Utility tax overcharges New Yorkers by $250 million, PSC says not so

This past spring, homeowners complained loudly to us about skyrocketing electric bills

What many utility customers may not have realized was that those expensive electric bills were funnelling tens of millions of dollars into the state's general fund. Since 2009, New York has imposed a 2 percent surcharge on utility bills. The state has pocketed about $2.9 billion so far.

The state Public Service Commission revealed last week that utility customers have been overcharged by about $250 million.

The surcharge to the gross utilities tax was supposed to gradually go away over the next 6 years, but it was never popular with business leaders for with Republican state legislators. So now it will be gone in 3 years.{>}

State Senator John DeFrancisco chairs the powerful Senate Finance Committee. He has joined with other Republican senators in calling for the elimination of the utility tax surcharge. He blames downstate Democrats who took control of both houses of the legislature in 2009 and 2010 for instituting the tax surcharge as a means of raising revenue for the state budget. "There was an insatiable desire to raise money and spend money in those 2 years. There was $14 billion of additional spending and $14 billion of new taxes. That is one of those taxes." DeFrancisco says.

Thanks in part to higher electric bills this past winter,the surcharge collected $250 million more than in was supposed to. Though that money will be eventually refunded to homeowners and businesses, Kvin Schwab of Centerstate CEO says the damage has already been done. "To hear that they're $250 million in collections beyond what they projected for this... That's $250 million that businesses could have used for expansion to create new jobs or frankly become more competitive."

A spokesperson for National Grid says the utility is awaiting word on how the quarter billion dollars will be refunded but he expects it will be reflected in lower electric rates. Because of the huge customer based the refund may not amount to very much on the average homeowner's bill.

The State Public Service Commission has issued a clarification to this story. Our story was based on widely reported comments by a PSC Commissioner who claimed consumers were overcharged by $250 million. The PSC says that statement is incorrect. The official line from the PSC says it was an "inaccurate characterization" based on "misperceptions of accounting information." The commission says the reverse is actually true and the utilities are actually owed more than $49 million.