Builders await looming Con Ed rate hike

TRD NEW YORK /
Feb.February 08, 2008 06:21 PM

Con Edison wants to jack up electricity rates by over 64 percent over the next three years, in part by charging higher rates during peak demand periods, and builders are plotting how to adapt if the state blesses Con Ed’s plans. 

The utility’s prior three-year increase began in 2005 and amounted to just a 12 percent climb.

A trade group whose leaders comprise the city’s real estate elite has made its concerns about the rate hike clear. The New York Energy Consumers Council, whose officers and directors include executives from Vornado Realty Trust and Rockrose Development as well as Jones Lang LaSalle and Cushman & Wakefield, also says big commercial energy users should get incentives to invest in energy efficiency.

Con Ed proposed a schedule of rate changes a year ago that the state delayed so that it could study them. Since then, the city and others have filed opposition to the utility’s plan, which would kick in on April 1.   

The state Public Services Commission has scheduled two special sessions in March but has not released an agenda; observers expect a vote on the rates around then.
 
Many of the city’s big developers have made huge investments in energy efficiency — like the Durst Organization’s co-generation plant at One Bryant Park — that can hedge against high prices.
 
Durst’s proposal to redevelop the massive Hudson Yards site also calls for a big co-generation plant, said Durst spokesperson Jordan Barowitz.
 
When developers invest in facilities to make their own electricity or capture steam and convert it to electricity, they protect themselves against so-called “rate shock,” or big fluctuations in rates when demand for power surges. But by imposing steep stand-by prices — charged when high demand forces buildings to tap Con Ed’s network — developers could be discouraged from building such costly facilities.

Stand-by prices should not apply to property owners who make their own power, said Julia Lynch Siegel, an executive at Full Spectrum. The developer is building a mixed-use complex near the Brooklyn Academy of Music, where it wants to generate some of its own power.
 


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