Rates
Frequently Asked Questions
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Why are my delivery charges higher than supply chargers?
The rates on the supply side of your bill are not set by Central Hudson. By default, the rates are set by a wholesale market and Central Hudson simply procures the energy on your behalf. If you subscribed to get energy from a third party—such as from the town’s CCA program or from an ESCO—then those rates are set by them. Central Hudson’s rates are only for the delivery of the energy. These rates are made up of the following costs that are passed onto the ratepayers: (1) the cost of operation, which includes everything from worker wages, interest rates, taxes, new capital projects, and more (2) the profit margin that it’s authorized to collect. Even when you use very little energy, there is a fixed cost attached to your delivery side of the bill to make up for these costs.
In short, the delivery costs are high because that’s where Central Hudson makes profits.
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How will HVPA lower rates?
HVPA will lower rates in the following ways, among others: (1) Not investing in unnecessarily capital-intensive projects that investor-owned utilities currently invest in only because it’s how they increase profits (2) Prioritizing cost-saving initiatives that are currently not deployed because they’re not profitable (3) Eliminating profits altogether (4) Not paying federal and state taxes (5) Accessing the type of low-cost financing that is only available to publicly-owned corporations (6) Getting preferential treatment from other public authorities, such as the New York Power Authority that sells a limited amount of affordable green energy (7) Having the option of generating its own energy for sale, which Central Hudson is not allowed to do as a private monopoly (8) Utilizing the direct pay provision of the Inflation Reduction Act to fund certain projects without passing cost to ratepayers (9) using progressive rate structure to lower the cost burden for low to average-use customers.
A recent analysis from Tom Konrad, Ph.D., CFA, found that switching to public power would lead to expected savings of 6.6% of revenue, which translates to $45 million.
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Will HVPA lower the supply charges?
Unlike Central Hudson, HVPA can lower the supply charges on your bill in two ways. First, it will have the authority to generate its own energy for sale if it wants to. Private delivery businesses like Central Hudson are not allowed to generate energy for sale in the competitive wholesale market because of their special status as legal monopolies. Publicly-owned utilities are allowed to do so because they are a public service and not a business. HVPA can decide to generate its own energy at lower costs than what is available in the wholesale market.
Second, publicly-owned utilities are allowed to be preferential customers of publicly-owned energy developers that sell low-cost enegy, such as the New York Power Authority. Unlike Central Hudson, HVPA would have such preferential access to NYPA’s energy supply.
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Won't paying to acquire Central Hudson increase the rates?
No. According to a precursory analysis from Tom Konrad, Ph.D., CFA, a net savings of $45 million is expected for an acquisition cost of $1.26 billion. When the Hudson Valley Power Authority finances debt to acquire Central Hudson, we estimate to see the following:
- Increase in interest payments for issued debt: $52 million
- Savings in taxes and shareholder dividends: $99 million
- Net Savings: $45 million
This includes the following liabilities:
- Refinance current public debt of $494 million at 5.26%
- Assume other liabilities, such as short term debt and accounts payable, at $652 million
A more in-depth study is currently being conducted, after which we will have more detailed information.
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