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Brian Lehrer: It's the Brian Lehrer Show on WNYC. Good morning again, everyone. Now your electric bill. If you live in Con Ed territory, they want to charge you more money. Did you hear this? For the third time in five years, the utility giant has asked a New York state regulator for a rate increase. If it's approved, one analysis estimates that the average consumer would pay about $300 a month in utility bills by next year. The request is extremely unpopular. Is that a shock?

Even Governor Kathy Hochul opposes it. It's not news to say many New Yorkers are already having a hard time making ends meet given ever rising living costs of various kinds. A rate hike would make it even harder to keep the lights on. Yesterday was the first day of public hearings up in Albany about it, which is why we're talking about it today. This is a public comment period that has now opened. Joining us to discuss is Samantha Maldonado, senior reporter at THE CITY covering climate, resiliency, housing, and development. Sam, always good to have you. Welcome back to WNYC.

Samantha Maldonado: Hi. Thanks so much.

Brian Lehrer: Let's start with the process, and then I'll ask you why Con Ed argues that it needs a rate hike, and what some of the pushback is. They can't just start charging people more for gas and electric on their own. Can you walk us through the process?

Samantha Maldonado: Sure. Basically what happens is this thing called a rate case. It can take almost two years, sometimes longer, sometimes a little bit less. Basically, what happens is that Con Ed or any utility company proposes a rate hike to the PSC, which is a state body of seven commissioners. They decide on these rates. They make this proposal, and it's usually something much bigger than what ends up happening.

They say, "This is what we want to pay for. This is the kinds of things that we need to raise your bills to pay for. Will you let us do that?" Then a process kicks off. There's all these parties that get involved in, essentially, what's behind the scenes negotiations. There's advocates for utility customers, such as AARP. There are big energy users like the MTA, even Walmart. There's the city of New York. They all chime in, and they say, "This is what we think. We have issues with this part of your proposal. We think this is a good idea. We think that our customers can afford any sort of other hikes," things like that.

This gets hashed out behind closed doors. The public can file comments as well. Then, as you mentioned, there's public hearings. I think there's about a dozen of them throughout New York. Then, eventually, there comes to be an agreement. It's, essentially, a negotiated counter proposal. That is what the commissioners then vote on. Again, that is usually much lower than the original proposal that the utility asked. We probably won't see a rate as big as what they asked for, but usually it is a jump.

Brian Lehrer: The numbers I've seen, confirm this, if it's right, is that they're asking for an 11% to 13% hike in the utility bills. That's way over the rate of inflation.

Samantha Maldonado: Yes, that's true.

Brian Lehrer: I guess maybe it's just worth saying why we're even having this kind of conversation about this when Con Ed is a private company. If Walmart wants to raise its prices, it doesn't have to go to the state and ask for its permission. Con Ed does. Why?

Samantha Maldonado: Yes, that's true. They have to be regulated. This is just part of how it works. Essentially, Con Ed does not supply-- They supply our energy, but they don't create it. They have to buy from the source. What that means is that they pass along those costs to us as customers, but they are allowed to make a return on investment in the ways that they bring us the power. That's the lines, certain physical infrastructure, that's energy efficiency programs, that's looking for gas leaks, things like that. Because they're allowed to make a return on investment, and frankly, a lot of those things are needed to keep our power reliable, that's why they have to go to the state and make a request of it. They can't just unilaterally do it.

Brian Lehrer: What's Con Ed's case?

Samantha Maldonado: Con Ed is saying, as I mentioned, "We need these upgrades. We need to make these investments in order to keep our power reliable, to be able to deliver electricity and gas to customers." They say that the grid is aging, which it is, and there's a lot of strain on it, especially now, given the heat wave. Things melt. They need to be updated. We have a lot more electric vehicles and things of that nature that are causing stress on the grid.

Of course, there needs to be upgrades and updates to it. They also say a big part of this increase is actually due to property taxes from the city. Con Ed has charged property taxes on its pipes and wires and other physical infrastructure. They're passing that along to the customers. Con Ed said that's about a third of the increase that they're asking for comes down to property taxes.

Brian Lehrer: Who gets to argue against officially, other than random citizens who might show up to these public hearings and say, "Omg, are you kidding me?" Who gets to have any power in arguing against?

