One Year After Sandy, A Dispute Over A Power Rate Hike Threatens To Leave New York Vulnerable To Megastorms

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A year after Hurricane Sandy knocked out power to millions in the Tri-State area, including all of downtown Manhattan, a dispute over ConEd's request to raise electric rates has created uncertainty about whether the utility has adequate resources to prepare for another megastorm.

As the situation deteriorated last fall, New York Governor Andrew Cuomo blasted utilities, including ConEd, which supplies power to New York City, for their performance in responding to the storm.

"They have failed the consumers," he said. "The management has failed the consumers."

So in January, the utility proposed raising customers' electric rates to pay for upgrades.

The increases requested amount to about $3 more per customer. The goal is to raise$1 billion over four years.

"For 2014 we have a plan to spend about $250 million in storm hardening initiatives in substations, electric distribution, gas system, and the steam system," ConEd spokesman Mike Clendenin told us in a statement. "Without proper funding we will not be able to protect the system as planned."

But ConEd already asked for, and received, a rate increase three years ago, to the tune of $10 per customer.

And for several reasons, including its sheer age, New York's power system is among the most expensive in the country.

So Gov. Cuomo is opposing the rate hike, calling it unnecessary.

"Given the historically low interest rates and the economic and income growth forecasts, such investments can be made without the rate increase requested by the utility," he said earlier this month.

New York City has also come out against the proposal.

"Most or all of the funding can be derived from greater efficiencies in project design, development, and construction, provided that Con Edison's revenue requirements are set at levels commensurate with the Company's projected needs," it said in its statement during the rate hearing.

But ConEd says that without the additional funds, it would have to reassess what improvements it can pay for.

In a follow-up interview, Clendenin told us plans to bring overhead cables underground, beef up protection at substations, and infrastructure that would help isolate outages may have to be put on hold.

"We can't go forward with the plan we've put out without proper funding," he said.

The utility hasn't been sitting on its hands. It has already installed flood walls and, literally, moats, at generators like the one on the Lower East Side that blew up and caused the downtown outage.

But some say it's not enough, and that stronger regulation of ConEd is needed. Westchester County Assemblyman Tom Abinanti, who was critical of ConEd in the aftermath of the storm, told LoHud

"I've seen nothing to tell me that they're better prepared," he said. "I have no faith Con Ed can respond any better than they did last time."

Though the last rate hike was large, its initial price tag was eventually brought down through negotiations.

That could happen this time, but there's obviously less room for maneuver.

The state's Public Service Commission, which has final say over the matter, could vote on the increase as soon as next month.