Public Service Commission

Use of Negotiated Settlements in the Rate Setting Process

The rates and services of most public utilities operating in New York are regulated by the Commission. Utility requests for rate increases are considered at public hearings. These hearings may be conducted as negotiations in which opposing sides try to reach agreement or as adversarial proceedings in which opposing sides present conflicting evidence. Negotiated settlements first began to be used in 1983 in the hopes that they would be less time-consuming than adversarial proceedings.

We examined the Commission's use of negotiated settlements in public rate hearings and found that the negotiations were conducted in accordance with relevant guidelines and were sufficiently open to all interested parties. We also tried to determine whether the use of negotiated settlements reduced the amount of time spent by Commission staff in activities related to the rate hearings. However, due to a lack of suitable records, we were unable to make this determination. We recommended modifications in the time keeping records used by Commission staff. 94-S-12