Frequently Asked Questions
Featured Questions
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Who will pay to buy Central Hudson?
As a public benefit state corporation, the Hudson Valley Power Authority will issue authority bonds to finance the upfront costs of acquiring Central Hudson, including legal costs. After acquisition, it will be authorized to issue tax-exempt authority bonds to run the publicly-owned utility. Revenue from bills people will pay is used to pay back the debt. Central Hudson currently funds 52% of its finances by issuing debt but its cost of operation is higher because, unlike HVPA, it pays high interest rates and its bonds are not tax-exempt. That means the cost of operation for HVPA would be lower, with the savings passed to the ratepayers.
HVPA is not funded with taxpayer subsidies. Authority bonds are not like municipal bonds that need voter approval, and the state or the taxpayers are not liable for HVPA’s debt obligations.
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Will HVPA be better for Central Hudson workers?
Yes. Currently, everything the Central Hudson workers need, from wages to equipment, has to go through highly politicized rate cases that pit workers against ratepayers. With no shareholders to answer to, HVPA can prioritize alleviating this tension by investing in the needs of the workers while keeping rates as low as possible. To ensure this happens, the bill puts the Business Representative of the Central Hudson union on the Board of Trustees, and the union gets to appoint two people in the Governing Board of the community oversight body, known as the Observatory. Presently, the workers don’t have a representation on Central Hudson’s board.
Additionally, the hiring of short-term contractors to avoid union rates will be prohibited. And HVPA requires the strong labor standards for businesses it contracts with, and for any buildout of generation assets it may pursue.
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Why not just fix the Public Service Commission?
When utilities like Central Hudson file for rate increases, they submit various reasons as to why they need to increase their revenues. When reviewing these needs, the Public Service Commission (PSC) is obligated to protect the company’s economic viability, given that it must make profits to survive. First, it is understood that if Central Hudson doesn’t earn enough dividends for Fortis shareholders, its standing as a business is compromised. Second, it is understood that if Central Hudson doesn’t raise a certain amount of revenues, its “financial integrity,” or borrowing capacity, is compromised, which means the rates will have to go even higher to make up for higher interest rates.
While several improvements can be made to the PSC, including who gets to appoint the commissioners, having to protect profits is the primary conflict that cannot be addressed as long as the need for profit exists.
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How much will it cost to buy Central Hudson?
Central Hudson’s value is not publicly available information. The Center for Public Enterprise’s informal evaluation estimates a valuation between $518 million and $1.19 billion. The range is due to different methods used in evaluating the value. However, this is only an informal evaluation, and we are in the process of conducting a more in-depth study to get closer to the actual value.
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How can HVPA survive without profits?
Unlike Central Hudson that must make profits to lure shareholders and to maintain its financial integrity so that it can continuously borrow money, being a state corporation with no profit motive means the Hudson Valley Power Authority can charge customers just the cost of running the operation. Being state-owned also means its financial integrity will be more stable, allowing it to borrow money more easily. The New York Power Authority is an example of a state corporation that maintains high bond ratings. Good financial health means continued access to lower interest rates that result in savings for the ratepayers.
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