Public Service Commission Approves Con Ed Rate Case and Climate Change Adaptation Settlement

Ethan I. Strell, CCCL Associate Director & Fellow

In an historic decision that will serve as a nationwide model, the New York State Public Service Commission on February 20 unanimously approved a settlement requiring Con Edison to implement state-of-the-art measures to plan for and protect its electric, gas, and steam systems from the effects of climate change. Although specific to Con Edison, the Commission’s Order stated that these considerations “have important implications for the regulatory regime in New York,” and that the “obligation to address these considerations should be broadened to include all utilities."[1]

The decision was issued in the context of Con Edison’s January 2013 petition for changes to its rates. Although the Commission’s Order approves approximately $1 billion in storm hardening and resiliency measures, customer rates should remain essentially flat over the course of the rate plans. Notably, the PSC decision ordered the continuation of the Storm Hardening and Resiliency Collaborative, which was created by the rate case parties to develop innovative resiliency measures and to address how the proposed $1 billion in storm hardening funds should be invested. The Collaborative took place simultaneously with the rate case litigation, and will continue through at least 2014.

A coalition of NGOs and academic centers—the Columbia Law School Center for Climate Change Law, Natural Resources Defense Council (NRDC), Environmental Defense Fund (EDF), and the Pace Energy and Climate Center (Pace)—were full parties in the rate case and active participants in the Collaborative.

In the rate case, the NGO and academic coalition presented scientific testimony on climate change and expert technical testimony on rate designs that support electric vehicle charging, advocated for deploying more distributed generation and microgrids, and cross examined Con Edison’s witnesses on the Company’s long-term planning and storm preparation efforts. The Columbia Center for Climate Change Law retained as an expert witness Dr. Radley Horton, a climate scientist at the Columbia University Earth Institute Center for Climate Systems, who testified about future climate conditions and how they are relevant to Con Ed’s operations and long-term planning.[2]

The Collaborative consists of four working groups addressing: (1) storm hardening design standards, (2) alternative resiliency strategies, (3) natural gas system resiliency, and (4) risk assessment/cost benefit analysis. Through the design standard working group, Con Edison and the parties agreed on an interim minimum design standard of the latest FEMA 100-year floodplain elevation plus three feet of freeboard to protect critical infrastructure from future floods. This “FEMA plus 3” standard will be reviewed to see if higher levels of protection are warranted.

Significantly, the Order confirms Con Edison’s commitment to conduct a Climate Change Vulnerability Study this year, which will provide important guidance on how the utility can best prepare for rising sea levels, more intense storms, heat waves, and other potential effects of a changing climate. The scope of the Climate Change Vulnerability Study is found in Con Edison’s “Storm Hardening and Resiliency Collaborative Report."[3]

In addition, the “alternative resiliency strategies” working group is tasked with identifying alternative response strategies designed to make the grid more efficient and resilient. Such alternative strategies include developing critical peak pricing to reduce load during heat events, create rate options for customers that will encourage smart charging of electric vehicles, and empower customers to make smarter, lower-carbon energy-use decisions. The Collaborative will also identify areas where high-efficiency cogeneration systems and microgrids could be placed to reduce system load, isolate outages, and provide refuges of power “islands.

In addition to the Collaborative, the Company has agreed in the rate case settlement to pursue measures other than traditional infrastructure to meet expected load growth and maintain reliability. Such “non-wires” alternatives are a tremendous step away from traditional utility models and will engage smarter 21st Century demand-side measures to meet customer needs. One such project will take place in Brownsville, Brooklyn and will save rate payers money while creating a more resilient and efficient grid.

On December 12, 2012, a group led by the Columbia Center for Climate Change Law filed a formal petition with the PSC asking it to require all the utilities it regulates to develop climate adaptation plans. This petition launched the process that led to the order requiring Con Edison to develop such a plan.[4]


[1] “Order Approving Electric, Gas and Steam Rate Plans in Accord with Joint Proposal,” February 21, 2014, at 71, available at http://documents.dps.ny.gov/public/Common/ViewDoc.aspx?DocRefId=%7b1714A09D-088F-4343-BF91-8DEA3685A614%7d

[2] Dr. Horton’s testimony is available at http://documents.dps.ny.gov/public/Common/ViewDoc.aspx?DocRefId=%7b0CE5C2BD-3D0E-4FDD-8C4F-C77691D7B709%7d; the Center for Climate Change Law’s brief is available at http://documents.dps.ny.gov/public/Common/ViewDoc.aspx?DocRefId=%7bC7889A83-F9B7-4072-8DCF-75741788D8BB%7d.

[3] Con Edison’s December 4, 2013 “Storm Hardening and Resiliency Collaborative Report” is available at http://documents.dps.ny.gov/public/Common/ViewDoc.aspx?DocRefId=%7bE6D76530-61DB-4A71-AFE2-17737A49D124%7d.

The NGO and academic coalition’s comments on the report are available at http://documents.dps.ny.gov/public/Common/ViewDoc.aspx?DocRefId=%7b789DF3B9-51E3-4DED-BB87-EBB34526B2EE%7d.

[4] The December 12, 2012 Petition is available at https://web.law.columbia.edu/sites/default/files/microsites/climate-change/files/Publications/PSCPetitionNaturalHazardPlanning_0.pdf.

Reprinted with permission from Climate Law Blog

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