Con Edison Offers Plans to Protect Customers and Energy Systems From Major
Submits Rate Proposals as Part of Investments in Reliability
NEW YORK, NY -- (Marketwire) -- 01/25/13 -- Con Edison submitted
plans today for major investments to protect critical equipment and
customers from devastating storms like Superstorm Sandy that have
struck Greater New York in recent years.
The company provided the New York State Public Service Commission
(PSC) with details on long-term projects -- including putting
flood-proof equipment in low-lying areas, building higher flood walls
around facilities, reinforcing overhead equipment and/or putting some
overhead lines underground to limit outages during storms.
The plans call for $1 billion in investments (click here:
through 2016, some of which could be recovered through federal
funding. As part of the $1 billion, Con Edison has already committed
to spend $250 million this year and next on storm protection
measures. The company said it was also committed to providing
customers with more accurate, individual restoration times, as well
as offering text messaging and other mobile communications for
customers who prefer them.
To provide initial funding for the storm-protection effort, Con
Edison proposed one-year delivery rates for electric, gas and steam
services. The submission of new rate plans, which was delayed due to
the company's focus on recovery from Sandy, reflects Con Edison's
cost-control efforts and its obligation to invest in its systems for
Con Edison President Craig S. Ivey said the company has sharpened its
focus on controlling costs in recent years. The 13,000 men and women
of Con Edison weave cost-consciousness into every task and project,
"Although the economy is improving, we are still working diligently
to hold down costs for our customers," Ivey said. "At the same time,
the increased frequency and damage of storms assaulting our area
presents a major challenge. We must invest in our systems in new ways
to maintain the safe, reliable service our customers deserve."
The rate plans, subject to an 11-month review by the PSC and other
interested parties, would cover the period January 1, 2014 to
December 31, 2014. (To view the filings, click here:
The filing seeks an additional $375 million in revenue to run the
electric delivery system, the company's smallest electric delivery
rate request since 2004, which would represent an overall customer
bill increase of 3.3 percent. The typical monthly bill for a New York
City resident (300kWhr) would rise from $81.64 to $84.55; for a
typical Westchester residential customer (450 kWhr), the monthly bill
would rise from $114.41 to $118.00. The typical monthly bill for a
small business (600kWhr) would rise from $157.55 to $169.31.
The company expects the increase to be mitigated when certain
contracts with non-utility generator units begin to expire in 2014.
The expiration of these contracts is expected to save customers an
estimated $46 million in 2014, and more in future years.
The filing also includes plans for approximately $800 million of
storm-protection capital expenditures through 2016 for the electric
system, including projects to place certain overhead distribution
lines below ground; increase the height of flood walls for certain
facilities; raise critical equipment; install submersible equipment;
install additional switches and related smart grid technology; and
reconfigure certain distribution networks.
For gas service, the filing seeks an additional $25 million in
revenue, the smallest gas rate request by the company since 2000,
which would result in an overall customer bill increase of 1.3
percent. The typical monthly gas heating bill for a residential
heating customer would rise from $187.68 to $190.35. Businesses would
see an increase from $349.24 to $351.88 per month.
The gas revenue increase the company is seeking is due to gas
infrastructure needs. These include the connection to a new Spectra
gas transmission pipeline in Lower Manhattan, and the construction of
a 10-mile gas main from the Bronx to White Plains to improve the
safety and reliability of Con Edison's gas distribution system.
Con Edison expects its natural gas infrastructure to grow
significantly in the coming years due to the rapidly increasing gas
usage resulting from oil-to-gas conversions. The conversions are due
to both the declining cost of natural gas and to New York City's
Clean Heat program that requires large buildings that burn No. 6 and
No. 4 heating oil to discontinue their use over the next 20 years.
The company expects that many large buildings will switch their
heating systems to natural gas, producing additional revenues that
should more than offset the company's investment in gas
infrastructure to support these conversions.
The filing also includes plans for approximately $100 million of
storm-protection capital expenditures through 2016 for the gas
system, including projects for cover plates and remote emergency
generators to address possible tunnel flooding and check valves to
prevent water infiltration that could lead to over-pressurization of
piping and equipment.
For steam service, the company is seeking a decrease of $5 million in
revenue. This decrease would come in addition to an estimated $66
million in annual fuel cost savings as a result of the conversion of
two Con Edison steam plants from burning fuel oil to burning natural
These delivery rate and fuel cost reductions reflect the company's
proactive approach to reduce steam system costs, and their combined
effect is equivalent to an overall decrease in customers' bills of
approximately 10.1 percent.
The filing also includes plans for approximately $100 million of
storm-protection capital expenditures through 2016 for the steam
system, including projects to install or increase the height of
existing gates or barriers around facilities, seal perimeter walls
and doors, and relocate equipment.
While today's submissions are for one-year rate plans, Con Edison
said it was open to discussions to develop a multi-year rate plan for
each service, with aggregate revenue targets for its electric, gas
and steam systems of $272 million in 2015 and $351 million in 2016.
To hold down costs for customers, Con Edison has delayed or replaced
new capital investments with targeted demand side management programs
and works with customers to reduce their energy usage through
energy-efficiency programs. Employees are paying a greater share of
their health-insurance premiums, even as health-care costs rise.
The company has also improved how it prioritizes and manages work. An
example is a new work management program for Electric Operations that
is expected to save $45 million of capital and O&M expenses annually
once fully deployed in late 2014.
Further, customers now pay a special charge called the Temporary18-a
assessment due to a 2009 law that required the PSC to collect an
additional assessment from utilities. The surcharge is scheduled to
expire in March 2014. If the surcharge is not extended as recently
proposed, customers would save approximately $128 million annually on
electric, gas and steam services, reducing the impact of storm
The rate plans also reflect company actions to address new cyber
security standards, including additional electronic and physical
perimeters around critical cyber assets; upgrading control systems
associated with critical infrastructure equipment by enhancing system
monitoring; and establishing dedicated cyber security personnel who
will be responsible for implementing and monitoring the company's
improved cyber security policies and procedures.
The filing marks the first time Con Edison has filed rate plans
simultaneously for electric, gas and steam services. The company
believes this will produce efficiency in resolving questions and
issues that apply to more than one service.
The rate plans and additional information are available at
Con Edison is a subsidiary of Consolidated Edison, Inc. (NYSE: ED),
one of the nation's largest investor-owned energy companies, with
approximately $13 billion in annual revenues and $40 billion in
assets. The utility provides electric, gas and steam service to more
than three million customers in New York City and Westchester County,
New York. For additional financial, operations and customer service
information, visit conEd.com, our green site,
conEd.com/thepowerofgreen, or Facebook at Power of Green.
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