Is It Time For New York To Take Control Of Con Ed?

In December of 2018, Governor Cuomo Calls on New York Public Service Commission to Investigate Con Edison Electrical Failure in Queens

On the heels of the major, so-far-inexplicable Midtown blackout last week, Con Ed decided late Sunday to dole out “preemptive” outages to a few unlucky neighborhoods. Citing the need for triage on a severely-strained grid, the utility made the call to leave tens of thousands of residents in Canarsie, Flatbush, and Mill Basin without power on one of the hottest nights of the year. Heavy storms on Monday brought yet more disruption—as of Tuesday afternoon, more than 4,000 residents in Brooklyn and Queens are without electricity. Con Ed's own outage map is down, though the numerical totals are still available.

The consecutive, sweeping power failures have prompted the usual attacks on Con Edison, as well as questions about what it means that, even with advanced notice, our aging energy infrastructure cannot handle the sort of heat wave that will soon be a weekly feature of summers in New York City.

Thus far, Governor Andrew Cuomo has mostly focused on the short term consequences, lashing out at the privately-owned utility and threatening to revoke its license to operate as a monopoly in New York City. “The franchise is not granted by God,” he told WAMC’s Alan Chartock on Monday. “It's granted by the people of the city. You can change a utility company if they don't perform.”

A quick scan of the alternative power companies is less than reassuring. The most likely replacement would be National Grid, a privately-owned monopoly gas provider for the region with a reputation for unannounced shut-offs. Free-market advocates see a promising future in smaller electricity suppliers known as ESCOs, but since arriving in the city in the early 2000s, the industry has been plagued by allegations of price gouging and fraud.

Meanwhile, a growing coalition of New Yorkers are making the case that the best successor to Con Ed is neither a private company nor a collection of them, but the public itself. Thanks to a growing interest in clean energy and a heightened awareness of the city’s creaking grid, advocates say the time is right to consider a public takeover of the private electricity industry.

“The utilities have a ton of political muscle that they’ve developed over the years, but they’re starting to lose that edge, in part because of climate change,” said Johanna Bozuwa, co-manager of the Climate and Energy Program at the Democracy Collaborative.

“The fact that we’re seeing these campaigns right now is not an anomaly,” she added, pointing to ongoing public takeover efforts in Colorado, Maine and elsewhere. “It’s a mess out there, and the investor-owned utilities are finally weakening.”

In New York City, a push for public takeover of utilities is being waged by left-leaning, climate-minded organizations like the Democratic Socialists of America, the Energy Democracy Alliance, and the SANE Energy Project. Those groups and others have also spent the last year organizing against a proposed rate hike filed by Con Ed, which would increase consumer electricity costs by about 5 percent while generating $695 million in revenue for the company.

Proponents of public power say a decades-long trend of deregulation has allowed investor-owned utilities like Con Ed to maximize profits at the expense of ratepayers, as bodies tasked with oversight roll over to their demands and slow-walk green energy solutions. Currently, less than a quarter of New Yorkers' electricity comes from renewable sources.

The state utilities regulator for New York is the Public Service Commission, a five-member board appointed by Cuomo. The group is chaired by John B. Rhodes, who previously led the state’s energy research authority, after fifteen years as a partner at Booz Allen Hamilton. Unlike many states, New York does not mandate that the utilities oversight board include a consumer representative.

“They all come out of private industry, and as a consequence, they’re more sympathetic to the industry’s concerns — which is always the bottom line — and not as concerned with the wellbeing of consumers,” said Susan Lerner, executive director of the good-government group Common Cause-NY. “So we see a series of investigations and somehow nothing changes.”

With the exception of major incidents, there is little pressure from voters to keep an eye on the utilities, says Lerner, “because electricity is seen as the purview of a private corporation.” But while the average New Yorker may not be especially concerned with the policy minutiae of power distribution, the corporations tasked with dispensing that commodity have taken an active role in such discussions.

Like all investor-owned electric utilities, Con Ed is a member of the industry group Edison Electric Institute, which spends about $8 million annually on state and federal lobbying efforts, much of it in opposition to renewable energy policies.

(A recent study found that dues paid to EEI by traditional utility companies are often passed onto customers as general operating expenses. It’s unclear whether this is the case with Con Edison’s customer in New York, and a spokesperson did not respond to a request for comment).

Public records show that Con Ed spent $292,410 of its own money lobbying in Albany in 2018. The company has reported consistent profits in recent years, bringing in $1.378 billion last year alone.

A Con Edison truck distributes dry ice to a line of people in a neighborhood without power in Brooklyn (Seth Wenig/AP/Shutterstock)

Eliminating private interests from the picture, according to activists, would not only speed up adoption of renewable energy, but expand the public’s commitment to such efforts. Under the vision put forth by several groups, the transition to carbon neutrality by 2050 would be led by communities empowered through democratic control over the grid.

“There are plenty of state owned utilities that don’t care about renewable energy,” said Aaron Eisenberg, a climate activist and member of NYC DSA. “It’s not enough to only have a publicly owned utility, it would need to come with an aggressive commitment to decarbonizing our energy system led by frontline communities.”

There are a few pathways to public ownership, none of them unprecedented, nor particularly simple. The process of municipalization would require a ballot referendum, with the price of Con Ed’s assets determined by a condemnation process outlined in the state charter. Brooklyn Councilmember Antonio Reynoso came out in support of the idea after attending a town hall hosted by the DSA on Monday night.

Pressed on whether he’d endorse a municipal takeover, Mayor Bill de Blasio on Monday said he’s open to discussing if “it is now time to do something different.” (A spokesperson for the mayor later clarified the comments weren't necessarily an endorsement of municipal takeover, noting that an investigation was the "first and foremost" priority.)

But given the enormous capital costs--the company says it spent $14 billion on the system over the last three years--a state-led takeover is widely seen as more plausible.

A potential substitute already exists in the New York Power Authority, a state-run public-benefit corporation founded by Governor Franklin D. Roosevelt in 1931. The largest public power utility in the United States, it generates low-cost energy, mostly renewable hydropower, used by a range of institutions, including many government buildings. While NYPA is currently distributed by Con Ed, and is constrained from taking on debt or expanding its customer base, advocates say that state legislation could begin the process of bringing the grid under NYPA control.

Proponents acknowledge that it’s an uphill battle that could take years to come to fruition. Even if Con Ed were displaced tomorrow, the goal of creating an equitable, sustainable and affordable system of electricity is a lofty one--perhaps not the sort of challenge New York’s elected leaders have been actively looking to take on. The hope among many advocates, however, is that the last few weeks have moved the needle.

“Our leaders should already be facilitating the studies to design the next generation of power distribution,” noted Lerner. “As a society facing the kind of radical climate challenge that we face, we really ought to be having these discussions right now.”