Northeast - Con Edison to Increase Delivery Rate in New York

By Gil Coelho, Market Manager - NEPOOL and ISO-NY, GDF SUEZ Energy Resources NA

GDF SUEZ Energy Resources continues to reinforce our role as a source of critical information for customers by providing pertinent answers to their concerns. One of the questions asked recently was in regard to Con Edison’s delivery rate increases.

Indeed, the trend over the past five years has been an increase in the distribution rates for customers located in Con Edison’s territory, and this trend will continue. We can identify two main drivers for the increases:

 - Infrastructure investments
 - Recovery of deferred charges

Infrastructure investments include critical updates and expansion to the utility delivery systems. In May 2009, Con Edison submitted a three-year delivery rate plan starting April 1, 2010, that it says “[…] provides funding for Con Edison to continue investments needed to maintain system readiness and operating reliability.”

To some degree, there was little argument that these investments were needed, and they were ultimately approved by the state. In a May 2009 press release, Con Edison Chairman and CEO Kevin Burke said: “The needed funding will improve electric infrastructure and energy efficiency, while fueling growth and spurring the city’s economic recovery. Infrastructure investments prepare us for a better future, create jobs, and get the economy moving.”

Con Edison’s plan includes an annual increase of approximately $420 million for each of the three years, attributing about 30 percent of that increase to increased taxes.

For more information on this delivery plan, please refer to Con Edison’s website:
http://www.coned.com/publicissues/investing_in_the_energy_infrastructure.asp

Con Edison also announced it will increase its Monthly Adjustment Clause (MAC) to recover smart grid investment costs starting this summer. As the deployment of smart grid technology increases over time, the charge to customers will increase.

The new charge will be effective June 30, but might not show up on the customer’s bill until August. As an MAC charge, it will increase the delivery rate for both utility full-service and retail access (shopping) customers.

Con Edison estimates the increase to be less than 1 percent on a customer bill.



For more information on the Smart Grid initiative, go to Con Edison’s website:
http://www.coned.com/publicissues/smartgrid.asp

Deferral of past infrastructure investments is a bit of a different story. During the late 1990s and early 2000s, decisions were made to defer the significant costs of infrastructure developments because the impact on rates was determined to be too large at the time.

The utilities have been collecting these deferred costs, roughly speaking, over the past four or five years. So, while it might have been an easy “political” decision 10 years ago to keep delivery rates down then, the costs are being borne today.

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