Understanding Energy Pricing in New York: What Residents Should Know
There’s been a lot of discussion across Lansing and Tompkins County about electricity prices – especially as new projects and large energy users consider connecting to the grid. Much of the confusion in these discussions stems from mixing parts of the power system that actually operate very differently.
To help clear things up, we’re going to break down how energy pricing really works in New York.
Three Parts of the Power System (and why they matter)
When people talk about electricity prices, they often blur three separate components:
NYISO – which manages the statewide grid and sets wholesale electricity prices
Transmission-level industrial customers – such as data centers, served by NYSEG under specialized tariffs
Residential and small business customers – also served by NYSEG but on entirely different rate structures from #2
These groups don’t pay the same prices, follow the same rules, or impact each other’s bills the way many assume they do.
So what does that mean for households here in Lansing? Let’s start by explaining how residential rates are set.
What Residential Customers Actually Pay
Household and small business electricity rates in Lansing fall under NYSEG’s SC-1 tariff, regulated by the Public Service Commission (PSC).
The resident’s monthly bill is shaped by:
New York’s statewide energy purchasing rules
Long-term hedging and supply strategies
PSC-approved delivery rates and surcharges
Critically, your bill does not change because a new data center or industrial facility connects to the transmission grid. Residential rates in New York are intentionally insulated from the influence of large industrial loads.
That separation becomes obvious when compared to how big industrial users are charged.
How Large Industrial Customers Are Billed
Big power users (like the Cayuga site) interconnect at high-voltage transmission lines (i.e. 115 kV).
Because Cayuga connects at that level, its service falls under NYSEG’s SC7-4 tariff.
A few key differences:
Industrial users pay more per kilowatt-hour for certain surcharges because those fees scale directly with total consumption.
Cost-recovery mechanisms are designed so that large users shoulder more of the burden – not residents.
These loads operate under tariffs that are completely separate from residential billing.
In other words: large users don’t raise local household bills, and they pay proportionally more because they use more.
This principle extends upstream to the wholesale market as well.
Wholesale Prices Don’t Change Because One Facility Connects
Wholesale electricity prices in New York are set regionally by NYISO, based on the “marginal generator” serving a large area. In Cayuga’s case, that is NYISO Zone C.
Adding a new transmission-level customer:
Does not change how wholesale prices are set
Does not alter which generator sets the price
Does not cause retail bills to spike
New York’s market design intentionally avoids the volatility seen in states with fully deregulated retail markets.
If an Industrial Customer Creates Costs, They Pay – Not Residents
New York has long-standing, well-enforced rules that protect residential customers.
Congestion costs follow the meter that creates them
Interconnection upgrades are paid for by the beneficiary
Capacity obligations fall on the entity serving the load
These costs cannot be shifted to NYSEG’s residential customers.
This is a long-standing practice by both the PSC and NYISO and is reaffirmed regularly. Most recently, in response to a Request for Information from Assemblywoman Kelles.
So Why the Confusion?
Much of the confusion and alarm circulating online comes from national articles describing states where regulation treats data centers like retail utility customers. In those states, large loads can absolutely influence community rates.
New York, however, does not operate under that model.
For example, the Bloomberg article, “How AI Data Centers Are Sending Power Bills Soaring” (Sept. 25, 2025) is based on regulatory systems that look nothing like that of New York’s. The rules in New York are deliberately designed to protect residents from exactly those types of impacts we are seeing elsewhere.
Bottom Line for Lansing
To sum it all up, New York’s energy market is built to:
Shield households from cost increases driven by large industrial users
Ensure big customers pay the full cost of their own service
Prevent the retail rate spikes seen in less-regulated states
Understanding the difference between wholesale vs. retail prices and transmission-level vs. residential service goes a long way toward clearing up the misconceptions circulating right now.
Lansing residents can be confident that a data center connecting to the transmission grid does not drive up local residential electric bills.