Samantha Maldonado: Certainly there's the commissioners. They will be hearing these arguments, and they ultimately decide to vote or to-- to approve or deny these increases, and to what extent. There are different parties who are involved in the rate cases. Essentially, just lots of lawyers duking it out secretly behind closed doors, though you can see, if anyone's ever inclined, to look at thousands and thousands of pages of documents on the Department of Public Service website. Again, that's advocates for consumers, that is people at environmental organizations like NRDC and WE ACT, that is companies. Obviously, Con Ed is there arguing their case as well.

Brian Lehrer: Is there a conflict for the environmental groups you cite? Because some of this rate increase request is based on modernizing toward a green energy future. We obviously saw in the big Trump policy bill that just passed Congress a rollback of clean energy subsidies and other initiatives that the Biden administration got passed. The Trump argument is these things are raising costs for consumers unnecessarily because climate change doesn't pose as much of a risk as environmentalists argue. The environmentalists' arguments for green energy transition are putting economic stress on Con Ed, which puts economic stress on the ratepayers. Or is that not accurate?

Samantha Maldonado: I think it's accurate that some of the rate increase that Con Ed has proposed is certainly going to pay for some of the provisions under our climate law, for instance, battery storage or just being able to update the grid in order to be able to handle the greater intensity of electric vehicles and things like that as we move to electricity. There's other--

Brian Lehrer: Also, conversion to heat pumps is another one, right?

Samantha Maldonado: Yes, exactly.

Brian Lehrer: Because those run on electricity in people's homes, not on the oil and gas that they used to use.

Samantha Maldonado: Yes, definitely. I think a lot of the environmental groups that are working on this, they do make the case that, why is Con Ed investing in fossil fuels and investing in upgrading, for instance, gas pipes or replacing them, when they really should be focused on doing more environmentally-friendly things? I think that they would, a lot of them anyway, would support the investments that Con Ed is making. It's not just a wholesale, "Oh, this is too much. People can't afford these prices." I think there's a recognition of they do need to make these upgrades, especially if we need to transition our grid, and make a wholesale economic transition, so that way we can adapt and fight climate change.

Brian Lehrer: If you're just joining us, folks, we're talking about Con Ed's latest rate hike request, 11% to 13% for gas and electric. We're going to put this in a little bit more historical context with our guest Samantha Maldonado, senior reporter at THE CITY who covers climate, resiliency, housing and development. Listeners, we invite you to chime in here too. If you're thinking, "What again?" You could be forgiven for that, because something similar happened just a few years ago. Have you been having sticker shock already if you're in Con Ed territory when you get your utility bills? 212-433-WNYC. 212-433-9692, call or text or make a case for Con Ed if you want. 212-433-9692.

Let's go over some of this recent history. I see that Con Ed asked for and was granted rate hikes of various sizes in recent years. You mentioned in your article that the state approved a rate increase of about 12% over three years for Con Ed Electric customers in 2023. I guess that's still kicking in. Before that in 2020, Con Ed implemented a state-approved electric rate increase of about 13% that also took place over three years, ending in 2023. Why so much, so recently?

Samantha Maldonado: As I said, I think there's a lot of-- Con Ed would certainly argue there's a lot of investments to be made to the grid, and so they are making them. Again, also property taxes, which is so boring, but the biggest driver of these bills. As we're doing a lot of things under the climate law or trying to, as the state is trying to, they're catching up with that. Also, there's just a lot, of upgrades that need to be made year to year anyway, just to keep pipes [unintelligible 00:10:43].

Brian Lehrer: In all these areas you were discussing before.

Samantha Maldonado: Exactly.

Brian Lehrer: Where does the property tax thing come into it? Explain that a little more.

Samantha Maldonado: Sure. The property taxes, basically what happens is the city can tax the pipes and wires underneath the street, essentially the infrastructure, and then the customers pay that tax because it is a business expense that Con Ed is able to pass along.

Brian Lehrer: Listener texts, "Can you ask about Con Ed profits? If they're a private company but need state regulation, does the government regulate their profit?"

Samantha Maldonado: Sort of. The government can-- As I said in the beginning, they're allowed under state law. Con Ed is allowed to make a return on investment on the delivery side of things. In part, the PSC needs to look at these rates to make sure that they are just and lead to reliable service. Part of that, I think, is to just make sure that Con Ed is solvent. I think there's not really an answer to that, just capitalism about [unintelligible 00:11:52].

