HVPA Act Looks to Democratize Central Hudson

What could the Hudson Valley look like without Central Hudson?

That was the question New York State Assemblymember Sarahana Shrestha and New York State Senator Michelle Hinchey asked constituents to consider when they introduced the Hudson Valley Power Authority (HVPA) Act on May 16, 2024.

The act is currently in the Committee Senate, specifically in Senate Committee Corporations, Authorities and Commissions. If eventually signed into law by Governor Kathy Hochul, it will create the Hudson Valley Power Authority, a state run and democratically controlled “public benefit corporation.” This authority will then purchase Central Hudson through the issuing of tax-exempt bonds and run the company with the goal of distributing power while remaining in the service of the public. According to Shrestha, this will be done through “lower rates, reliable service, correct and clear bills, clean energy, community benefits and environmental justice.” 

This restructuring of power distribution in the Hudson Valley may lead to large changes in what ratepayers see on their bills. At Shrestha’s most recent town hall meeting on May 31, the assemblymember said, “there is an immediate rate decrease whenever a utility becomes publicly owned.” This has been true nationally, as ratepayers to public utilities across the country pay 4% less on average than those of private companies. Shrestha believes that the potential rate cut from this buyout could be much greater than that 4%, hoping to model the success of the other power authorities in the state. 

The New York Power Authority (NYPA), established in 1931, is a publicly-run state authority that has been successful both as power distributor and as an independent financial entity, providing some of the cheapest electricity in the nation since its inception. Likewise, Massena, a town in Northern New York, bought out its local for-profit utility company in 1974 and their residents have had steady, affordable rates since. Shrestha argues that the HVPA will bring similar results to residents and details that process within the act.

To lower rates, the act proposes the refinancing of Central Hudson’s debt of over $1 billion at a lower, preferential interest rate and the establishment of contracts to purchase electricity at wholesale prices; these are actions that Central Hudson cannot do as a private company. In addition to this, the HVPA hopes to work with the NYPA, making it take on the transmission of electricity when possible. The transmission process is one of the largest expenses that Central Hudson incurs and could be nullified or seriously reduced if the HVPA assumes power distribution.

The act will also cap a customer’s bill at 6% of the household’s income and implement a progressive green rate structure, charging those who use the most electricity to pay more for it. According to Shrestha, this will make a customer’s bill reflective of their electric use. Shrestha says that this new structure will make it so “people who use less energy aren’t paying an unfair share of the costs like they are doing right now.” If signed into law, these changes would potentially reduce the delivery bills for the majority of current Central Hudson customers. 

In July 2024, the Public Service Commission (PSC) approved 5.5% and 7.3% increases in electric and gas delivery revenues respectively, causing an immediate increase in rates through August 2025. These changes total a revenue increase from all sources of 79.3 million. This approval is less than the 181 million dollar revenue increase (13.3% for electric and 14.2% for gas) that Central Hudson sought approval for. 

The rate hike, which came shortly after a settlement between Central Hudson and the PSC, was finalized in June 2024. The settlement concluded the over two-year investigation into Central Hudson by the PSC that was prompted by thousands of customer complaints filed against the company. The investigation looked into a variety of billing errors made by the company that had a serious impact on the approximately 310,000 customers it serves. Shareholders of Central Hudson will pay $62.59 million with an additional $2 million in stipulated payments if the company fails to deliver meter readings on time. 

The idea of government ownership of a utility may seem off-putting to some voters, but Shrestha argues that the issue is not so black and white. “It is more or less like a regular corporation, but it does not have a profit motive and it does not have shareholders, it’s publicly owned,” she said. “It is, in fact, not a fully governmental entity, it tends to be in the terrain of a quasi-governmental entity, that’s owned by the public but able to function independently outside of the regular business of the State government.” The HVPA will be financially independent from the state, relying on revenues from ratepayers and sound financial decisions to maintain its operations. Electricity will not become free, rather, bills will be paid to this new entity and not to Central Hudson, a company owned by Fortis, a Canadian for-profit corporation.

“We want the energy system to be fair. And we know that we don’t have a lot of time to fix it,” Shrestha told The Oracle. “The only way we can think of to do that is by eliminating the profit motive.” According to Shrestha, with the development of power utilities in the early 1900s, many concepts of distribution were considered and a capitalistic method was contentiously chosen. “The profit motive was inserted…but it was never the definitive answer,” she said.

Shrestha argues not having to be concerned with the distribution of profit to shareholders allows the authority to distribute revenue to areas that the HVPA deems important. Revenue can be directed to fleshing out infrastructure, and hiring more employees while improving the conditions of current employees. Furthermore, the HVPA can direct funds towards clean energy, aligning the authority with New York State’s climate goals by building infrastructure that would otherwise be unprofitable. While this happens, the authority can also cut down on unnecessary infrastructure that was built by Central Hudson solely to justify increasing rates. 

The HVPA act also seeks to make the authority “community stakeholders” within the communities it operates within. “The Authority will put aside a portion of revenue into community controlled trust funds” that will then be spent on projects that local elected officials help determine, according to Shrestha. 

If the HVPA act succeeds, it could set a precedent for public power across the state. Recently, pushes for public power have stalled out in Long Island and Rochester. “We have to show [public power] working once, so that we can convince the rest of the state, and really the rest of the country that it is doable,” said Shrestha. “If we can show one example of it happening at this scale, it adds momentum to the overall movement … we want this to be a good test case, at a bigger scale.”