State to probe utilities' cleanup charges

The state Public Service Commission will scrutinize the way New York utilities have recovered hefty cleanup costs for hundreds of toxic gas-plant sites around the state, officials said.

Utilities already are recovering hundreds of millions of dollars in costs through customers' rates - National Grid customers saw a rate increase just last month tied to the cleanups. Another has been sought. The PSC said it wants to make sure the costs are reasonable and ratepayers aren't being overcharged.

The plants were the primary method for making vaporous gas used in lighting and heating in the era before natural gas. Making gas left behind a toxic legacy of coal tar and plumes that have polluted hundreds of properties, often in prime business and residential districts that once depended on the gas. After insurance and other outside funding sources are exhausted, ratepayers largely have borne the cleanup costs based on the notion that they largely benefited from the plant operations.

There are around 25 such sites on Long Island, and site owner National Grid last year asked the PSC for rate increases related to escalating costs.

The PSC said in a statement this week its review will "address concerns about rising costs of these remediation efforts."

In January, a typical National Grid residential heating customer with a $135 monthly bill saw a $2.15 increase, most of it tied to increased costs for cleaning up the manufactured gas sites. When it bought the former KeySpan in 2007, National Grid won approval from the PSC to place a surcharge on bills to cover the cost of studying and cleaning up more of the legacy gas-making sites.

In addition to that increase, National Grid has filed a separate rate case seeking authority from the PSC to raise the site-cleanup surcharge because costs have gone higher than expected. That proposal calls for a 2.7-percent bill increase, or roughly $60 a year, atop the 1.5 percent, the company has said.

The PSC said it will ask utilities and all other parties to "help develop a comprehensive record as to the current and future scope of the utility remediation programs in the state, the current cost controls utilized by utilities and opportunities to improve such controls, the appropriate allocation of responsibility for such costs, and methods to recover costs determined to be appropriately borne by ratepayers in a way that minimizes their impact."

One local politician applauded the move. Noting he has predicted manufactured gas plant-cleanup costs at more than $1 billion in Suffolk alone, Suffolk Leg. Wayne R. Horsley (D-West Babylon) said, "Kudos to the PSC. They are beginning to listen to ratepayers' concerns."

National Grid spokeswoman Wendy Ladd said in a statement the company "looks forward to participating" in the review and cost-control effort by the PSC. "We welcome a broad discussion among the utilities that have inherited these sites, the PSC staff, the NY State Department of Environmental Conservation and other stakeholders to assure that these sites are addressed in the most cost effective manner possible," she said.