A new charge appeared on NYSEG bills in February 2025. Then came a request for an even larger rate increase. Regulators found the utility hadn't met its reliability targets in six straight years. Here's what it all means for you.
If you've opened a NYSEG electric bill since February 2025, you may have noticed something new: a line called the "Recovery Charge." It isn't a mistake, and it isn't going away soon. It's the result of a formal legal process that moved nearly a decade's worth of storm costs directly onto customer bills — and it runs parallel to, not instead of, the company's latest request for a major rate hike.
Here's how it happened. Over roughly the past decade, NYSEG accumulated approximately $680 million in storm restoration expenses — money spent repairing power lines, restoring electricity after major weather events, and rebuilding infrastructure damaged by storms.[1] The company argued it hadn't yet collected these costs from customers through the normal rate-setting process.[1]
In August 2024, NYSEG petitioned the New York State Public Service Commission (PSC) to use a new financial tool — called securitization — to recover those costs.[2] New York Governor Kathy Hochul had signed legislation earlier that year making this mechanism available to utilities.[3] Think of it like refinancing a mortgage to get a lower interest rate: instead of recovering storm costs quickly at high rates through traditional ratemaking, the utility issues long-term bonds at lower rates, with customers paying off those bonds over time.[4]
NYSEG's own materials explained it this way: "Securitization is similar to refinancing your mortgage to secure a lower interest rate." The company said it would reduce the short-term impact on bills compared to traditional ratemaking.[4]
The PSC approved the petition on December 19, 2024 — authorizing NYSEG to issue approximately $680 million in securitized debt, plus about $27.2 million in upfront financing costs.[2] The bonds were then sold to investors through a special-purpose entity, with the proceeds going to NYSEG and the repayment obligation flowing through customer bills as the Recovery Charge.[5]
NYSEG ultimately raised $710.6 million through the bond issuance, structured in three tranches with maturity dates in 2031, 2034, and 2037 — meaning customers will be paying this charge for over a decade.[3]
Regulatory filings and bond prospectuses can make large numbers feel abstract. They're not.
Alison Miller lives in a 700-square-foot apartment in NYSEG's service territory. Despite qualifying for energy assistance credits, she reported paying nearly $140 in Recovery Charges since March 2025 — money flowing directly to bondholders to cover the cost of past storms.
The PSC estimated the average residential customer using 600 kilowatt-hours per month would see a 1.43% total bill increase in the first year from the Recovery Charge alone.[2] That may sound modest in percentage terms. But it compounds on top of other increases — and critically, it arrives alongside a separate, much larger rate increase request filed just months later.
Note: The $140/yr figure is based on reported customer experience (Alison Miller's case); individual amounts vary. The $397/yr electric and $403/yr gas estimates are derived from NYSEG's own projections of $33.12/mo and $33.57/mo respectively for typical residential customers. These are NYSEG's requested amounts — the PSC may approve a different figure.[7][8]
The Recovery Charge didn't appear out of nowhere. It's the latest step in a years-long pattern of storm costs accumulating faster than they were resolved — while customers simultaneously absorbed significant rate increases.
NYSEG begins what will become nearly a decade of unrecovered storm restoration expenses — costs that aren't immediately billed to customers but accumulate on the company's books, growing toward $680 million.[1]
Beginning in 2019, NYSEG fails to meet its enforceable reliability performance targets every single year. The company pays regulatory penalties (called Negative Revenue Adjustments) for these failures — but service does not measurably improve.[9]
NYSEG's previous rate increase — a 62% increase in electricity delivery rates and 17.8% for gas, phased in over three years — was approved by the PSC. Its final phase was implemented in May 2025.[10]
NYSEG files with the PSC to use the state's new securitization mechanism to recover $680 million in legacy storm costs, plus upfront financing expenses.[2]
The Public Service Commission approves Case 24-E-0493, authorizing NYSEG to issue the securitized bonds. The financing order becomes irrevocable on January 22, 2025.[5]
The new "Recovery Charge" begins appearing on NYSEG electric bills. Customers begin paying down the $710.6 million in bonds issued by a special-purpose entity.[3][6]
The PSC releases the final report of an independent management audit of NYSEG and RG&E, with 128 recommendations. A Notice of Apparent Violations is simultaneously issued, including for the six consecutive years of missed reliability standards.[11]
Just weeks after the audit, NYSEG files Case 25-E-0375, requesting a 35% increase in electric delivery revenues (~$464 million) and a 39.4% increase in gas delivery revenues (~$93 million).[7] This comes on top of the Recovery Charge already on bills.
