It was last July, and the Center had been waiting more than a year for new rooftop solar panels – a photovoltaic or "PV" system – to be connected to the city’s electrical grid. Out of exasperation, they decided to turn it on before being issued an official permit. Con Edison workers appeared almost immediately and “really gave it to us, really bitched us out. So of course we said it was no problem and turned it off," CEO Brian Coleman recalled. "Well, maybe three weeks later we got a routine phone call smack in the middle of the blackout asking us if there was something we could do to lessen our energy load.”
Planning director Paul Parkhill finished the story: “Yeah, I said to the guy, that’s ironic, because you just asked us to turn off our PV system. The best thing we could possibly do is keep it running.”
The story illustrates what many have pointed out about Con Ed for years. The utility giant would benefit tremendously from the addition of what energy experts call “distributed generation” – sources of electricity close to the point of consumption – since that would mean reducing the load on an already strained electrical grid. Problem is, they don’t want that extra energy coming from the very people who are supposed to be buying it.
The Greenpoint design center, for example, not only waited a year for Con Ed to supply a permit, it had to pay more than $6,000 for the company to read its application. Other obstacles include the high stand-by fees Con Ed charges to keep electricity available should private generators' own systems fail, and the fact that the utility refuses to let commercial customers do “net metering” – an available technology that lets them sell excess energy back to the grid. (Con Ed does allow residential customers to employ net metering, however.)
To be sure, as Con Ed prepares for another summer of record electricity demand, the city's primary energy supplier wants to prevent another major blackout more than anybody. But critics say one simple economic fact may be interfering with those efforts: the more customers produce their own energy, or cut down on consumption, the more money Con Ed stands to lose.
All of that may be about to change.
The state Public Service Commission (PSC), which oversees public utilities, is reviewing Con Ed’s own proposal to eliminate any perverse incentives the company may have to discourage energy conservation amongst its customers. The utility submitted that plan in May as a part of a proposed 17 percent rate hike on electricity. During the next nine months regulatory changes will be negotiated by the city, Con Ed and the PSC, and are expected to take effect when electricity rates are announced next April. Con Ed spokesperson Chris Olert declined to comment on the proceedings, but according to PSC rates and tariffs chief Doug Lutzy, an important part of the proposal is “a mechanism to break or decouple the natural link between profits and sales.”
Every few years the government and Con Ed negotiate electricity rates by agreeing on revenue requirements and dividing that amount by how many units of energy, called kilowatt-hours, they expect to sell. This motivates the utility to move as many units of energy as possible because, as Lutzy explained, “they’ll lose revenue if sales don’t materialize as expected.”
