18-a Surcharge Extension Will Harm New York’s Economy

Posted: March 7, 2013

Section 18-a of the New York Public Service Law authorizes the state to impose a fee on electric bills from public utilities to fund the operations of energy-related agencies and authorities.

The 18-a surcharge was scheduled to sunset in March, 2014, but a five-year extension was proposed in the 2013-2014 Executive Budget.

18-a results in additional taxes estimated at more than $500 million each year, totaling nearly $3 billion in additional costs for ratepayers through the proposed five-year extension period.

18-a appears on New York electric bills as the “Temporary State Assessment Surcharge” or “Temporary NY State Surcharge” line item.

Figures from National Grid estimate the annual impact of 18-a extension on a typical large business at $30,000, $540 for a typical small business, and $55 per year for an average household.

New York already faces the fourth highest electric rates in the nation, according to the U.S. Energy Information Administration.

Below are comments from New York State leaders about the consequences of extending the 18-a surcharge:

“Every day, ratepayers from across our state call my office and ask ‘Why is my utility bill so high?’

The answer to that question is the numerous taxes and fees imposed on businesses and consumers alike, the worst of which is the 18-a assessment.

This tax hits every single business and residence in our state, and increases the cost of energy by $509 million a year.

I, along with my colleagues in the Republican conference voted against this tax when it was imposed and we simply will not stand by silently as the can is kicked down the road for five more years.”

Senator George Maziarz, Chairman of the Senate Committee
on Energy and Telecommunications

“New York’s electric rates are heavily burdened by hidden taxes. A report by Public Policy Institute finds more than one-quarter of electric bills in New York are from state and local taxes.

Extending the so-called ‘Section 18-a’ fee will cost all energy consumers in the state at total of $2.8 billion.

We urge the governor to reconsider and use the 21-day amendments process to amend or remove Part N.

In 2009, when this temporary fee was imposed, there was an explicit promise to the people of the state that this tax would not be permanent.”

Heather Briccetti, president and CEO of The Business Council of New York State, Inc.
and New York AREA Advisory Board Member

“Energy costs consistently rank as a top concern for small business, and assessments such as 18-a have been a significant cost driver in energy.

Repealing this onerous tax has been a priority for NFIB and we are pleased to join with the Senate Republican Conference in calling for this tax extension to be removed from the Executive Budget proposal.”

Mike Durant, NY State Director, National Federation of Independent Business

“New York businesses and homeowners continue to pay some of the nation’s highest energy costs, and state-imposed taxes such as the 18-a tax are a big part of those high energy costs.

We have called for the repeal of this regressive, onerous and anti-economic growth energy tax since it was first enacted, and we strongly oppose any extension beyond its planned 2014 expiration.”

Brian Sampson, Executive Director of Unshackle Upstate

“The 18-a energy tax adds to the cost of doing business on Long Island and makes our region and entire state less competitive, and thus its proposed extension in the budget should be eliminated.”

Kevin Law, President & CEO of the Long Island Association

“As we began our path together in achieving fiscal stability here in New York State three years ago, Governor Cuomo remained committed to not raising taxes on businesses and residents, and in turn the State’s manufacturing and business community worked to keep business going, their doors open, products manufactured and job retained and added.

Like anything worth doing, it was tough, but it was done. An extension of the 18- a tax would be a huge step back for these hard working businesses.

Those very same companies had paid the temporary tax with the belief it would sunset, and planned their business and expansion plans according to this promise from Albany.

To continue this tax will most certainly compromise the business community’s ability to do everything they need to on this continued path towards economic recovery.

I urge Governor Cuomo to remove this proposal from his budget proposal, and thank the Senate Republicans on their commitment to do so.”

Karyn Burns, Vice President for Communications & Government Relations of MACNY,
The Manufacturers Association of Central New York

“At a time when the prices of feed and fuel are sky high for our members, it is imperative for the state to allow the Article 18-a assessment step down to go forward to help contain rising production costs. Profit margins are thin at best for many of New York’s family farms, and keeping the 2% “tax” in place is not the business friendly approach that will help New York’s farms be more competitive.”

Julie Suarez, New York Farm Bureau Public Policy Director

“AARP commends the Senate for their leadership in working to make utility bills more affordable for all New Yorkers.

This is a crucial kitchen table issue, as state residents pay some of the highest utility costs in the nation, a status that takes an unduly harsh toll on the elderly and those on fixed incomes.

This move, coupled with AARP’s push to help consumers have a stronger voice during rate hikes, is surely needed to help New Yorkers better afford the basic necessity of their utilities.”

Beth Finkel, State Director for AARP New York

Learn more about the 18-a surcharge:

Forbes: The Nasty Truth About Energy Taxes in New York State

VIDEO: Your Voice with Senate Energy Chairman George Maziarz

Albany Times Union: Taxes by another name?

Albany Times Union: Cut the cord on utility surcharge

Unshackle Upstate: 18-a Assessment – Why we want to see it go away