State PSC staff says Richards' severance was too high By Todd Grady Staff Writer (January 16, 2004) — The severance package paid to former Rochester Gas and Electric Corp. Chairman Thomas S. Richards is among the items being disputed in the utility’s request to impose rate increases. RG&E has asked the state Public Service Commission to allow it to raise average electric rates by 15 percent and natural gas rates by 7.4 percent. The utility says it needs an additional $122 million from ratepayers to cover business costs that have increased while average electric and gas rates have been flat or declining. Among those costs: $4.1 million of the $10.5 million severance package paid to Richards, who also served as president and chief executive officer, when he resigned under pressure in June 2002, hours after RG&E became part of Energy East Corp. in a merger. PSC staff has recommended the commission reject the rate increase request, saying the utility has overstated its financial problems. The staff agreed to allow RG&E to recover $6.4 million of Richards’ severance through rates over five years, but balked at the remaining $4.1 million, calling it “unexpectedly high severance pay.” Edward Collins, spokesman for the PSC, said “there’s nothing unusual about” utilities asking to recover severance payments from ratepayers. “There are savings to ratepayers, so when companies offer to achieve economies and efficiencies (through a smaller work force) on behalf of ratepayers, the companies can request to reflect those efforts in rates,” he said. Richards could not be reached for comment. In an interview Wednesday, RG&E President James Laurito called the issue regarding Richards’ compensation a “minuscule event” in the pending rate case. “You can go into the filings and you can pull out those incremental details, but that’s not the story,” Laurito said. “The story is really rising costs, declining rates and that having a negative impact on our ability to supply safe, secure and reliable service. Those smaller things really aren’t what make the difference in the amount of the request.” The PSC’s staff argues that $4.1 million of Richards’ severance should be excluded because RG&E failed to provide records that Richards’ termination was “for good cause.” PSC also said that it attempted to determine why Richards left, but RG&E replied that “it does not possess sufficient information to answer the questions.” However in a Securities and Exchange Commission filing, Energy East later said the “termination will be treated as a termination by the executive for good reason.” Richards was entitled to a severance package if he was terminated for “good reason, ”according to the merger agreement between RGS and Energy East that was approved by shareholders of both companies. The severance package was worth more than $4.25 million, according to an Energy East filing with the Securities and Exchange Commission in August of 2002. Energy East made a later filing with the SEC in February that disclosed Richards exercised options on 195,358 shares of RGS, valued at about $3.6 million. Richards’ package also included $2.3 million in excise taxes RG&E’s auditors determined the utility was responsible for in connection with the severance, according to a recent PSC filing. Among other issues the PSC’s staff is disputing: The utility’s request to receive a $10 million incentive for maximizing the value of its Robert E. Ginna power plant in a proposed deal to sell it to Constellation Generation Group for $422.6 million. The incentive would come out of sale proceeds, leaving less of the profit for ratepayers. RG&E’s request to reinstate its use of a “weather normalization adjustment” clause. The clause would allow RG&E to even out its revenue flow by raising monthly bills between October and May if the weather is warmer than usual, while crediting customers’ bills during colder-than-normal months. The staff opposes the clause because it says RG&E failed to get input from customers. On Thursday, RG&E filed its rebuttal to the PSC staff report, and both sides’ arguments will now be presented to an administration law judge, who will issue his report to the full commission. TGRADY@DemocratandChronicle.com
RG&E rebuts PSC view on rate hike Company argues that denial could lead to layoffs, hurt service. By Todd Grady Staff Writer (January 17, 2004) — Rochester Gas and Electric Corp. has told state regulators that it would have to lay off hundreds of workers and dramatically reduce investments in infrastructure if its request to raise electric and natural gas rates is denied. The utility made that statement in an overview submitted as part of hundreds of pages of testimony filed late Thursday with the state Public Service Commission. The filing is RG&E’s rebuttal to a recommendation by PSC staff that the rate increases by rejected, and rates be frozen instead. That rebuttal, plus the staff report, go to an administrative law judge, who will make a report to the full PSC, which must ultimately rule on the request. Hearings on the matter begin Feb. 4 in Albany; a public hearing will be scheduled at a later date. A final decision could take several months. “Our testimony is evidence of the continued trend the company faces of declining rates and increasing costs which will negatively impact our ability to provide safe, secure and reliable energy delivery services,” RGE said in a separate statement. The utility, which has 355,000 electric and 291,000 natural gas customers, said it would comment further after all its testimony is filed, which should be by Sunday. RG&E has asked the PSC for permission to raise average residential electric rates by 15 percent and average natural gas rates by 7.4 percent. The utility said the increase is needed to offset rising costs, including health care premiums for its workers, and to make up for electric and gas rates that on average have been flat or declining since 1996. RG&E called the PSC staff’s findings “part of a general pattern of extreme and adverse positions, which started in the last rate proceeding.” The utility also argued that freezing rates would cut shareholders’ return to 4 percent, lower than the 9.96 percent rate of return that the commission earlier authorized. In its current request, RG&E also argues that its 2004 earnings would be further reduced by $4 million. The utility projects its 2003 earnings to be $25 million to $35 million, down from $46 million in 2002, and way below earnings of $89 million to $92 million annually from 1996 through 2000. PSC staff was incorrect in alleging that RG&E “dramatically overstated’’ its financial problems, RG&E argues, because those findings are based on an inaccurate adjustment of partial 2003 earnings as reported to the Securities and Exchange Commission. Edward Collins, spokesman for the PSC, said he could not comment on RG&E’s rebuttal testimony. TGRADY@DemocratandChronicle.com
