New York PSC Will Conduct Audit on Utility Company Payment Standards

Governor Kathy Hochul has announced that at her direction the New York State Public Service Commission (PSC) has initiated a comprehensive review of utility management compensation.

The audit, which will include Central Hudson and NYSEG, will focus on compensation for non-union utility management employees statewide and the results will inform future rate cases to protect residents from unfair rate hikes. Numerous recent management and operations audits of large, investor-owned electric and gas utilities have highlighted meaningful concerns with how utilities administer their programs.

“This audit will ensure that utility compensation structures are working for New Yorkers, not rewarding expected behavior,” Hochul said. “We will hold utilities accountable and ensure their focus is where it should be: delivering reliable, affordable, and high-quality service. At a time when families are facing rising costs, we are taking decisive action to ensure every dollar that customers pay is justified and that utility companies are prioritizing the needs of the people they serve.”

In a recent audit of Central Hudson, the auditor concluded their bonus structure rewarded financial performance but only set reliability and service quality metrics at the bare minimum. In the case of NYSEG and RG&E, auditors had to recommend that the companies set performance standards that encourage service improvements. In other recent audits, including of Con Edison, O&R, and National Grid, auditors found that companies should update their compensation structures to focus on ratepayer-centric goals.

The audit will examine compensation practices at 13 major utilities, including Con Edison, National Grid, Central Hudson, NYSEG, RG&E, and Veolia Water New York. Investor-owned electric and gas utilities have a total of 12.4 million customers in New York State. Findings from the audit will influence future rate cases, providing the PSC with insights into best practices and potential cost-saving measures.