KINGSTON, N.Y. – Central Hudson Gas & Electric Corp. shareholders will absorb up to a $64 million loss in connection with a settlement favored by the Public Service Commission on Thursday as a result to an investigation into the company’s billing problems.

The agreement was unanimously agreed to by the PSC and includes $8.2 million in costs for the implementation of a monthly matter-reading program.

“Customers rightly expect to receive timely and accurate bills for their utility services,” said Commission Chairman Rory M. Christian in a statement. “Our investigation and prudence review and audit found that Central Hudson wasn’t meeting this basic expectation. As a result of our investigation, the company has made and will continue to take corrective actions to resolve billing problems that have caused many customers great stress and confusion.”

The independent monitor’s report found that “Central Hudson has resolved critical billing issues and reached a stable state,” according to a slide presented at Thursday’s meeting.

Additionally, “The Company could face future foundational issues which should be addressed through strategic changes and personnel enhancements,” a slide presentation showed.

Under the provisions of the agreement:

• Shareholders must pay the more than $35.3 million spent over the last two and a half years to remedy problems with the company’s customer information and billing system.

• Shareholders will pay $4 million to directly benefit customers to be allocated by the Commission.

• The company will not challenge approximately $8.75 million in negative revenue adjustments as a result of missed customer service metrics, largely stemming from the billing system failures.

• Shareholders have incurred more than $8.2 million in costs associated with back-billing credits to customers that were related to the billing system problems. The company continues to be obligated to provide back-billing credits when warranted if future cases arise.

• Shareholders will pay costs incurred and projected to be incurred to implement monthly meter readings (estimated to be $6.3 million).

• Shareholders will pay up to $2 million in additional payments in the event the company does not implement monthly meter readings by October 31, 2024.

Central Hudson responded in a statement after the PSC vote was taken.

“Central Hudson has worked tirelessly to strengthen transparency and to rectify the billing issues our customers experienced due to the implementation of a new billing system,” the statement said. “We’ve hired over 100 new professionals to better assist customers, hosted dozens of community meetings to address concerns directly, ensured affected customers were fully compensated, and rolled out monthly meter readings to largely eliminate bill estimates.”

“As the billing system’s performance has improved and as we have grown our team of customer service professionals, customer service metrics have improved considerably,” the statement said.

The company said the monitor’s report recommendations will be implemented.

“The independent monitor provided a series of recommendations, which we committed to implementing, to ensure Central Hudson’s readiness for future system integrations and any unforeseen challenges,” the utility said.

The PSC noted that their investigation had ended.

“As adopted, the $64.59 million settlement agreement resolves the Department’s ongoing investigation into past billing system failures by the company,” the PSC said in a statement.

The settlement comes after a 123-page report issued by an independent monitor assigned to examine Central Hudson’s billing system and a proposal to end bi-monthly billing estimates.

“ After a thorough review, the monitor found that Central Hudson has resolved critical billing issues and reached a stable state,” the PSC said. “The Department of Public Service (DPS), the staff arm of the Commission, noted that in April of this year, complaints reported to the Department reached its lowest number since the company launched its new billing system, down 88 percent from its high in March of 2022.”

The independent monitor also identified foundational strategic issues that pose a risk to system stability if not properly addressed.

“Through the settlement agreement, Central Hudson will use shareholder money to implement the foundational strategic recommendations of the independent monitor,” the commission said.

The PSC said that while the independent monitor and DPS staff have found that system-wide issues have been addressed “individual billing issues may still be possible (as is the case with any utility billing system), and customers who believe their bills are inaccurate are encouraged to file complaints with the DPS’s Office of Consumer Services.”

As part of the agreement, Central Hudson filed a revision to its monthly meter read plan with a goal of reading the vast majority of customer meters every month by Oct. 31, an acceleration of more than 14 months compared to the company’s initial plans to reach this goal by February 2026.

The settlement incentivizes completion of the meter reading plan by requiring the company to pay an additional $500,000 for each month of delay up to $2 million. If triggered, this incentivization remedy could bring the overall monetary value of the agreement up to $64.59 million.

Central Hudson serves approximately 309,000 electric customers and 84,000 natural gas customers in the Mid-Hudson Valley.

The problems began shortly after the company replaced its 40-year-old customer information system in September 2021. Billing problems with customers began mounting shortly after.

The Department of Public Service’s Office of Investigations and Enforcement began a probe into the billing issues, including delayed bills and overcharges, in April 2022. The agency was swamped with complaints only days after beginning its probe. The utility, meanwhile, was asserting at the time that the billing problems were nearly fixed.

A state report in December 2022 blasted the utility for its billing practices and ordered it to address it.

In January 2023, Central Hudson acknowledged the problems but contested the allegations in the report, a slide from Thursday’s presentation said.

In July 2023, Central Hudson agreed to hire an independent monitor and pay for it and to expedite the monthly meter reading plan.

That ultimately led to monthly meter readings earlier this year. By late summer of 2024, the utility has said that virtually all customers should expect to be transitioned to that meter-reading system.

Some political leaders released statements after the vote on Thursday.

U.S. Rep. Pat Ryan, D-Gardiner, who represents the 18th Congressional District, said the settlement is a boon to ratepayers.

“As your County Executive and your Congressman, but most importantly, as your neighbor and fellow ratepayer, we’ve fought this battle against Central Hudson together for years. I always said we’d never back down until every ratepayer was made whole – today, we finally held them accountable,” Ryan said in an email.  “This settlement, paid for solely by shareholders, and including direct relief for ratepayers, is a direct result of collective and relentless advocacy, particularly the tireless efforts of everyone at PULP (Public Utility Law Project). These multi-billion dollar monopolies have more than enough power and profits  –  today, we returned that power to Hudson Valley families.”

Laura Whitlock, executive director and counsel for the Public Utility Law Project, said the sentiment was significant.

“Overall, PULP sees this Settlement as significant and a major step forward,” Wheelock said in an email. “It demonstrates accountability, compliance, and the need to monitor the Company to ensure that these principles are respected.”

Assemblymember Sarahana Shrestha, D-Esopus, said the settlement is not enough. Shrestha, who has sponsored a bill for a public takeover of Central Hudson, represents the 103rd Assembly District.

“As welcome as it is, this settlement, however, will do nothing to address underlying problems in an energy system run by corporate monopolies,” said Shrestha said. “Energy should be a public good, and I look forward to working with ratepayers, legislators, and stakeholders across the Central Hudson service territory to chart a path toward a publicly-owned and democratically controlled Hudson Valley Power Authority to replace Central Hudson.”