Brian Lehrer: Some people are submitting comments to the public comment process that the state is running. I see some say this is price gouging. There's got to be a way, or is there a way? I guess you were just saying there is, kind of sorta, to find out whether Con Ed shareholders really need the money.

Samantha Maldonado: Right. Actually, the governor, Kathy Hochul, really pushed this point home earlier this year. Affordability is, obviously, a huge political concern, and an everyday concern to voters and just everyday New Yorkers. She ordered the state to take a look at executive compensation from Con Ed, and also just pushed her commissioners to not approve a rate hike. Essentially, they are an independent body, and they're looking at a lot of factors. It is a bit of political posturing, but it's definitely been in the conversation.

Brian Lehrer: On executive compensation. A listener just texted that Con Ed's CEO Timothy Cawley got nearly $15 million in total compensation last year. Is that an accurate number as far as you know?

Samantha Maldonado: I'm not sure. I did not look at the numbers for what the executives are being paid. Con Ed does say their executive compensation is mostly paid out by shareholders instead of ratepayers. I emphasize the word mostly, because, obviously, there's a bit of both. They say it's tied to just performance, essentially. I can't speak to their corporate structure.

Brian Lehrer: $15 million is a lot of performance. How many theaters did he get to go up on-- I'm just kidding. We just looked it up. My producer says that is an accurate number. 15 million in total compensation—

Samantha Maldonado: It's a lot.

Brian Lehrer: —last year for the CEO of Con Ed. Richard in Orange, you're on WNYC. Hi, Richard.

Richard: Hi, Brian. Thanks for taking my call. I wanted to offer a different angle, and I'm no longer in New York or New Jersey. The state assembly representative made a similar case. Her name is Britney Timberlake. She was warning New Jersey residents of the hike that are coming our way over here. Similar 13%, 15%. Now, my take is that this might be a classic case of the socialization of the costs for all these AI data centers. They're building these massive data centers. I'm pretty sure these owners would like to see their energy costs reduced. Maybe that's why we're seeing these massive increases on the customer level.

Brian Lehrer: Richard, interesting theory. I think in the Trump administration, they talk about this as a reason, for example, not to abandon coal, because, for all the downsides of coal, the health downsides for the coal miners, the climate downsides, that coal still drives a lot of the electricity plants, and we need to build the capacity for all this AI, which they see in the Trump administration as a good thing. Is Richard onto something there?

Samantha Maldonado: I can't speak to the particular theory, but I know at the moment Con Ed is not investing in data centers or AI centers. I don't think that would work necessarily.

Brian Lehrer: They have to supply the electricity for them, I guess, is the argument. They have to expand capacity, or are deciding to expand capacity, to accommodate those data centers. Richard is asking an interesting question. Are they socializing the cost of those AI corporate investments by charging ratepayers more? I guess we can't answer it, per se, right now, but it's an interesting question. A number of people are calling in on the way the energy bills are divided, and which aspect of it we are really paying for. Let's take Tina on Shelter Island in this respect. Tina, you're on WNYC. Hi.

Tina: Hi, Brian, thanks. I'm Tina of Harlem, but in Shelter Island right now. My bills are direct from Con Ed. The question I have is, I have a different supplier. Of course, Con Ed bills us all. For the delivery aspect of it, I am paying Con Ed. I just locked in a rate on 100% green energy that's less expensive for three years. I'm wondering if I'm going to be protected if this rate hike comes through, or what percentage of this 13% to 15% is based on delivery, what percent on supply?

Brian Lehrer: Great question. A few people are calling in with that question. Samantha, if you know.

Samantha Maldonado: Yes, that's a good question. The hikes that we're looking at are for delivery charges. It sounds like this caller has an ESCO, which is basically you can choose your own supplier. They're buying power from someone else, but Con Ed is still delivering it. The investments that they want to make-- that they've asked the state to approve, are on the delivery side.

Brian Lehrer: As we run out of time, if people want to make their voices heard in this public comment period on the rate hike, other than by calling the Brian Lehrer Show, which we're not sure Con Ed is listening to, how can they do it?

Samantha Maldonado: They can file a comment. You can go-- There's a docket on the website, the Department of Public Service website. It's a state site. They can file a comment there. They can also attend one of the several public comment periods, there in person. I believe you can call in as well.

Brian Lehrer: Samantha Maldonado, senior reporter at the news organization THE CITY, covering climate, resiliency, housing, and development. Thanks so much for coming on.

Samantha Maldonado: Thank you. Take care.

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