Albany, NY – May 18, 2011 – (RealEstateRama) — Governor Andrew M. Cuomo and Mayor Michael R. Bloomberg today announced that their legislation to prevent a massive rate hike on New York City energy customers has passed the Legislature unanimously in both houses.
The measure proposed by Governor Cuomo and Mayor Bloomberg will allow the City to guarantee property tax abatements to power plants. This will change property tax abatements for power plants from a discretionary program back to an “as-of-right” program and, in doing so, addresses the primary reason the Federal Energy Regulatory Commission (FERC) cited for requiring the rate increase.
“With New York City ratepayers facing hundreds of millions of dollars in unwarranted electricity rate increases, we moved quickly with our partners in government and the Legislature to protect consumers and address the issues cited by FERC in its initial decision,” Governor Cuomo said. “Now that the bill has passed, there are no grounds to increase rates; therefore we are moving immediately to file papers with FERC seeking a reversal of its January decision.”
“The moment the decision came down from the Federal Energy Regulatory Commission to give power companies an unjustified windfall that would translate into a 12 percent electricity rate increase for ratepayers we began working to have it reversed,” Mayor Bloomberg said. “The passage of our bill clarifies for the Commission the true costs of producing power and there is now zero justification for the massive rate increase. We asked the Commission to re-examine this case and the passage of today’s law is another reason they should render a new decision that will be more equitable to New York City ratepayers. I want thank Governor Cuomo and thank Senator Schumer for their strong leadership in fighting to protect New Yorkers from an unjust electric bill increase. I also want to thank Speaker Silver, Assemblyman Farrell and the rest of the Assembly for moving this bill quickly through the Assembly, and I also want to thank the State Senate, Majority Leader Skelos and in particular Senator Lanza for passage in the State Senate.”
The Federal Energy Regulatory Commission (FERC) decided in January to allow power plants in the City to be paid energy capacity prices that factored in the cost of property taxes, even though many power plant operators in the City do not pay any property taxes at all. FERC’s order concluded that since new power plants were not guaranteed property tax abatement, as they were in the past, those taxes should be built into the federally approved capacity prices that are passed on to ratepayers. This would have increased electricity bills for residents and businesses in New York City by as much as $1 billion over the next three years and provided a windfall to existing plants that do not pay property taxes.
The bill proposed by Governor Cuomo and Mayor Bloomberg:
- Adds peaking power plants, which are used by the FERC to determine capacity prices, to the City’s as-of-right property tax abatement program, and will provide 100 percent property tax abatement for 15 years.
- Extends the City’s existing Industrial and Commercial Abatement Program (ICAP), which is currently set to expire this year.
- Does not impact property tax revenue because the City already planned to provide tax abatement for these units in their discretionary program.
The rate hikes were set to take effect in June.
