Daily Freeman: State report blasts Central Hudson billing practices, citing negligence, defects and mismanagement

DAILY FREEMAN, PAUL KIRBY

A report from an investigative arm of the Public Service Commission has blasted Central Hudson Gas & Electric Corp. for its billing practices.

The commission voted Thursday to order Central Hudson to answer allegations contained in the report compiled by its Office of Investigations and Enforcement.

The commission released the scathing findings of a months-long investigation and instituted a “proceeding to determine whether the commission should pursue a civil penalty action against Central Hudson Gas & Electric Corporation for apparent failures related to the company’s new customer information and billing system,” a commission statement said.

“In addition, the commission will investigate the propriety of the costs incurred by Central Hudson related to implementation of that system.”

Commission Chairman Chair Rory M. Christian said that the probe was necessary.

“Ensuring customer bills are accurate is the singular responsibility of the utility, and the Department has investigated Central Hudson’s action with the goal of holding them accountable for any billing errors and ensuring their customers are held harmless,” Christian said in a statement. “Given the scope and seriousness of the utility billing problems at Central Hudson, the Department will now determine the level of commission action required to address these issues.”

The company is also ordered to submit a plan to eliminate bi-monthly estimates and to evaluate potential impacts of such a change on customers.

Joseph Jenkins, a utility spokesman, said the company has been cooperative with the PSC.

“Over the last several months, Central Hudson has fully cooperated with our regulators at the Public Service Commission as they investigated our implementation of a new customer information system,” Jenkins said in a statement. “Technical challenges associated with the implementation of this system has caused undue stress and confusion to some of our customers. For that, we are deeply apologetic.”

Jenkins said the order to show cause step is part of the process.

“As part of the regulatory process, Central Hudson is provided the opportunity to respond to the PSC’s findings through an Order to Show Cause,” Jenkins said. “We will continue to be open and transparent with our regulators as we move through this process. Central Hudson will continue to dedicate significant resources toward resolving any lingering issues with the billing system and find ways to further improve our customer experience.”

The problems with Central Hudson’s billing system became apparent earlier this year when the commission began to receive a significant number of complaints from the utility’s customers, the statement said.

As a result, commission staff conducted a six-month investigation into Central Hudson’s actions related to the development and deployment of modifications to its customer information and billing system.

The PSC Office for Investigation reported in its executive summary that “Central Hudson’s primary motive for spending over 88 million dollars to upgrade its customer information and billing system was the need to have a system that could properly handle complex billing scenarios. The development and implementation of the project, however, was riddled with Company missteps. In the leadup to the transition, Central Hudson employees warned decision-makers of deficiencies in training, testing, and overall readiness. Central Hudson pushed employees to meet the transition deadline, and despite significant efforts of those employees, the Company was not ready for the transition.

“On September 1, 2021 (the go-live date), the system was not only incapable of handling complex billing scenarios, but it also contained hundreds of programming errors and defects that resulted in billing overcharges and delays for thousands of customers. The problems were directly attributable to Central Hudson’s negligence, lack of appropriate training, lack of proper system testing, misuse of resources, and an overall lack of readiness.

“Central Hudson’s lack of candor regarding the problems only exacerbated the impact of the company’s failings, resulting in several months of undue hardship for its customers, its employees, and the public at large. The investigation also identified violations of applicable requirements.”

After a review of utility documents and interviews of company officials, staff identified several apparent violations of the Public Service Law, regulations, and commission orders, the commission statement said.

“In addition, staff has reason to believe that the company mismanaged the project and that the costs associated with the project may have been imprudent,” the commission said.

Based upon the commission’s order to show cause decision, Central Hudson has 30 days to demonstrate why the commission should not issue a civil penalty action and/or an administrative penalty proceeding for Central apparent violations.

The commission also wants to know why the panel should not initiate a prudence proceeding to investigate the propriety of costs incurred by Central Hudson related to implementation of the system.

Three Ulster County political representatives who have been strongly critical of Central Hudson in the past heralded the PSC findings and show cause decision.

“This is a resounding victory for the people of the Hudson Valley, who for too long have been the victim of corporate greed and gross incompetence from Central Hudson,” said U.S. Rep. Pat Ryan, the former Ulster County executive. “Today we showed that when we stand up with unified voices, we can bring about real change.”

Senator Michelle Hinchey, D-Saugerties, felt similarly. “If there is anything this investigation has made clear, it’s that the people of the Hudson Valley deserve better. … Central Hudson customers deserve justice and answers for the hardships they’ve endured, and I’ll continue to fight to hold the company accountable for their negligent actions.”

Cahill said the examination appears far from over. “The granting of the motion to examine whether Central Hudson put profits over reliability, shareholders over ratepayers is a significant step,” Cahill said