Schumer seeks gas price probe Todd Grady Staff writer (January 13, 2004) — Sen. Charles Schumer is calling for a national investigation of the price surge of natural gas. The increase in prices will result in an average homeowner in the Rochester area paying $128 more to heat his or her home this year than last, according to a survey Schumer’s office conducted. During a news conference Monday at the Irondequoit home of Gerry and Regina Kehoe, Schumer, D-N.Y., called for an investigation by the Federal Trade Commission and Federal Energy Regulatory Commission. He also promised a hearing on the matter when Congress returns from recess later this month. Schumer is a member of the Senate Judiciary Committee. The Kehoes are paying about 17 percent more, or an additional $20 a month, this winter to heat their 1,800-square-foot home than they did last year. “God knows what’s going to happen next month,” Gerry Kehoe said. The price of natural gas on the New York Mercantile Exchange is up 42 percent since the end of October, calling into question possible price manipulation and price gouging, Schumer said. “Are we sure that has happened?” he asked, citing adequate natural gas supplies. “No, but that is the only logical explanation.” He added that natural gas customers could get a refund or reduced prices next winter heating season from anyone found to be manipulating market prices or gouging consumers. Last month, state Public Service Commission Chairman William Flynn asked the chairman of the New York Mercantile Exchange, Vincent Viola, to investigate the most recent price increases. The PSC determines gas delivery rates for the state’s regulated utilities. However, utilities say they do not make money from selling natural gas to customers, only by delivering it to them. They also say they try to insulate customers from price spikes during winter by buying natural gas in advance and storing it. “Are we blaming RG&E?” asked Schumer, referring to the local utility, Rochester Gas and Electric Corp. “Absolutely not. This is a phenomenon that’s occurring throughout the entire Northeast.” Dick Marion, spokesman for RG&E, said the utility backs Schumer’s efforts and others. “We fully support the continued vigorous oversight of the gas commodity market,” he said. RG&E has a proposal before the state Public Service Commission to boost average natural gas rates 7.4 percent and average electricity rates 15 percent. If approved, the increases would boost bills for average residential natural gas and electricity customers by more than $15 a month. RG&E has 355,000 electricity customers and 291,000 natural gas customers. The surge in the wholesale price of natural gas has particularly affected the Rochester area, because 95 percent of homes in Monroe County are heated with natural gas; statewide, the average is closer to 50 percent. “By the end of the year we’re probably looking at about $180 to $200 extra per year, and it’s got to come from somewhere,” said Gerry Kehoe. “It’s difficult.” TGRADY@DemocratandChronicle.com
Copy of an e-mail sent to Jim Laurito on 01/15/04 To: webmaster@rge.com From: Dynamic RecordingSubject: For Jim Laurito CC: tgrady@DemocratandChronicle.com, schumer@senate.gov, , residential@nyserda.org, themail@rochester-citynews.com, news@wokr13.tv, crmayor@cityofrochester.gov, "charles straka" , secretary@dps.state.ny.us, newsroom@wroctv.com, foxrochester@foxrochester.com, dceditpage@DemocratandChronicle.com, morellj@assembly.state.ny.us, web-master@energyeast.com, countyexecutive@monroecounty.gov, news@10nbc.com, "Our job, we see it as reliability. That’s what customers deserve, and that’s what we’re here to provide." --------------------------------------------------------- Jim, RG&E reliability is no where near as good as it was 10 years ago. Believe me I know both at my business and at my home. Tell Enron East that instead of a rate increase what they need is a corporate pay decrease for all EE,RGS, RG&E management starting with von Schack ! And it would be a good idea to make Tom Richards give his $10.4 million payout back ! http://dynrec.com/rge/ And it would also help if they didn't give Ginna Station away. I read this(see article below) that the RG&E sold the plant for only 220.6 million ? That seems like a VERY good deal for Constellation but not for the EE/RGS/RG$E stockholders. The new steam generators were around 115 mil $422.6 million - $202 million = $220.6 milliom - $115 million steam generator upgrade = $107.6 million = A very bad deal for stockholders and customers ! http://dynrec.com/rge/ginnasale.html Democrat and Chronicle ... Ginna generates. Ginna’s two steam generators were replaced in 1996, a $115 million project to refurbish the plant. But Judson ... B&W and ETARCO LTD. To Ship Two Steam Generators ... This shipment is part of a US$40 million contract between B&W and RG&E to replace two 23-year-old steam generators in their Ginna power plant. ... www.babcock.com/pgg/pr/ginna.html - 4k - Cached - Similar pages [ More results from www.babcock.com ] ========================================================== Rochester, NY - November 25, 2003 – RG&E (Rochester Gas and Electric Corporation) a utility subsidiary of Energy East Corporation [NYSE:EAS] announced today that it has signed an agreement to sell the R. E. Ginna Nuclear Generating Station to Constellation Generation Group LLC for $422.6 million (including nuclear fuel). Dave Kaspersin Former Foreman Electric Substations Rochester Gas and Electric
CORPORATE DOWNSIZING
Click For More on The Proposed Rate Increase !
Click For More on Voltage Problems.
Click For More on Demand Metering.
Feds Find Power Manipulation in Calif.
400,000 to Keep Russell Station on line - - -
$75 Million to close it down - - -Enron East/RGS/RG$E Give Ginna Station Away !