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Central Hudson Is Broken. Can New York Fix It?

Legislators are investigating. Advocates want to put utilities in public hands. People behind on their utility bills are in trouble. Regulators have a lot of power to act—if they choose to.

An activist holds up a hand-lettered sign that reads "Public Power Now."
The May 13 “Make Shareholders Pay!” rally in uptown Kingston drew about 50 people to urge cancellation of customer arrears at Central Hudson’s expense and a transition to publicly owned utilities.
Steven Yoder
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Tom Pfeffer thought it would be simple. He owns a property on East Union Street in Kingston, an old firehouse, where he keeps the heat at 50 degrees. Normally his Central Hudson bill runs $5 to $150 a month or so. But his statement last September showed he owed about $9,300, he says.

He soon found the mistake: the statement’s numbers show he should have been charged for 180 units of natural gas but was getting billed for 10,180 units. So he called Central Hudson twice, and both times customer service took his information and promised someone would call back, he says. He followed up by sending in the actual meter readings. But the company never did, he says. Instead in January, he got another bill, this one for $9,631. Now he’s filed a complaint with the state’s Department of Public Service—the staff arm of the Public Service Commission, which regulates utilities in New York. 

“Nobody from the company has said, ‘This is really unfortunate. We’ll take care of it,’” says Pfeffer. He worries about the people without the time to scrutinize their bills who may have missed less obvious overcharges. 

Tom Pfeffer’s $9,631 Central Hudson statement showing the extra 10,000 units of gas he was billed. Photo courtesy of Tom Pfeffer.

Central Hudson says its billing problems started September 1 of last year, when it went live with a new customer information system. The previous one, 40 years old and run on a mainframe, couldn’t handle the utility’s growing number of customers getting their power through alternative systems like rooftop solar or community choice aggregation. The company had been calculating those bills manually, which was unsustainable as more customers went solar, says company spokesperson Joseph Jenkins.  

Designing the new system took several years. Jenkins says Central Hudson beta tested it in 2019 and 2020. But when the company took it live last September, problems showed up that hadn’t surfaced in the beta test. Jenkins says when they spotted those, they put “manual holds” on the affected accounts.

For many, mayhem ensued: no bills for months, charges that were multiples of what they’d normally owe, hours on hold with customer service. About 20,500 customers were affected, Jenkins says. 

The resulting public outrage isn’t on the scale of the anger in California at Pacific Gas and Electric for its misdeeds—like diverting ratepayer money it was supposed to use to bury overhead lines as an anti-wildfire measure. But its tone and intensity are of a piece, judging from the 4,000 comments and counting that have flooded into the state Public Service Commission, and the language ratepayers are using about the company in public forums like one held in Kingston on May 3.

“This is the worst systemic billing situation our organization has ever seen,” says Laurie Wheelock of the Public Utility Law Project, a New York utility customer advocate founded in 1981.  “It’s gotten to the point where I can’t even look at a Central Hudson bill anymore and go through our internal protocols to determine if there’s an issue, because everything seems off.”

Jenkins declined to disclose the names of the software contractors who built the new system and wouldn’t comment on any actions the company is taking against those responsible.

The fiasco seems bound to bring changes for Central Hudson, and maybe other New York utilities. But it’s not yet clear how far state regulators will go in pursuit of reform. The coming months will be a test of whether a New York utility can be held accountable for creating financial emergencies for customers, and whether a broader overhaul might be on the way.

“I’m not eating, I’m not sleeping, I’m having nightmares”.

It’s not the first time customers have suffered the consequences of a utility billing snafu. After California’s PG&E updated its billing system in 1999, more than 200,000 customers got delayed or estimated statements, forcing them to pay for several months of energy at once. In 2008,  Utah’s Questar Gas backbilled 500 of its customers for more than $500,000—in amounts between $200 and $2,200—after the utility installed faulty drive-by meter readers that spit out inaccurate data. 

Amounts like those pale next to what Kymara Lonergan says she’s up against. Lonergan, 63, owns the 34-acre Thunder Horse Hollow Farm in Ulster Park, south of Kingston. She sells Christmas trees and spices that she cultivates, raises horses and emus, and serves as vice president of the American Emu Association. She uses electric heat to keep the horses’ watering troughs and buckets warm in the winter, and with that and the electric fencing, her Central Hudson bill normally runs about $900 a month in the winter, she says. 

