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Electric rate hikes zapped after law passed

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The threat of a spike in electrical rates died a two-pronged death last week.

The Federal Energy Regulatory Commission had come under fire for its January decision to allow city power generators to enact a large increase for their rates during peak electrical times. The agency believed the power companies faced steep property taxes when in actuality they received significant abatements. The FERC ruling could have caused city residents’ electrical rates to shoot up by 12 percent.

Days after the state Legislature passed a law last week to prevent the planned hike from being passed to those residents, FERC undid its decision.

“I’m glad this misguided rate hike has been reversed and proud that the state took swift action to save ratepayers millions of dollars,” state Sen. Michael Gianaris (D-Astoria) said. “Gov. [Andrew] Cuomo deserves thanks for working closely with those of us who were alarmed by the FERC decision to resolve the problem.”

For months lawmakers had been fighting FERC’s ruling, which could raised rates by 17.5 percent for businesses, Gianaris said. His district contains and lies adjacent to several major power-generating plants in Astoria.

FERC’s decision had been opposed by city and state officials. Mayor Michael Bloomberg wrote a letter in March to FERC Chairman John Wellinghoff against the commission’s ruling. About a week later, U.S. Sen. Charles Schumer (D-N.Y.) requested a hearing with Wellinghoff. The decision had also been criticized by utility Con Edison. The electric company supplies power but does not generate it and said the rate would interfere with the company’s attempts to keep its rates low.

Assembly Speaker Sheldon Silver (D-Manhattan) introduced a bill May 6 into the state Assembly that would prevent any of the planned rate increase from FERC to be reflected in consumers’ bills.

State Sen. Andrew Lanza (R-Staten Island) introduced a companion bill in the Senate five days later. The bill also set specific rules for how power-generating companies can receive property tax breaks. It passed in the Assembly with 60 votes and two excused and in the Senate by 33 to one with one abstention.

Cuomo signed the bill May 18, at which time it became a law.

By May 20, FERC had reversed its decision.

Reach reporter Rebecca Henely by e-mail at rhenely@cnglocal.com or by phone at 718-260-4564.

Updated 10:52 am, October 12, 2011
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