the proposal until a period for public comment expires on Nov. 20.

The Council plans to submit written arguments on the proposal to the PSC before the public-comment period expire.

The systems benefit charge would apply to all electricity that individuals and businesses buy on the open market in New York. It would support a variety of research and development programs, energy-conservation programs, and subsidies for low-income residential customers.

The current systems benefit charge was created as a result of individual "settlement agreements" between the PSC and individual energy utilities that spelled out how each utility would deregulate. Previously the utilities funded such programs directly. Under the settlement agreements, each utility has its own specified SBC rate. Each utilities' SBC supports different purposes, depending on the region served by the utility.

The Council fears the proposal would increase energy taxes at a time when New York just repealed the energy gross receipts tax on business and is still working hard to make its energy costs here competitive with costs in other states.

The state's proposal would extend the systems benefit charge for five years beginning Jan. 1, 2001. It would also increase the charge, which now costs $78 million per year, to $139 million per year. Many businesses that had been exempt would now be paying the tax, which generally would in the neighborhood of 0.142 cents per kilowatt-hour.

The Council has argued that businesses and other energy consumers already have strong incentives to conserve energy, because of the cost savings they can achieve.

Extending and increasing the tax was recommended by some members of an advisory panel that was created by the Public Service Commission as part of the original agreements with individual utilities that created the tax.

The advisory panel was charged with evaluating the costs and benefits of the tax and the programs it funds. The draft report on costs and benefits was written by the New York State Energy Research and Development Authority (NYSERDA), which administers programs funded by the tax.

Evers represents The Business Council on the panel and participated in the evaluation, but The Council did not concur with its recommendations.