New York’s century-old utility regulator has increasingly drifted away from its official goal to “ensure access to safe, reliable utility service at just and reasonable rates.” Now its latest actions would have the agency working outright against that outcome.
Gas, electricity, and other utility companies are regulated by New York’s Public Service Commission (PSC), whose members sign off on utilities’ rates and investigate service disruptions, among other things. The PSC, made up of gubernatorial appointees, in recent years has used its authority increasingly to tax electricity customers and to restructure the state’s electricity markets by requiring utilities to support certain renewable and nuclear plants.
But the PSC took its dabbling in the energy sector to the next level last week when its support staff issued an “energy storage roadmap” to reach levels required by Albany’s 2019 Climate Leadership and Community Protection Act. The PSC is expected to eventually take steps that will involve paying companies to build storage facilities.
Buried among the roadmap’s details is an alarming item: to ensure energy storage projects “create well-paying jobs,” the authors write, any storage project should “pay New York State Prevailing Wage as a programmatic contractual requirement.”
“Prevailing wage” is a misnomer because it’s neither “prevailing” nor just a minimum level of pay. Prevailing wage imposes the pay, benefits, overtime rates and certain other work rules from union contracts—which cover a minority of employees in nearly every trade in nearly every corner of the state—on all workers. Forcing businesses to comply with New York’s “prevailing wage” prevents more efficient non-union competitors from outbidding them, while helping to bail out mismanaged union benefit funds.
Construction unions, desperate to reverse a decades-long decline, have increasingly sought help from state officials to steer work to their members. The state’s archaic “prevailing wage” law has been central to that, and it appears folks working for the PSC have gotten the message.
Importantly, any conditions the PSC adds to its eventual energy-storage mandate will increase costs. That runs exactly counter to its mandate to pursue “just and reasonable” rates.
The politicization of the PSC is nothing new: Governors Pataki, Spitzer, and Paterson all stretched its mandate in order to collect revenue from ratepayers and spend it on preferred energy-related projects.
Governor Andrew Cuomo took particularly notable steps to transform the PSC—and repeatedly used the agency as a parking lot for political appointees. James Alesi, a former state senator best known for suing the owners of a house he was trespassing in, became a PSC commissioner despite having no experience or education in energy policy, engineering, or any other utility-related field. In another case, Cuomo appointed Rory Lancman, a former state assemblyman, to a senior PSC post for which he lacked the qualifications to be his own assistant (after Lancman had stepped aside to help Queens Democrats defeat a socialist-backed district attorney candidate).
Still, the idea that the PSC would artificially drive electricity costs higher to benefit a political constituency represents a new low. It’s one thing for an agency to deviate from its mission; it’s another to knowingly work against it.