The most troubling finding in the regulatory record isn't any single dollar figure — it's the pattern those figures reveal.
In 2024 alone, NYSEG's outage frequency rate was 1.30 — a slight deterioration from 2023. The predominant causes were tree contacts, prearranged outages, and equipment failures, which together accounted for about 79% of all interruptions.[12] New York also experienced 42 storm events qualifying as "major storms" in 2024, with customer hours of interruption from those storms increasing by 161% compared to 2023.[13]
The key question regulators and ratepayers must ask: if customers have already funded multiple rounds of rate increases — explicitly justified as investments in reliability and storm hardening — why hasn't reliability improved?
Rate increases were needed to "upgrade aging infrastructure and systems to improve reliability." Larger capital budgets were approved explicitly for this purpose in two consecutive rate cases.
NYSEG missed its enforceable reliability targets six years in a row despite those larger budgets — and despite paying penalties. The independent auditor found that Avangrid (NYSEG's parent company) "prioritizes corporate earnings, not the needs of NYSEG and RG&E."[14]
The independent audit — conducted by a firm the PSC selected in September 2023 and finalized in May 2025 — produced 128 recommendations for how the companies need to improve. Among its most significant findings: limited transparency of utility cost allocations, multiple aspects of operations running at the Avangrid parent-company level rather than for local utility benefit, and inappropriate controls for customer service outsourcing.[11]
According to regulatory testimony reviewed in this analysis, NYSEG presented capital spending data "in a manner that did not directly match the format used in prior rate case filings" — making it systematically harder to compare what was promised versus what was actually spent across rate cases.
There's a structural asymmetry in how storm costs and reliability failures are distributed between ratepayers and the utility's shareholders — one that the regulatory record makes unusually visible.
| Scenario | Customer Bears | Shareholder Bears |
|---|---|---|
| Major storm damages infrastructure | Storm restoration costs (via Recovery Charge or future rate cases) | Nothing — costs pass through to ratepayers |
| Utility requests storm-hardening investment | Capital costs + allowed return on that investment | Earns a guaranteed return (10% ROE requested in current case)[15] |
| Utility misses reliability targets | Continued poor service + ongoing rate increases | Pays small financial penalties (NRAs) — offset by rate revenue |
| Storms get more frequent / severe | Higher bills, longer outages, more recovery charges | May benefit from additional rate case opportunities |
The NYSEG rate case currently under review (Case 25-E-0375) requests a 10% return on equity for shareholders, yielding approximately $32 million in authorized profit in the rate year.[15] Storm hardening expenditures — including a $189.7 million Major Storm Allowance in the current request alone — generate a regulated return for the utility's investors at that same rate.[16]
Customers pay for storm damage when it happens (Recovery Charge). They also pay for the hardening investments meant to prevent future storm damage (capital allowances in rate cases). And they pay a guaranteed profit to shareholders on top of those investments — regardless of whether the hardening actually improves reliability. This is the structure of regulated utility finance in New York State, and it is worth understanding as customers evaluate what their bills are paying for.
Many customers may assume the Recovery Charge appearing on bills since February 2025 is part of NYSEG's proposed rate hike. It is not. It stems from a separate PSC order (Case 24-E-0493) approved in December 2024, and it runs on its own schedule through 2031–2037 regardless of what the PSC decides about Case 25-E-0375.[2][5]
NYSEG's previous rate case produced a 62% increase in electricity delivery rates, phased in over three years and completed in May 2025.[10] The current request for a 35% increase follows directly on its heels.
The PSC's final management audit of NYSEG and RG&E was released May 20, 2025. NYSEG filed its new rate increase request six weeks later. The audit's findings — including the six consecutive years of missed reliability standards — are part of the official record for the rate case.[11][7]
Rate cases in New York are formal proceedings in which the public can participate. Written comments can be submitted to the PSC under docket numbers 25-E-0375 (electric) and 25-G-0378 (gas). Public statement hearings have been held; post-hearing briefs and a final PSC decision are still pending. Once decided, parties can still comment on the administrative law judges' recommendations.