Con Edison Is Ordered to Return $18 Million to Customers

The New York State Public Service Commission ordered Consolidated Edison today to return $18 million to its customers for failing to provide safe and reliable service in 2006, a year that included a nine-day blackout that began in Long Island City, Queens, and affected 170,000 people. The highly critical decision could affect Con Edison’s request for a substantial increase in electric rates.

“One of the commission’s foremost areas of concern is to ensure that electric distribution systems are safe and reliable,” said the commission’s chairwoman, Patricia L. Acampora. “Con Edison did not meet four targets for systemwide reliability in 2006. As a result of the utility’s failure to meet these important targets, shareholders are directed to provide a credit to ratepayers. Hopefully, this sends a message to Con Edison that they must be diligent in efforts to maintain a reliable network, or they will face financial consequences.”

A January report by the commission had blamed Con Edison for the blackout, citing a failure to maintain and update its equipment. The penalty today is a further blow to the utility. Even so, the utility commission’s staff has issued a preliminary recommendation supporting the rate increase.

Critics of Con Edison applauded the penalty, saying the utility had not only failed to provide reliable service, but also to communicate with its customers. Assemblyman Michael N. Gianaris, a Queens Democrat who led an Assembly task force that looked at Con Edison after the blackout, said in a statement that the penalty was insufficient:

The P.S.C. decision to fine Con Edison $18 million fails to even scratch the surface of what is necessary to hold Con Edison accountable for its poor performance in 2006. The only changes that will have a real impact on Con Edison’s performance are my proposed reforms to force competition and greater oversight into Con Edison’s business model. I will continue to fight for these necessary dramatic reforms and will remain unsatisfied until they are implemented.

Councilman Eric N. Gioia, who represents much of the area affected by the blackout, said:

I am disappointed that Con Ed was not fined more. This money is nothing in relation to what the people of Queens endured. When a devastating power outage like the one in Queens threatens lives, hurts businesses, and affects hundreds of thousands of people, Con Edison needs to be held to the highest levels of accountability. They are still getting away with poor service at high prices.

Assemblyman Richard L. Brodsky, a Westchester Democrat who oversees commissions and authorities, and who had urged the Public Service Commission to scrutinize Con Edison, said in a statement:

Today’s fine is a pittance compared to the damage Con Ed has caused by its unreliable service. At a time when the company is reporting record profits, we are not satisfied with receiving only a small fraction of the scrutiny that we have requested. We will continue to investigate Con Edison’s service reliability and quality, and we will continue to work to reverse the harms that electric deregulation has caused to New Yorkers. The P.S.C. had walked away from its legal duty to ensure adequate, safe and reliable electric service at affordable prices in this state, and the committee will bring transparency and accountability into the manner in which the electric industry was deregulated.

In a statement, Con Edison accepted responsibility for its failings:

Con Edison has acknowledged that we did not meet our customers’ expectations, nor our own high standards during heat and storm related outages in 2006.

We are making substantial investments and improving our emergency response procedures to enhance the reliability of the electric delivery system – spending more than $4 billion over the last three years.

P.S.C. staff also noted that Con Edison is “doing much more work” in substation construction, in inspection programs, and in crew dispatching to lessen the impact of outages on customers.

We have learned many lessons from the outage in Long Island City as well as from the Westchester County storms. Those lessons already are being applied to our policies and procedures to help prevent outages and ensure more rapid restoration when they occur.

Con Edison was found to have failed to meet four targets — network interruption frequency; radial interruption frequency; network interruption duration; and radial interruption duration — out of six contained in a Reliability Performance Mechanism adopted in 2004, under its last rate plan. The maximum penalty for failing to meet the six targets would have been $59 million.