Con Ed Files Electric & Gas Rate Proposals – Seeking ~7.7% and ~8.4% Delivery Rate Increases (C&I) in 2017
New York, NY – On Friday January 29, Con Edison filed electric and gas rate proposals with the NY Public Service Commission (steam not included), seeking rate increases of $482MM and $154MM for electric and gas, respectively. This translates to a ~7.7% increase on electric delivery rates and ~8.4% increase on gas delivery rates (for a typical commercial customer). Overall, the delivery revenue increases are ~9.5% and ~13.4% for electric and gas, respectively. Actual rate increases will vary by rate class, residential vs. commercial, and an account’s individual load shape (usage and demand). Con Ed has not increased electric rates since April 2012 and gas rates since October 2012. The proposed increases, which are subject to review by the NY PSC, would take effect January 1, 2017. Read on to learn more about why Con Ed is asking for more money, how long the rates would be in effect, and how the rate cases are actually settled.
- Why is Con Ed Seeking More Money?
- How Long Will These Rates Be In Effect?
- How are the Rate Cases Actually Settled?
Why is Con Ed Seeking More Money?
According to Con Ed’s website, Con Ed is “seeking a rate increase to fund infrastructure investments that will give customers greater control over their electric usage and bills; improve electric reliability, and help integrate new clean energy technologies into the grid,” as well as accelerate the gas main replacement program to enhance safety and facilitate oil-to-gas conversions. Below are the key drivers of the proposed rate increase:
In addition to the increased revenue, Con Ed is seeking a return on equity of 9.75%.
The major projects outlined in the filing include Advanced Metering Infrastructure (AMI), aka smart meters, continued implementation of the Brooklyn Queens Demand Management project (BQDM), implementation/enablement of REV Track One initiatives, REV demonstration projects, and accelerate gas main replacement.
Below are the projections from Con Ed’s electric forecasting testimony and the associated Exhibits. The 2017/2018/2019 projections are based on econometric models (if anyone wants to discuss the models in detail, please reach out to me directly as it’s beyond the scope of this regulatory update).
How Long Will These Rates Be In Effect?
Con Ed’s rate proposal is a one-year proposal (2017), which would be effective as of January 1, 2017. However, as per Con Ed’s President Craig Ivey’s letter to the PSC:
While this rate filing proposes one-year rate plans for electric and gas service, we intend to explore multi-year rate plans in settlement discussion with Staff and interested parties. – Craig Ivey, President, Con Ed
How Are The Rate Cases Actually Settled?
Con Ed is asking for revenue increases of $422MM and $154MM, based on a bunch of testimonies and exhibits filed with their proposal and a return on equity of 9.75%. However, this does not mean they will receive what they ask for.
At the risk of oversimplifying the process:
Rates are settled in a public rate making process. Con Ed files their rate proposal with the Public Service Commission. Public Service Law requires a decision within 11 months. During those 11 months, interested parties and intervenors can ask Con Ed questions regarding their proposal, provide expert witnesses to counter Con Ed’s claims and requests, and ultimately settle the case (typically a one, two, or three year settlement).
In New York City, the largest energy consumers can participate in the rate making process as members of the New York Energy Consumers Council (www.nyecc.com). The NYECC has become the largest and most influential consumer representative and advisor within the New York energy industry, saving its members millions upon millions of dollars through its involvement in the Con Ed rate cases. As a member of the Board of Directors for the past three years, I can personally vouch for the efficacy of the organization, its commitment to its members, and the results of its efforts (as well as the fantastic annual ENYA event!). The continuing strength of our presence depends, however, on the ongoing involvement and financial support of our membership. Although both members and non-members often win from the work of the Council, no energy customer wins if the Council lacks the financial resources to pursue positive changes to the competitive energy marketplace. If you’re a member, thank you for your continued support! And if you’re not a member, please consider joining the NYECC, participating in the rate making process, and helping us deliver a win for consumers during this rate case, and in future rate cases to come. Please reach out to me directly or call 212-616-5118 with any questions on membership.
Andy Anderson, LEED AP O+M, CMVP
1261 Broadway, Suite 510
New York, NY 10001