Rate Hike in Pipeline for Con Ed Customers
Home gas and electric bills could increase to pay for the utility’s infrastructure investments — including some that would hinder the state’s ambitious climate goals, advocates say.
Con Edison customers, your bill might go up again soon.
Under a preliminary agreement struck last week between the state Department of Public Service, Con Ed and other stakeholders, the utility company would be able to increase its prices to pay for programs and infrastructure needed to deliver electricity and gas.
If the state Public Service Commission (PSC) approves the proposal, the average bill would rise about 12% over three years for residential electric customers in all five boroughs and Westchester, and over 20% over three years for residential gas customers in The Bronx, Manhattan and northern Queens. The new rates would be effective June 1.
“Con Edison is building an energy system to meet New York’s climate goals, while strengthening the safety, reliability, and resilience of our service, and this investment is critical to meet those goals,” said Con Ed spokesperson Allan Drury in an emailed statement.
The state’s Climate Leadership and Community Protection Act (CLCPA) of 2019 mandates that New York must get 70% of its electricity from renewable sources by 2030, and achieve a zero-emissions electric grid a decade after that.
The guidelines to achieve those mandates, known as the “scoping plan,” were released in December. They call for widespread electrification to decrease the state economy’s reliance on fossil fuels.
While some of the investments Con Ed envisions may help advance the city’s transition to a greener future, environmental advocates contend that other proposals may further entrench fossil fuel dependency.
Concerns abound, too, as to whether New Yorkers can afford the new rates.
“The projected rate increase will be far too high for New Yorkers,” said Laurie Wheelock, executive director of the Public Utility Law Project of New York (PULP). The nonprofit group estimated that electric residential customers would initially see their monthly bills rise about $6 in June, while gas residential customers would pay $14 more.
Customers will have some opportunities to weigh in on the proposed hike.
“The agreement will be subject to public review and comment before the PSC makes its final decision, possibly sometime in the second quarter of the year,” DPS spokesperson James Denn said in a statement.
What Do the Hikes Pay For?
Con Ed first submitted a proposal for a steeper rate increase to the PSC in January 2022. Over a year-long period of negotiations, Con Ed, the DPS — which regulates utility companies — and representatives for consumer groups, environmental organizations and energy companies negotiated down from that original request.
The increased rates do not pay for the supply of electricity or gas, which Con Ed must sell at-cost to customers. Rather, the hikes are to cover maintenance of and investments in its infrastructure that delivers the energy. While state law prohibits the utility company from profiting off the energy it provides, it is allowed to make money on investments in the system.
On the gas side, the plan includes a commitment to survey the entire pipe network by the end of 2025 to find leaks, as well as incentives to encourage quick response times to customer calls about gas leaks or odors.
Con Ed, which has 8,000 miles of gas pipes, committed to removing 240 miles of leak-prone gas pipes and 12 miles of flood-prone pipes. In some instances, the utility would figure out whether a gas main could be eliminated instead of replaced if it serves a “small number” of customers that “are easy to electrify,” according to the proposal.
Con Ed allowed for a change in tack if the state required a different approach. Still, some are concerned about the possibility of prolonging the life of fossil-fuel infrastructure.
“To just be working through hundreds of miles of pipe that are not actively leaking and remaining functional at a time when the scoping plan is saying we need a well-planned and strategic downsizing of the system — and we are about to go through those planning exercises — we just think it’s a really big mistake,” said Chris Casey, a senior attorney with the nonprofit Natural Resources Defense Council, which supported the aspects of the Con Ed proposal related to electric service, but opposed those related to gas.
“There’s a really good chance Con Ed is going to go ahead and replace pipe with brand new pipe that’s supposed to last 100 years or so, and in doing so, could squander some of the best opportunities to kind of strategically downsize the system,” Casey added.
He warned that such actions could lead to a “utility death spiral” in which rates escalate to pay for fossil fuel infrastructure maintenance and replacement — driving away more affluent customers who can afford to electrify, while burdening the remaining lower-income customers with increased costs.
