Upstate Utilities Push 26 Percent Rate Hikes as Grid Upgrades Promise Jobs and Sticker Shock

New Yorkers face steep proposed hikes in electricity and gas bills, reflecting the price of long-delayed upgrades to an ageing grid and stirring a broader debate over energy affordability, decarbonisation, and utility regulation.

When bills land with a thud, New Yorkers typically take notice. This summer, more than a million energy customers upstate braced themselves as Rochester Gas & Electric (RG&E) and New York State Electric & Gas (NYSEG) tabled proposals that would push electricity rates by as much as 26% and gas by 22%—leaving households facing annual increases of up to $600. These are not mere rounding errors: to some, $33 extra for electricity and nearly $19 for gas each month approaches the cost of filling the fridge.

The companies, both subsidiaries of Avangrid, argue that the price hikes are necessary to finance long-postponed investments. Their rationale is familiar: the ageing infrastructure is increasingly rickety, and more New Yorkers than ever demand reliable, modern service. Both RG&E and NYSEG want to boost resources for upgrades, peppering testimony with references to grid resilience, animal guards, and 1,100 new local jobs. If the hikes are approved by the state’s Public Service Commission, the firms’ collective income could swell by $16.2m thanks to a desired jump in their allowed rate of return from 9.2% to 10%.

As is customary when wallets are on the line, protest was swift and vocal. At a Rochester Public Hall hearing, dozens of residents—and a multicoloured jumble of advocates—denounced the move. Many voiced the perennial worry that for the elderly, the working poor, and families on the edge, utility costs are not just another monthly bill but a matter of economic survival. “If we want to remain a state of opportunity, these increases have to be turned back,” thundered one speaker.

Bill increases of such magnitude matter far beyond upstate zip codes. While Manhattanites and denizens of the outer boroughs have yet to face a similar sticker shock (Con Edison’s next review looms in 2025), the structural challenges are the same. New York’s energy grid—fragmented, creaking, and increasingly battered by extreme weather—needs a thorough overhaul estimated to cost billions. In an era of electrifying everything, from buses to stoves, that price is climbing by the month.

The discomfort is hardly confined to bill-payers. Politicians, including Rochester’s council president Miguel Melendez, have urged a pause, arguing that fairness and innovation—not frantic rate hikes—should guide the transition to greener energy. Social groups demand more transparency from Avangrid and its ilk, many implying that regulated monopolies should tread more carefully (and less profitably) when passing costs on to the public.

The plan, unsurprisingly, blends the familiar cocktail of local jobs and climate credentials. Avangrid touts wildlife-friendly upgrades alongside animal guards for the grid, a hat-tip to both reliability and environmental stewardship. Yet, the price is borne by ratepayers, not shareholders. Individuals like Suzanne Shady, representing local service workers, argue for a broader reckoning: high fixed costs may pad the balance-sheet, but they can squeeze small businesses and low-income tenants. For the city, escalating utility bills add to the ambient pressure of rising rents, food prices and taxes.

Downstream effects could stretch further. Higher energy costs tend to ripple: landlords pass costs to renters; shops to customers; employers to workers. Months of swelling outflows can produce second-order effects, nudging marginal families to consider outward migration, or hindering New York’s perennial quest for affordability. That bodes ill for a city straining to recover its pre-pandemic population and allure.

Sparking a wider debate about the cost of transition

Nor is New York alone in facing these conundrums. Across America, and across the pond in Europe, regulators weigh the imperative of overhauling transmission lines and deploying smart technologies against the risk of making energy costlier than residents can bear. While Avangrid and its parent company may eye New York’s blend of regulatory flexibility and generous return-on-equity as an attractive proving ground, ratepayer revolts have derailed similar plans elsewhere when voters came to see them as rent-seeking.

Some policymakers reckon that the current American model—private, investor-owned utilities with guaranteed profits—has run its course. Critics point to European experiences, for better or worse: in Germany, for instance, ambitious upgrades and subsidies for renewables have made energy cleaner but also, at times, brutally expensive for households and manufacturers alike. New York’s own Climate Leadership and Community Protection Act demands a rapid decarbonising of the electricity sector by 2040. Delays to upgrades could scupper those goals; overzealous rate hikes risk a popular backlash.

There is a dry irony to it all. For years, officials have kicked the can down the road on infrastructure, worried about sticker shock. Now, the bill is coming due—and residents are as exercised about the timing, the equity, and the mechanisms as the consequence. RG&E’s proposals, while not entirely unreasonable on the technical merits, fail the political test. Utility monopolies, protected by charter and public trust, are expected to deliver essential services without profiteering (or the appearance thereof), especially in times of economic flux.

Regulators in Albany find themselves in a familiar bind. Rejecting or slashing the proposed increases may buy public goodwill, but risks leaving the system as precarious as ever—portending worse service, blackouts, or costlier emergency repairs. Granting them in full could fuel migration, deepen inequality and confirm voter suspicions that the energy transition will favour monopoly shareholders. The real solution—long-term planning, transparent investment, explicitly means-tested assistance for the most vulnerable—remains politically nettlesome.

Ultimately, New York’s grid problems do not stem from one year’s rate filings or one company’s ambitions. They reflect decades of political prevarication, a structure that socialises costs and privatises profits, and the puny level of serious public debate around who pays for progress and who benefits. Absent bolder reform, the city—and state—will keep lurching from bill shock to bill shock, with too little to show for it. ■