Con Ed Fights Solar Rules in New York That It Profits From in New Jersey

Consolidated Edison Inc. (ED), owner of New York City’s utility, is fighting legislation to boost demand for solar power in the state while profiting from rules that triggered a boom for the technology in New Jersey.

Con Ed says New York’s Solar Jobs Act being considered by lawmakers in Albany is unnecessary because the state has already set a goal of getting 30 percent of its power from renewable sources such as wind and solar by 2015. In New Jersey and Massachusetts, which offer similar incentives, Con Ed is investing as much as $190 million developing solar projects.

While Con Ed will benefit from selling solar power at above-market prices in New Jersey, the New York rules would require it to buy an increasing amount of energy from homes and businesses that install solar systems. That, the utility says, will drive up consumers’ rates. It may also create 22,000 jobs and spur as much as $20 billion in investment by building a rooftop solar industry, according to the Vote Solar Initiative lobby group.

“I don’t begrudge Con Ed wanting to have it both ways, and they’re not the only utility opposed, but they’re trying to prevent the development of a solar industry in their home state,” said New York Assemblyman Steve Englebright, who introduced the legislation.

Long-Term Contracts

The law would require New York utilities to enter 15-year contracts to buy renewable energy credits, which represent the power generated by rooftop solar systems, at the market rate for solar power.

More than 100 companies, including Staples Inc., General Electric Co. and Mitsubishi Corp., support the legislation because it would guarantee a market for power they may generate from installing solar panels on their buildings.

Con Ed doesn’t like this arrangement because it locks the utility into long-term contracts to buy solar energy at rates that will be higher than it would pay for electricity generated by other sources, said Chris Olert, a spokesman for the utility. New York already has the third-highest residential power price in the U.S., averaging 15.52 cents a kilowatt-hour, and he said that requiring the utility to purchase electricity at higher- than-average prices will drive up its rates.

“We think this program is prohibitively expensive for our customers,” Olert said in an interview. “We are supportive of solar, just not this program.”

Business Opposition

Con Ed Chairman and Chief Executive Officer Kevin Burke, is also chairman of the Business Council of New York, which has more than 2,500 members and opposes the bill.

Pierre Bull, a policy analyst at the Natural Resources Defense Council in New York, said Con Ed is concerned that wider use of rooftop solar power would cut into its profits. Businesses and consumers that generate their own electricity will use less power provided by the utility, reducing its delivery fees, and the company would incur costs to connect those systems to the power grid.

The Vote Solar Initiative estimates that the New York legislation, if passed would drive up demand for rooftop solar projects and create as many as 22,200 jobs to manufacture and install panels. That would trickle down to $20 billion in local spending, between 2012 and 2020, according to a report the group released in June.

The New York law would affect Con Ed’s regulated utility, which is prohibited from owning assets that generate electricity. The parent company has other, unregulated, units that do not face the same restrictions, and is investing $190 million in two of them to expand its renewable energy portfolio.

Con Ed’s Developments

Con Ed Development builds and operates power plants, including wind, solar and natural gas projects, and says the 20- megawatt Pilesgrove Solar plant it is building in New Jersey will be the largest in the northeast.

Con Ed Solutions installs and operates rooftop solar projects on homes and businesses. It built an 11.1-kilowatt system on the U.S. General Services Administration building in New York, the third-largest federal office building in the country. The company said in April 2010 that it would focus on New Jersey and Massachusetts, where incentives make solar power more profitable.

Solar projects in New Jersey earn Solar Renewable Energy Credits that can be sold, generating long-term revenue. Small plants, those with capacity of less than 10 kilowatts, are also eligible through next year for rebates to offset installation costs.

Those incentives attracted 137.1 megawatts of solar power last year in New Jersey, second only to California’s 258.9 megawatts, according to the Washington-based Solar Energy Industry Association. New York, the third-most populous state, had 23 megawatts and didn’t make the top 10.

“This is the right time to be investing in solar,” Jorge Lopez, chief executive officer of Con Ed Solutions, said last year after the company announced plans to invest in his unit.

To contact the reporter on this story: Christopher Martin in New York at cmartin11@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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