New York Electricity Rates Are High And Going Higher
Con Ed is petitioning the state’s Public Service Commission to approve an electricity rate hike and a gas rate hike for New York City and Westchester county consumers. The $400 million in additional funds would be used to better storm-proof the New York electricity infrastructure; doing such things as burying overhead transmission lines and upgrading gas system equipment. $25 million of the $400 million would come from rate increases on gas service.
This is despite the fact that New York’s electricity rates are already the highest of any state in the country with the exception of Hawaii. According to the U.S. Energy Information Administration, New Yorkers pay on average 18.26 cents per kwh as of March 2013. This is compared to a national average of 11.59 cents. Although, savvy consumers who live in areas open to electric choice can usually find much better rates.
Consolidated Edison, the utility responsible for the transmission and delivery of power to the New York City area, has been the target of criticism lately from labor unions, green energy advocates, and New Yorkers who are unhappy with the company’s handling of the aftermath of Hurricane Sandy.
The unionized utility workers claim that Con Edison’s ability to ensure safe and reliable electric service has been compromised by recent massive cuts in labor. According to the union, the utility isn’t investing in maintenance and prevention but rather scrambling from one emergency fix to another. The also claim that it wasn’t prepared for Hurricane Sandy because of it’s labor issues and the resulting lockout last year.
In the company’s letter to the Public Service Commission they point out that their proposed rate filing for November of 2012 was postponed in other that they might focus their attention on the aftermath of Sandy.
Specifically with regard to future improvements meant to mitigate the impact of future storms, the filing says this:
“We have identified several strategies based on our own recent experience, as well as our understanding of several preliminary recommendations made by new commissions established by Governor Cuomo following Superstorm Sandy. Our plans include strategic undergrounding and flood protection projects, including flood walls for certain electric and steam equipment, raising critical equipment in light of higher potential flood levels, upgrading gas system equipment, and accelerating installation of submersible equipment, where appropriate.”
Wholesale electricity rates in New York hit a high of $1,448/MWh on July 18th, just hours before strong thunderstorms brought a temporary reprieve from the summer’s punishing heat. The total system peak demand for electricity was expected to near 33,000 MW for the day.
Operators asked certain industrial electricity consumers in NYC to curtail usage between the hours of 1:00pm and 6:00pm to ensure there was enough capacity to meet more critical energy needs. The users that were asked to cut back on usage are part of a demand response program that enlists certain large users of electricity to agree to cut back usage during peak demand periods in exchange for rate reductions or outright payments.
Nationwide the recent extreme weather is just one factor that has been putting upward pressure on electricity rates. Despite the continued drop in natural gas prices, electricity rates in New York,Texas, and other deregulated states have bottomed out and started moving upward.
The reasons are as complicated as the electricity market. Natural gas has fallen over 40% from last year but the price of fuel is only one input in determining electric rates. Delivery costs make up a large portion of the price consumers pay for electricity. These infrastructure cost are rising quickly. This added cost burden is passed on to commercial and residential electric consumers.
Lower natural gas prices have resulted in lower wholesale electricity rates. This has resulted in financial pressure on producers and given them less incentive to build new capacity. In order to incentivize producers to build more plants, rule makers have taken steps to increase wholesale rates — such as the move in Texas to raise wholesale rate caps by 50% with plans to increase them even future.
New York electric company Con Edison enacted more brownouts in New York on Wednesday amid the heat wave that has put pressure on much of the electricity infrastructure in the country. Unlike the rolling blackouts seen in Texas in 2011, the approach of the New York utility is to reduce voltage to Manhattan resulting in a so called “brownout.” This results in dimmer lights and other side effects, but doesn’t directly result in a loss of power for customers.
The city is currently baking in temperatures in the mid to upper 90’s, pushing electricity usage near the records the city saw last summer. For Wednesday, the company is forecasting usage of 12,455 megawatts. July of 2011 saw the city reach 13,189 MW. The company is also calling on residents to be prudent in their use of electricity; though, there are no calls to turn off air conditioners.
The brownouts come at a time when Con Ed is battling with its union workers. The company, which says the brownouts are not related to the labor problems, recently locked out around 8,000 works as part of the labor dispute. The union has complained to the Public Service Commission of New York asking that the utility be forced to rescind the lockout. The union charges that Con Ed has violated regulatory rules in the labor dispute.
A wave of thunderstorms is expected tomorrow which should bring temperatures back down to seasonal norms, taking some of the pressure off the electric grid for now.