NYC-WTC_000195490

NYC 9/11 Public Portal Document

include office buildings, hospitals, colleges and universities) and a 3.3 percent rate reduction for residential and small commercial custoiners. The five-year rate plan superceded the prior 1995 rate agreement as of March 31, 1997, and the revenue requirement increase for the third rate year of the 1995 agreement was reversed. In calendar year 2000, Con Ed agreed to further reduce retail electric rates and extend the electric restructuring agreement by three years, to 2005. Effective October 1, 2000, the total reduction in retail distribution rates was 16.8 percent. Also an additional 200 megawatts of capacity became eligible for business rate incentives. The settlement agreement reduced utility tax revenue by $5 million in 2000, and is expected to reduce revenue by $9 million in 2001 and $10 million in 2002.

As a result of the 1996 PSC Competitive Opportunities proceeding, the PSC ordered a complete I restructuring of the/State’s energy utilities to encourage competitive/markets. This agreement originally set the pace of deregulation* in the State with the expectation of full retail access by 2006. The original PSC agreements provided a transition to a competitive retail market through the development of retail access plans, ' a reasonable recovery of strandable costs and the divestiture to unaffiliated third parties of approximately 50 percent of electric generating capacity in the City. The PSC agreements were revised in 2000, allowing for full retail access for all customers as of November 1, 2000. Additionally, Con Ed has completed the process of divesting itself of all its generating capacity. Since the January Financial Plan, estimates of participation in competitive electric and gas retail access have been revised downward. Fewer businesses and consumers are participating in retail access than previously estimated, reducing the estimated revenue loss in the near-term from energy deregulation. The impact of energy deregulation and State utility reform legislation is estimated to reduce utility tax revenue by approximately $2 million in 2001 and 2002 and with increasing public participation in the deregulated market, is expected to reduce revenue by approximately $26 million by 2005.

Forecast: The 2001 utility tax forecast is increased by $20 million to $260 million, a 5.3 percent increase over the prior year. In 2002, utility tax revenue is projected to decline 0.8 percent over 2001 to $258 million. The strong growth forecast for 2001 is attributable to the robust local economic expansion in calendar year 2000 and an increase in regional energy prices, principally caused by diminished OPEC oil production. The decline in 2002 reflects a projected reduction in energy prices Already being seen in the second half of 2001, and slow growth in the local economy. The ECSP is estimated to reduce collections by $32 million per year in 2001 and 2002. In 2003 through 2005, utility tax revenue is forecast to decline an average of 2.4 percent as a result of the increasing public participation in competitive retail access.

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