Consolidated Edison would have you believe that the free-market is responsible for the huge hike in your electric bill this summer, but it’s really the energy utility’s shoddy upkeep of its systems and a general lack of planning on the part of the Public Service Commission when it made its deregulation plans that are to blame.
It’s the small business owner and residential consumer who have picked up the tab for the failings of Con Edison as it changed its identity, for the first time this summer, from monopoly to competitor.
As a public utility, Con Edison was given decades of economic incentives, tax breaks and subsidies which helped it bring electricity cheaply to the New York City area.
But, as the string of black-outs and power-shortages showed, not having anyone to compete with didn’t encourage the utility to do its very best.
Con Edison representatives have said that with such a large system - tens of thousands of feet of wires in its underground and overhead local distribution system - things are, occasionally, bound to go wrong.
But those representatives failed to point out that the company hasn’t upgraded its local distribution system in more than a decade, even though it was advised to do so.
Those representatives also failed to point out that the energy “shortages” that are forcing Con Edison to buy power from “high cost providers” this summer are because it poorly maintained its own plants for so long that the private companies who bought them as part of the deregulation process inherited a bunch of low-quality, high-pollution facilities with inefficient outputs.
Mayor Giuliani seems to be the only politician who remembers that being a public utility is a position of trust for which a company is greatly rewarded. There was never a possibility that New Yorkers wouldn’t buy energy from Con Edison when it was the only show in town.
The PSC’s heart might have been in the right place when it abruptly divested Con Edison of its energy generating facilities and opened up the market, but it didn’t plan the move very well. It seems to have thought that just ushering the free-market into the equation would set things right.
The PSC didn’t take into consideration that a transition period from monopoly to free-market would be necessary to shield the consumer from any big business chaos that might erupt.
In terms of energy costs, the PSC denied the city’s requests not to allow Con Edison to pass any new expenses it might encounter during this, its first summer of deregulation, directly onto consumers’ shoulders. The PSC didn’t expect the up to 49 percent hike Con Ed tried to pass off, but it did expect increases. City officials warned of increases of up to 30 percent, which still would have made a large dent in the wallets of consumers.
Shop and small business owners, and individuals trying to cool their homes, were expected to be the ones to cushion any corporate blows. They opened their electric bills last month and weren’t sure how they were going to pay the shockingly high amount they found listed there.
In the city’s newly competitive energy market it’s the stockholders and the corporations themselves who will stand to benefit from the success of their newly privatized power companies. So it’s only fair that they, not the city of New York, should have to take the risks and field the blows now.