When Con Edison released a proposal on May 4 to raise electricity rates, many proponents of Mayor Michael Bloomberg’s sustainability initiative started immediately working to make sure that the utility’s capital improvement programs are not at odds with the goals of PlaNYC, the sweeping effort to reduce New York’s greenhouse gas emissions by 30% by 2030. Gil Quinones, a senior vice president with the city’s Economic Development Corporation, vowed to use the 11-month approvals process to secure investment from Con Ed to support the mayor’s plan. And while it’s early, Con Ed looks inclined to cooperate.
Every few years, Con Ed proposes a schedule of rates, called a rate case, which the state reviews and uses to set allowable profits. This year, the utility requested a rate increase of 17 percent per residential bill for a total 11.6 percent bump, but that’s only part of the story. A central element of PlaNYC is a proposal to spend a tenth of the city’s energy bill on efficiency measures to green-up city owned buildings. Privately owned buildings would come next, with retrofits to come through a mix of incentives and mandates. Con Ed’s investment in power plants and lines will determine much about that mix, so the city is carefully preparing to challenge the proposal.
“We want to make sure they’re making the investment in their infrastructure to support anticipated growth,” said Quinones. “Con Ed had indicated that they intend to invest in energy efficiency to achieve a 500 megawatt demand reduction on top of their current effort. If that is their target then we are aligned.”
Also optimistic is Ashok Gupta, a senior scientist with Natural Resources Defense Council, who advised on the mayor’s initial sustainability planning last year. In setting gas rates earlier this year, Gupta told AN, Con Ed embraced the idea of “revenue decoupling,” which would tie its rates to the gap between forecast revenues and actual delivery, rather than to the total amount of energy it sells. “Revenues and profits would not be tied to how much energy they waste,” said Gupta. “That would be a huge step to help triple or quadruple investment in efficient equipment.”
Gupta explained that the Public Service Commission, a state-appointed body that approves all utility rates, will probably extend revenue decoupling to electricity. A procedural hearing is set for June 18, after which EDC and advocates will submit comments. The final rates and incentives could come via a negotiated deal or an adjudicatory process. Advocates like Gupta aim to get the PSC to add performance incentives and targets to encourage the emissions reductions that the mayor and Governor Eliot Spitzer have announced.
“Implementing PlaNYC is mostly in these procedural hearings,” Gupta said. “Efficiency is about a lot of things lining up, whether it’s office lighting or envelope issues. You need to really scale up these efforts to be comprehensive.”