Power for All
Con Ed defended the gas system investments by pointing to the New Yorkers who rely on it.
“Con Edison is required by New York law to provide for services to our customers,” spokesperson Drury said. “Achieving a carbon neutral New York by 2050 still requires that we maintain our gas delivery system and do so in a way that keeps everyone safe.”
On the electric side, Con Ed wants to use the revenue from the rate hikes to pay for a slew of projects. Some would help make the energy grid more reliable — including developing energy storage projects in Staten Island and Queens, and burying power lines underground to minimize outages, especially in eastern Queens.
Con Ed also plans to replace circuit breakers used beyond their capacity and damaged utility poles, install electric vehicle charging stations and offer incentives for the installation of heat pumps. The company will create customer recommendation and analysis tools to help customers retrofit their homes and access financial incentives, too.
Some of the new money will cover higher labor costs and property taxes, as well as information technology expenses, the company says.
While these steps push forward provisions of the CLCPA — some that Casey called “really important” — groups representing communities historically burdened by adverse environmental impacts don’t think Con Ed is being aggressive enough in tackling climate change and inequality.
“Those are steps in the right direction, but I would like to have seen a lot more,” said Meagan Burton, senior attorney with Earthjustice, who also represents WE ACT for Environmental Justice and the Alliance for a Green Economy in the rate case proceedings. Burton’s clients oppose both the electric- and gas-related areas of the proposal.
“We want there to be an advancement or increase of programs advancing electrification or … specifically targeting emission reductions in disadvantaged communities, and so we’re disappointed that we’re not seeing that,” she said.
Deputy Mayor for Operations Meera Joshi signed off on Con Ed’s proposal with a supportive memo from the city, which nevertheless expressed concern about the “the impact that these major rate increases will have on New York families and small businesses.”
New Yorkers already pay some of the highest prices for electricity in the country and have experienced surging utility bills over the past year. In particular, low-income and non-white New Yorkers spend a disproportionately higher percentage of their income on energy.
Still, the proposal includes some protections for customers. For instance, Con Ed agreed not to cut service for unpaid bills when the temperature outside is under 32 degrees or above 90 degrees. And low-income customers enrolled in a monthly affordability program would be shielded from the rate increases thanks to greater discounts included in the proposal — as long as those customers use electricity at average rates or gas at below average rates.
Wheelock, of PULP, estimated about 440,000 Con Ed low-income households aren’t enrolled in the affordability program and worried that those households would not be able to absorb the bill increase.
In January, the PSC approved a program that would provide $672 million of relief for residential customers and small businesses with utility debt across the state. Ratepayers subsidized most of that program’s cost through a 0.5% bill surcharge. Utility companies contributed about $101.5 million, including $45.5 million from Con Ed.
Those relief funds “will result in a meaningful one-time improvement in affordability in the year that it is provided, but will do nothing to solve the chronic affordability gap,” said Wheelock, who added, “the flames of which will only be fanned by the proposed rate increases.”
Nearly 430,500 of Con Ed’s residential customers are at least 60 days behind on their bills to the tune of about $670 million, according to the latest data the company filed with the state.
As part of her budget proposal, Gov. Kathy Hochul included $200 million in utility bill discounts for lower-income New Yorkers who currently don’t qualify for existing energy affordability programs, in a bid to cap electric bills at 6% of income.
Utility customers can expect to see bills go up further as the PSC approves more projects in support of the state’s transition to renewable energy sources — which, when widespread, would insulate customers from volatile commodity market gas pricing that can lead to big month-to-month fluctuations in their bills.
As stated in Con Ed’s proposal, its customers will eventually pay for costs associated with the company’s compliance with the city’s Local Law 97 — which aims to reduce emissions from city buildings — as well as any fees the utility incurs from the state’s forthcoming congestion pricing scheme in Manhattan.