New Yorkers Lash Out At ConEdison Over Soaring Electricity Bills

• New Yorkers blame distributor ConEdison for quickly rising electricity bills.
• Some customers complain that their (energy) supply bill has tripled in past months.
• The deregulated system may lower costs somewhat, but all of the fuel volatility risk is transferred directly to the consumer.

Sky-high electric bills on the front page. Europe? The U.K? No, just north of New York City, where local politicians criticized Consolidated Edison of NY, the local electric utility. And further, local business people noted that they had warned of this potential problem a decade ago when the last governor decided to close down the nearby nuclear power plant, Indian Point. Some customers complain that their supply bill (for their electricity usage, not the lines or wires) has tripled in past months. For the typical consumer this is a noticeable increase.

Con Edison—which in the past has taken the stand that it just delivers the electricity (they don’t actually produce it) so go complain somewhere else—announced that it “was reviewing our practices…” and will work out programs to help customers who are struggling to pay these rapidly escalating electricity bills. Meanwhile the staffer of a local member of Congress said, “At the end of the day, it is Con Edison that bills New Yorkers, and, therefore Con Ed that bears direct consumer responsibility for this egregious price hike…” Politicians have focused on how to help consumers pay their bills this winter, both here and in Europe. They don’t focus on the possibility that the existing wholesale electricity market, set up three decades ago to make electricity competitive, may bear responsibility for the mess as well.

Here is how it works. The local utility is a delivery mechanism. It delivers a product (electricity in this case) produced and marketed by somebody else. In theory, the delivery company should not care about the price or quality of the product. And most local delivery utilities do not. They are simple delivery vehicles (“like the milkman”, a former Con Ed executive explained)  that charge fixed costs for their regulated service. Which from a business point of view is not a great set up. High prices or poor service on the part of electricity producers encourages consumers to either go off the grid or cut back on consumption. The local distribution utility’s business and relationship with the customer depends on another company’s skills and probity. Is that a good business strategy? Doesn’t sound like a good one for Con Edison. – READ MORE