But this January her bill spiked to $3,000, even though two of her horses had died and she was operating two fewer heated troughs. In March it was $4,000. Twice she called customer service to find out what was going on and was told a supervisor would call back. No one did, so she paid what she could in the months of January through March—maybe $600 each month, she thinks—while she waited to hear. After still getting no news, over Easter weekend she called to check on her bill. A customer rep told her she now owes $16,000. The person couldn’t offer answers but did suggest she take a deep breath, go outside, and enjoy nature.

If that’s what she has to pay, Lonergan says she’ll lose her farm. She has a big photo of her family on one barn wall. “All I can think of when I look at that picture is how miserably I have failed by not researching or thinking or finding out that this could happen and I could lose everything,” she says. She started feeling suicidal after that call. “I’m not eating, I’m not sleeping, I’m having nightmares about it. It’s really bad,” Lonergan says. Several programs are out there that help customers with utility bills, but she says her income isn’t low enough to qualify.

Kymara Lonergan and a volunteer with two of her mini-horses. Central Hudson says she owes $16,000 in electric bills. Photo by Steven Yoder.

Lonergan is hardly alone. As of March, more than 53,000 other Central Hudson customers were behind on their bills by more than 60 days. A pandemic moratorium preventing utilities from terminating service to those in arrears ended last December, and across the state they’ve started threatening to shut off customers who are behind.

Will Central Hudson be held accountable?

If area leaders and activists have their way, Judgment Day is coming for Central Hudson, not customers. In March, the New York State Public Service Commission (PSC) launched a staff investigation of the billing disaster. In response to questions from The River, James Denn, a spokesperson for the state’s Department of Public Service, replied by email that no date has been set for completing either the investigation or a separate management audit of the company. “Ensuring that customer bills are sent out timely and accurately is the singular responsibility of the utility, and the Department will hold Central Hudson accountable for any billing errors while ensuring customers are held harmless,” he wrote.

In the California and Utah cases, regulators forced the companies to write off lost revenue that resulted from their own faulty systems. Under California law, if a utility undercharges a customer because of a billing or meter error, the company can backbill the customer for only up to three months of undercharges. So, in 2007, the state’s Public Utilities Commission determined that PG&E violated state billing rules by backbilling outside that window and ordered the company to refund all amounts that it charged beyond it—about $35 million total. And it ordered that PG&E shareholders pay the refunds and not pass the cost on to ratepayers.

Similarly in Utah, where utilities may backbill customers for no more than six months, the company had to forgo $480,000, and the Utah Public Service Commission forbade the company from passing that cost onto ratepayers. 

The issues in those cases are different from Central Hudson’s, so it’s unclear that New York’s PSC would use any of that as precedent. But they show the power regulators might have to hold it accountable. “Across the country, the commissions tend to have a fairly significant authority on managing the bill collection and payment process between utility and customer, ” says Odogwu Obi Linton, chair of the Consumers and the Public Interest Committee at the National Association of Regulatory Utility Commissioners. “Commissions can do anything from require extended payment options to telling the utility company that certain portions of [bills] are not authorized for collection.” 

Area leaders are demanding swift action by Central Hudson and the PSC. In March, state Senator James Skoufis, who represents parts of three Hudson Valley counties, announced a Senate investigation into the billing debacle. On April 13, the state Senate Committee on Investigations and Government Operations, which Skoufis chairs, sent Central Hudson a list of questions about the failures of its new system, including whether it used utility industry best practices in installing it, and whether the company had a backup plan in place in case things went wrong. Committee investigators are combing through the hundreds of pages of documents they’ve gotten back, and the committee doesn’t yet have a firm date for releasing its final report, Skoufis spokesperson Emma Fuentes told The River by email.

On May 12, Ulster County executive Pat Ryan, state Senator Michelle Hinchey, and state Assemblymember Kevin Cahill sent a letter to Central Hudson with a list of demands, including for the company to halt service terminations through May 1, 2023 and zero out balances for customers who don’t get corrected bills by June 30. 

