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Con Ed Investing $1 Billion in Storm Preparedness

May 30, 2013

Con Ed is investing $1 billion in storm preparedness in New York City and Westchester County over the next four years in order to avoid disruptions in electric service.

Improvements will be funded by Con Ed’s ratepayers through rate hikes on customers’ delivery portions of their electric service. Storm preparedness measures that will be carried out include building cement walls around power plants and substations and placing switches underground that allow for automatic electric disconnection to certain areas in order to keep other areas powered. The utility also plans on burying 30 miles of electric wires as well as redesigning two underground electric networks in New York City.

About 10 percent of all scheduled improvements have been made. Improvements totaling $12.5 million have gone towards repairing a critical substation on the Lower East side that was critically damaged during Superstorm Sandy and left Manhattan in the dark for days.

The utility has been highly criticized since last November’s storm that left millions along the East Coast without power for days and sometimes weeks. Many ratepayers and consumer groups see the rate hikes for storm improvements as unfair and an extra burden on customers who are already paying some of the highest electric rates in the nation. Nevertheless, improvements are imperative for future storm response.

Con Ed’s Chairman and CEO stated in a release, “Sandy caused incredible damage to our energy delivery systems, disrupting the lives of millions of New Yorkers,” Burke said in a statement.  “While we recognize that these weather events represent a ‘new normal,’ our goal through our investments is to lessen the hardships that violent weather causes for our customers.”

Con Ed also plans to invest $1.2 billion this year alone to upgrade its grid in order to meet increased power demands during hot summer months. The New York Independent System Operator (NYISO) expresses little concern that New York’s utilities will experience a shortage in electric supply, but this is expected to change in upcoming years due to increased demand.

Data from the New York Mercantile Exchange (NYMEX) projects that electricity costs will be higher this summer due to increased cost of electric supply in the region. Commercial and industrial businesses can expect to see summer electric rates similar to those in 2010 and 2011. Con Ed’s residential and small business customers will see their rates jump from around 7 cents per kilowatt hour (kWh) to about 9 cents/kWh on June 1st. Residents and small businesses that are shopping around for a retail electricity provider should look for rates lower than 9 cents/kWh.