Don’t Let Short-Term Politics Risk Reliability in New York
The energy grid is the most important machine in America. It keeps our lights on, phones charged, stores open, and society moving so reliably that we don’t think twice about flipping a switch or plugging into an outlet.
EEI and our member electric companies take seriously our responsibility to support and maintain the grid, powering the lives of 84 percent of New Yorkers and nearly 250 million customers nationwide.
So do the officials on the New York State Public Service Commission, who set New York’s electricity rates and help ensure customers have reliable access to energy delivered as affordably as possible.
EEI and our members support Governor Hochul’s efforts to implement an “all-of-the-above” energy plan while balancing customer costs.
However, many of the current legislative budget proposals aimed at utilities and the regulatory process would politicize how rates are set and introduce costly and unnecessary barriers to how electric companies invest in the grid.
As written, proposed changes to our industry’s financing model in New York would impede investments in the grid, ultimately raising prices for New Yorkers and eroding the reliability and resilience of the broader system.
Promoting Objectivity, Protecting Customers
Our industry is among the most capital-intensive and closely regulated in the country, and many people forget that electricity rates are set by public service commissions following open and transparent rate reviews.
These reviews give a range of stakeholders an opportunity to weigh in on rate decisions, including companies, state regulators, consumer advocates, local elected officials, customers, labor representatives, and environmental groups.
Through this process, commissions set a limit on the maximum profit that a company has the opportunity to earn, monitor financial disclosures, scrutinize planned infrastructure investments, and evaluate the appropriate return on equity needed to attract capital for those investments. They ensure any company spending that’s needed to support reliability is carried out transparently and prudently—and that delivery rates remain reasonable for customers.
Importantly, these decisions are made by professionals who understand that a sector as diverse as ours—which accounts for 5 percent of U.S. GDP and powers the other 95 percent—is nuanced.
Proposed caps on returns make for good campaign soundbites but risk further complicating an already highly technical ratemaking process, increasing risks to the grid and deteriorating regulatory objectivity. They could also upend electric companies’ unique ability to raise and deploy low-cost capital—which would effectively raise customers’ long-term energy costs.
And make no mistake, we need to finance projects that get more steel in the ground and electrons on the grid. At the beginning of the year, 48 projects totaling 11 gigawatts of new energy demand sat in the New York Independent System Operator’s interconnection queue. Those sorts of projects bring new jobs, tax revenues, and grid upgrades to the state. They will also require enough energy to power several million homes.
EEI’s members will invest $1.1 trillion through 2029 to support these sorts of projects and make the grid smarter and stronger—all while ensuring America and New York are home to the jobs, industries, and technologies of tomorrow.
We finance these grid investments through equity markets, funding large-scale projects efficiently and at low rates of interest. This model lets us upgrade and build out the grid while shielding customers from unnecessary risk and minimally impacting their bills. Proposed caps on returns for our members significantly curtail our ability to do that.
Ultimately, from a policy standpoint, we can’t afford to introduce process delays that compound pressure on the system over time. When upgrades are postponed, costs do not disappear. They resurface as emergency repairs, higher operating expenses, and avoidable service disruptions.
These unplanned costs are harder to manage and more burdensome for customers than disciplined, strategic, forward‑looking investments approved through the regulatory process. Sustained underinvestment trades predictable, measured spending for reactive decisions that increase long‑term costs.
Affordability is a national issue without easy solutions, impacting everything from health care costs to groceries to prices at the pump. Although a recent Lawrence Berkeley National Labs study found that, relative to total household spending, Americans’ inflation-adjusted spending on electricity is near an all-time low, we are committed to keeping prices as low as possible for those who depend on us while delivering energy that is safe, reliable, and resilient. Our companies thrive when our customers thrive.
We look forward to continuing our work with New York leaders to address customer affordability—and to ensure New York customers have a resilient, reliable, and modern energy grid.
We believe the affordability conversation in New York should start there.
Drew Maloney
President and CEO
Edison Electric Institute
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