Five days later, the three officials sent an even more forceful letter to the PSC asking it to finish its investigation by October 1, appoint an independent monitor to oversee the company until the billing problems are resolved, suspend a rate increase set to go into effect in July, and take other steps. To help customers immediately, they’re also asking the PSC to order Central Hudson to offer customers whose bills are in arrears a $0 down/$10 month deferred payment plan and to reverse late fees and negative credit reports, among other actions. 

Hinchey also introduced a bill last December that, if passed, would mostly outlaw estimated billing, a frequent target of customer outrage in community forums and comments. Customers were complaining to Hinchey about Central Hudson’s estimates even before the billing disaster, and she says the company uses an estimation formula no one has seen; the company claims their algorithm is proprietary. The bill would require all utilities statewide to provide actual meter readings except in extraordinary circumstances, like a locked gate or snowstorm, Hinchey tells The River. And the PSC would have to develop a “model procedure” for calculating estimated bills that all utilities must use when they do estimate.

Central Hudson told Hinchey that the extra expense of providing actual readings would be nominal, and that it wouldn’t seek to pass any of those costs on to ratepayers, she says. 

As for Central Hudson, the utility is “very much looking forward to working with Senator Hinchey and any sponsors of the bill to make sure that it proves to be a successful one,” Jenkins says. “We want to work with them in the best way that we can.”

A push for public power

The calls to hold Central Hudson accountable are music to area activists’ ears, but they want to go farther: a change in who runs utilities in the first place. “Public utilities are a public good,” says Susan Gillespie, board president at Communities for Local Power, which advocates for transitioning to a locally based, clean energy economy. “We think they should be publicly owned and managed.” 

At a May 13 “Make Shareholders Pay!” rally in uptown Kingston that Gillespie’s group organized, speakers called for change, including enactment of the Build Public Renewables Act. If passed, the bill would let the state-owned New York Power Authority expand its renewable power-generating capacity beyond the six generation projects it’s limited to now, and phase out its nonrenewable plants. “We want Central Hudson to be better, but let’s also push for a world in which Central Hudson does not exist,” said speaker Daniel Atonna of the advocacy group For the Many.

Local anger at the area’s private power producers got a boost from Columbia Utilities’ recent move to cancel a contract with a community choice aggregation program that’s serving 10 municipalities in the area—a move Columbia blames on Central Hudson’s billing problems. On April 19, Columbia, a privately owned energy supply company, asked the PSC for permission to cancel its agreement to supply renewable power at a previously agreed price to Joule Community Power, the CCA’s administrator. 

If Columbia gets its way, ratepayers who are currently saving money through Joule’s CCA programs will be put back onto Central Hudson’s regular electric rates, which have spiked since the three-year CCA agreement was signed. Joule is moving forward with a lawsuit against Columbia, and some local towns in the CCA program are joining in.

Utility malfeasance is sometimes an opportunity for public power advocates. Last summer, PG&E’s problems prompted San Francisco to move toward taking over the utility’s city-based electric facilities and running the grid itself. In 2003, in the Florida city of Winter Park, citizens voted to buy out its investor-owned utility after chronic reliability problems and deep customer dissatisfaction. Winter Park now claims the city is on its way to putting its entire grid underground, while keeping rates lower than the Florida average. 

More immediately, PULP’s Wheelock hopes to convince consumers to show up at rate case hearings held by the PSC, in which utilities negotiate with regulators to raise their rates. For years, those hearings have been attended by utilities, associations that represent big business, PULP, and few others, she says. “To have actual humans, individuals, ratepayers in the room is really important so that the administrative law judges can hear, and the Department of Public Service and utilities can hear, what’s happening on the ground,” Wheelock says.

Jenkins told The River on May 13 that the company is “down to just a few hundred customers who have not had their accounts brought up to current at this point.” Meanwhile, customer complaints about Central Hudson keep pouring into the Department of Public Service—more than a hundred between May 11 and 17 alone.  

For Lonergan, nothing will be resolved until she finds out what she actually owes Central Hudson. “It’s like the sword of Damocles is hanging over my life,” she says.