CUB

New Yorkers have known for some time that they pay about the highest electricity prices in the country. Big Apple residents can now know one of the reasons why: Consolidated Edison (Con Ed), the monopoly electric company servicing the area, is the most profitable utility in the nation.

This conclusion is based on a study by the National Association of Regulatory Utility Commissioners (NARUC), composed of state utility regulators. Con Ed has earned an average internal rate of return of 21.96 percent over the past 21 years. The average for all electric utilities surveyed — 89 electric and gas companies — was 14.19 percent.

Utilities are more profitable on the average than other industrial sectors. The average for Standard and Poor’s 400 Industrials was 12.95 percent.

So why is Con Ed about to demand that the Public Service Commission (PSC) grant the company another major rate increase? Good question, and one that is being asked by a new residential ratepayers group created by an executive order of Governor Mario Cuomo.

Called the New York Citizens Utility Board (CUB), the consumer group publicized the little known NARUC study in some detail. Con Ed also placed first among utilities by two other yardsticks, used by NARUC, — the basic rate of return and investor wealth rate of return.

Organized just a few weeks ago, CUB is already showing why it is needed. Some independent, consumer funded and controlled organization needs to speak out for the ratepayers and represent their interests in the technical proceedings before the PSC.

Con Ed has a horde of paid specialists — lawyers, accountants, economics and consultants of wide variety — to flood the PSC with arguments why New Yorkers should pay the company hundreds of millions of dollars more. CUB will examine these arguments and rebut them in the same forum.

In October 1974, I wrote a column recommending the creation of CUBS in all states to fight skyrocketing electric rates. State laws would have to be enacted, I wrote, that require the utility companies — electric, gas and telephone — to accept inserts inside their billing envelopes several times a year inviting their residential customers to join the state-wide CUBS. Minimum membership dues would be $5 per year.

CUBS would then hire skilled consumer advocates and countervail the utilities before all forums of government -­executive, legislative and judicial. The inserts would be paid for by the CUBS; there would be no added postage and membership would be entirely voluntary. These inserts would be a very tiny return for the public giving these companies a legal monopoly right and the right to pass on their advertising and many lobbying costs to consumers.

Wisconsin, Illinois and San Diego established CUBs and the idea was about to sweep the country in the Eighties. But in 1986, in a 5 to 3 decision, the U.S. Supreme Court ruled bizarrely that the monopoly utilities could not be required to carry the insert.

So, following the Illinois initiative, Governor Cuomo ruled that certain New York state agencies would have to carry the inserts along with, for example, motor vehicle registration envelopes and state tax refunds. So thousands of New Yorkers are now joining CUB by returning the insert to NY CUB, 146 Washington Avenue, Albany, New York 12210, or by calling 1-800-747-4282.

Interested readers in other states, who wish to explore starting a CUB in your state, may contact CUB’s executive director, Robert Ceisler at the above address. Ceisler chided Con Ed recently, saying that “Con Ed’s long history of high rates and excessive profits are inseparable. The public is fed up with being forced to fund a greedy Con Ed profit machine.”

Con Ed needs to change its ways and become more efficient and less gouging. After all, its namesake in Illinois, Commonwealth Edison, agreed to refund $1.3 billion to its customers last fall. Guess who was in the forefront in bringing the successful challenge? Illinois CUB. Illinois households received on the average over $325 in refunds. Not bad for a consumer group whose annual budget barely exceeds $1 million a year.

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