Fossil fuel investments drive up ConEd’s energy bills


A version of this story was published by New York Focus, an investigative news site covering New York state politics. Sign up for their newsletter here.

In 1973, a liquefied natural gas (LNG) tank exploded on Staten Island, killing 40 workers who were cleaning it up. It was one of the worst industrial accidents in New York’s history and prompted the state to ban new LNG facilities. Yet two continued: one maintained by National Grid in Brooklyn and the other by Con Edison in Astoria, Queens.

Nearly 50 years later, both are still in operation, with no plans to close soon.

ConEd, like National Grid, is instead seeking approval from state regulators to spend millions upgrading its LNG plant. The proposed $65 million in upgrades are just one of a long list of investments ConEd plans to make in its electric and gas systems by 2025, with regular utility customers footing the bill.

If state regulators approve ConEd’s proposal, customers would be responsible for $1.4 billion in spending next year, split between utility electric operations ($1 billion) and gas ($400 billion). millions of dollars). This could mean a 10% increase in electricity bills and a 15% increase for gas from January. Those hikes — the steepest in at least 15 years, if approved — would likely be followed by others in 2024 and 2025.

The utility presents spending as a win for customers. The proposed investments will improve service and make the network more weather-resistant, spokesperson Allan Drury told New York Focus, while supporting the state’s climate goals, as a portion of the funds will go to projects to clean energy.

But ConEd also plans to pump hundreds of millions into its existing fossil fuel systems — investments that New York City officials and environmental advocates say would violate New York’s climate law. State, which obliges the electricity sector to switch to 100% clean.
energy by 2040.

On Wednesday morning, nearly 50 New York City and state legislators, led by State Senator Robert Jackson of Harlem and Assemblyman Zohran K. Mamdani of Queens, echoed that concern in a letter to Governor Kathy Hochul and the Public Service Commission (PSC), which oversees utility rates.

Lawmakers are asking the state to reject rate hikes outright, while urging ConEd to invest more in the transition to renewable energy.

The proposed rate hikes would add to a backlog of utility debt, which has been growing steadily during the pandemic and surged again when Russia’s war on Ukraine helped push up debts. world energy prices through the roof. In May, nearly 1.3 million New York households were at least two months behind on their gas and electric bills, and collectively owed $1.9 billion – the highest level of utility debt. high ever recorded, according to documents compiled by the Public Utility Law Project (PULP).

ConEd accounts for 43% of that debt, with some 385,000 households owing an average of more than $2,000 each.

“As per usual”

Throughout the proceedings, ConEd has insisted that its primary responsibility – and that of the PSC – is to provide “safe and reliable service at just and reasonable rates.” The fossil fuel investments it plans to make, the report says, will ensure that New Yorkers can rely on their electricity and gas whenever they need it, even as the weather gets worse. extremes.

ConEd also argues that fossil fuel infrastructure upgrades can reduce emissions. The utility’s biggest investment on the gas side is replacing “leak-prone” lines, which it says will reduce methane emissions, at a cost of more than $400 million a year.

But experts have called this massive investment misguided. Researchers at consultancy Synapse Energy Economics said in May that “an approach based on building retrofits, electrification and pipeline removal could reduce emissions at a cost per tonne 77% cheaper” than the replacement of gas pipes. New York City has also questioned pipeline spending, warning that the utility’s gas plan amounts to “business as usual.”

“While rebuilding an aging gas system may reduce leaks or fugitive emissions at the margin, it also risks extending our reliance on carbon-intensive infrastructure and creating stranded assets” , three city officials said in testimony to the PSC.

ConEd’s proposed gas projects also include the expansion of several pipelines in the Bronx and Queens, which critics say will ultimately increase the amount of fractured gas pumped into New York City. Drury, the spokesman, said about 80% of the company’s gas comes from the Marcellus Shale, where the gas is extracted by hydraulic fracturing.

Climate advocates widely agree that ConEd is ahead of many other utilities in moving away from fossil fuels.

Jessica Azulay, program director of Alliance for a Green Economy, points to the utility’s $77 million proposal for a building electrification “readiness” program, an incentive to help building owners upgrade upgrade electrical systems to prepare for larger loads once heating systems are converted to electric.

ConEd is also considering three new transmission projects that it says are necessary to meet the state’s climate goals. And he proposes to start producing his own solar power, adding 100 megawatts of solar projects every year for the next decade.

Still, Burton says these green investments are “a drop in the bucket” compared to what ConEd spends to keep fossil fuel systems in place. Climate advocates mainly take issue with the proposals on the gas side of the ledger, meaning gas that is pumped directly into people’s homes through their boilers and gas cookers.

But some of the electricity investments have also raised alarm bells. Among them are $71 million in upgrades to the East River Power Plant, one of the most polluting power plants in the state. That includes $20 million to convert standby generators to cleaner fuel oil — the only type that will still be legal in New York by 2025.

But climate advocates say the East River upgrades will only extend the life of a power plant that must be shut down in less than 20 years if the state is to meet its 100% climate goal. clean energy by 2040.

“Clean energy investments would prevent the emission of approximately 2.4 million metric tons of carbon dioxide, which would be equivalent to taking more than 500,000 cars off the road for a year,” Drury said.

ConEd may be overstating its emissions reduction promises. Staff at the Public Service Department, which houses the PSC, said in a May 20 filing that the utility’s emissions calculations did not follow the methodology required by the state’s climate law.

ConEd showed a bit of finesse in its response, arguing on the one hand that its proposals respect the climate law, and on the other hand that tariff affairs are not the right forum to solve climate problems. Lee Ziesche, an organizer with the anti-fracking group Sane Energy Project, says it sets things back, since rate affairs effectively decide utility budgets and what they will actually do in
coming years.

Additionally, Ziesche said, ConEd is taking advantage of the gray area offered by the state’s slow implementation of its climate plan. Three years after New York passed its climate law, the plan to implement it is still being finalized and no major funding has been provided to meet its binding targets. Other initiatives that would give the state a head start on meeting those goals — like banning gasoline in new construction — have also stalled. Ziesche said it has allowed utilities to continue to “get things done.”

Whether they are climate-friendly or not, all the investments offered by ConEd have one thing in common: they are lucrative for shareholders. New York utilities are not allowed to profit from the energy they sell; instead, they are guaranteed a certain return on capital expenditure. ConEd currently realizes an 8.8% return on investment and is asking the PSC to increase it to 10%.

Among those opposing the push is retail giant Walmart, which has warned that retailers could pass on rising electricity costs to consumers. The utility argues that it needs to raise yields to balance its credit and keep up with inflation. Its investors made $1.35 billion in profits last year, according to earnings reports.


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