Major Rate Case Process Overview

The New York State Public Service Commission (Commission) is responsible for establishing delivery rates for electric, natural gas, private water, and steam service provided by regulated utilities. The delivery rates include all of the costs that the utility incurs to own, operate, and maintain its system to provide the customer with utility service. 

The commodity rate is not regulated by the Commission and is the cost of electricity or gas that is set by the market, not a regulator.

Delivery rates are established through a formal legal process referred to as a rate case. A rate case begins when a utility requests to change the delivery rates it charges customers. The utility has the responsibility of demonstrating its need to increase rates and it files expert testimony describing why the rate increases are necessary. 

Other persons and entities also may participate in a rate case by requesting to intervene as a party. A party is a formal participant in the case and is required to present their case through filing expert testimony. The Department of Public Service (DPS) always participates as a party in rate cases and designates a trial staff team made up of subject matter experts that is responsible for reviewing a utility’s entire rate filing, preparing expert testimony in response to the request, and representing the public interest. Other persons and entities that often participate in rate cases include municipalities, large utility customers, and groups with special interests (environmental, community, etc.).

Rate cases proceed in a public and open process

The review process is open to stakeholders, including the public. All public documents filed by the utility and all parties to the case are available for review on the DPS Document and Matter Management System. Members of the public may comment on a utility’s rate request by filing comments or making a statement at a public hearing.

A rate case may proceed either through a litigated process or may follow a settlement track.

A litigated rate process is generally completed within 11 months of the utility’s request to increase its delivery rates.

Months 1-4

• An Administrative Law Judge is assigned to preside over the proceeding. In months 1-4 the judge may establish a schedule for the case including setting dates for the filing of testimony and the evidentiary hearing, make determinations about party status and other procedural matters, and hold conferences. The judge may also hold a public statement hearing (this type of hearing may also be held later in the process). A public statement hearing is designed to obtain input from the general public. The format is designed for the taking of unsworn oral statements, although written statements ordinarily may also be submitted. Parties to the proceeding are not permitted to cross examine persons making statements at a public statement hearing.
• The Department of Public Service assigns a trial staff team that is charged with the responsibility to analyze the utility rate filing and represent the public interest. The team includes lawyers, accountants, engineers, economists, financial analysts, and consumer service specialists who audit and investigate the company’s proposals. All parties to the case engage in “discovery.” Discovery is a pre-trial process used by parties to obtain facts and information about the case from other parties. The most common discovery device is the written interrogatory, but oral depositions and other devices are also available.

Months 5-7 

• Parties file written expert direct testimony describing their positions in response to the utility’s filing.
• Parties file written rebuttal testimony responding to other parties’ initial testimony.
• The judge presides over an evidentiary hearing. Trial-type evidentiary hearings are designed to obtain sworn testimony from witnesses (usually expert witnesses) that are subject to cross examination by the parties to the proceeding. The format is designed like a trial, and it is recommended that the participants be assisted by legal counsel, although the assistance of legal counsel is not mandatory. Usually, the written direct and rebuttal testimony and exhibits filed by the parties are entered into the case record and the focus of the hearing is on the cross examination of witnesses. Any party that filed testimony must make their witness available for cross examination by other parties. A court reporter prepares a transcript of the evidentiary hearing and, when available, it is posted to the Department of Public Service website.
• After the evidentiary hearing, the judge establishes a schedule for the filing of legal briefs. Through the briefs, the parties have the opportunity to argue their positions using the evidence developed during the evidentiary hearing.

Months 7-9

• Parties file initial and reply briefs.
• The judge may issue a Recommended Decision. A Recommended Decision provides the judge’s recommendations to the final decision-maker, the Commission, about how they would resolve the issues that are in dispute in the case based on the evidence developed at the evidentiary hearing.

Months 9-11

• If a Recommended Decision is issued, parties are generally given the opportunity to file a brief on exceptions. In a brief on exceptions, parties identify if they believe any of the recommendations made by the judge is in error and must state why it believes the recommendation is mistaken, providing support for their positions by references to evidence in the record.
• The Commission reviews the record.
• The Commission makes a decision about the rate request at a public session. During the session the Commission may discuss aspects of the case and votes on whether to adopt a written order that resolves all outstanding issues and matters necessary to determine the utility’s delivery rates.
• Where the Commission sets rates in a litigated process, it is establishing the rates for the rate year. Those rates stay in place until the utility files another case to change its rates.

If a rate case follows a settlement track, the initial phases of the case will proceed as described above.  After written direct and rebuttal testimony has been filed, if the parties think that one or more issues may be settled, the parties may enter into settlement negotiations.

Before the parties enter into settlement discussion, the utility must file with the Secretary to the Commission a notice of impending settlement negotiations. The notice must describe the issues that may be settled, the parties to the negotiations, and certification that the utility has or will notify the appropriate persons or parties of the negotiations to permit reasonable time to participate. The judge will review the notice to ensure that all persons who reasonably should have been notified of the negotiations have been afforded reasonable opportunity to participate and may direct corrective action.

Settlement negotiations are confidential. No party participating in settlement negotiations may reveal the discussion between parties. If any party violates the settlement rules, the judge may impose sanctions, including but not limited to exclusion from negotiations or the case.

Parties may request the appointment of a settlement judge to assist the parties during negotiations. If assigned, the settlement judge is required to maintain the confidentiality of settlement. The judge presiding over the case cannot act as the settlement judge.

If the parties to a case reach a negotiated agreement, the parties will write their agreements in a document called a Joint Proposal. This document describes how the signing parties propose that the Commission decides the case.

Often in rate cases, parties may propose how the Commission should set rates for multiple years.

If a Joint Proposal is filed by parties to a rate case, the judge will establish a process for reviewing the Joint Proposal. Typically, the process includes allowing the parties to file briefs supporting or opposing the Joint Proposal, holding an evidentiary hearing, and allowing additional briefing following the evidentiary hearing.

The Commission then reviews the record. The Commission makes a decision about the Joint Proposal and rate request at a public session. During the session the Commission may discuss aspects of the case and votes on whether to adopt a written order that resolves all outstanding issues and matters necessary to determine the utility’s delivery rates.

If the Commission approves a Joint Proposal, it may be establishing rates for multiple years. The rates established in the final year of the rate plan stay in place until the utility files another case to change its rates.