Con Edison pays billions in taxes and you’re picking up the tab

New Yorkers are sounding the alarm over Con Edison’s proposed rate hikes, with some blaming a tax structure that quietly shifts the burden onto consumers.

Con Edison paid more than $3.3 billion in taxes to New York City last year, including $2.4 billion in property taxes – making it not only the city’s largest property taxpayer but the state’s as well. These costs are ultimately passed on to its 3.5 million customers, but aren’t reflected in monthly bills. Instead, they’re embedded in delivery charges – leaving service users none the wiser.

Property taxes apply to Con Edison’s infrastructure – pipes, wires, substations – and are considered an unavoidable expense. Yet, under state law, regulated utility companies can recoup these costs through ratepayers.

In a January press release, Con Edison estimated it would collect more than $3.2 billion in property taxes next year. 

Utility bills are divided into three categories, each making up about a third of the total cost – supply, delivery and additional taxes and fees.

Because Con Edison doesn’t generate most of its own energy, it buys electricity and gas on the wholesale market. Prices fluctuate based on various factors, including changes in weather and the state of the economy, as well as global fuel supply and demand. These costs are passed directly onto consumers through supply charges without markup.

Instead, the company earns its profit from delivery charges - overall fees for things like operating and maintaining the infrastructure that brings energy to homes and businesses.

As Con Edison invests in new energy infrastructure, property taxes baked into bills are expected to climb. The company estimates it needs more than $1.5 billion in additional electric revenue and $440 million in gas revenue to fund these projects. The proposed increase filed in February would result in consumers paying 11.4 percent more on electricity delivery and 13.4 percent more on gas.

“Con Ed is requesting exorbitant rate increases and this is going to be a major burden on families and Co-ops – on top of the already high cost of living in New York,” a Riverdalian who requested anonymity said.

All of this comes amid a growing affordability crisis. A March report by think-tank Switchbox found that roughly one in four households struggled to pay their energy bills and about one in seven were at least two months behind on their payments, making for a total of 1.2 million families. 

Although Con Edison sets the proposed increases, they must be approved by the New York State Public Service Commission (PSC) – a government agency sharply criticized for consistently greenlighting price hikes. Since 2017, the PSC has allowed rate hikes at Con Ed’s request at least three times.

In 2021, the PSC was assigned to audit Con Edison, a move that drew backlash from consumers and advocates alike, who argued an independent agency should have taken charge.

“It’s like asking the cat to guard the cream,” the anonymous resident expressed. “It’s not right to let the NY State Public Service Commission do the quasi-investigation alone because they are the ones who routinely approve the hikes that Con Edison requests.”

However, a growing wave of New Yorkers and elected officials are challenging the system. According to the state Department of Public Service, more than 1,600 public comments opposing the latest request were filed as of May 2 – with many demanding that the PSC reject Con Edison’s request.

Assemblyman Jeffrey Dinowitz has continuously sought to establish an independent state office to represent customers and hold the utility company accountable.

“For several years running, I have passed landmark legislation known as the Utility Consumer Advocates Office,” he wrote in an email. “Each time I have passed it, the governor – either Cuomo or Hochul – vetoed it.”

U.S. Rep. Ritchie Torres echoed the call for action in February, penning a letter urging Governor Kathy Hochul to support the measure. Last year, his office investigated drastic disparities in energy costs across the five boroughs.

The investigation found that Con Edison – which delivers gas to the Bronx, Manhattan, and parts of Queens – charged more than twice as much for gas delivery compared to National Grid, which covers the rest of the city. In some cases, Bronx residents paid hundreds of dollars more annually in delivery fees than neighbors in Brooklyn, despite areas with similar infrastructure and density being serviced.

“Property taxes contribute heavily toward the high cost of utilities, but both National Grid and Con Edison pay property taxes,” Torres noted to The Press. “So why is Con Edison charging 200 percent more for gas delivery than National Grid?”

Also on the state legislative front is the NY Heat Act, which seeks to cap utility bills at 6 percent of a household’s income. Although it passed the Senate multiple times since 2021, it’s failed to gain traction in the Assembly’s budget proposals.

Con Edison called for regulatory action itself, stating in press releases it “welcomes the opportunity to work with policymakers on solutions that could direct that tax revenue back to low-income customers to provide bill relief or support clean energy programs.” 

Still, critics argue it does little to sufficiently advocate for reforms that could ease the financial pressure on ratepayers –  leaving customers to shoulder rising costs shaped by decisions in which they have little to no say.