Gov. David Paterson wants utility companies to pay higher fees to help close the state?s budget gap, which could result in higher bills for LIPA and National Grid customers.

Back in December, when LIPA wanted to hike its customers? fees, Paterson told the company to rethink then plan. LIPA listened. However, the governor?s proposed fee increases for the utility companies could have the same net result of higher bills for ratepayers if utilities decide to pass the cost down.

Paterson says the fees would help the state raise $651 million each year, for the next three years. The higher utility fee would cost LIPA $29 million for 2009, which is about $1 a month for the typical homeowner.

"I?m a retired guy and I only get a pension, Social Security, so even a dollar means a lot to me," says Bob McKibbin, of Hicksville.

While energy analyst Matthew Cordaro says LIPA will have no choice but to pass on the increase to customers, LIPA CEO Kevin Law says ?We are going to do everything we can to avoid passing it along to our customers.?

A proposed utility assessment hike would need the approval of the state Legislature. National Grid gas customers would end up paying an average of $1.18 more a month. The company says it has reached out to the governor to voice its concern about the hike.