Center for Climate Change Law Helps Secure Novel Pact with Con Edison

Professor Michael Gerrard Played Significant Role in Negotiations


Albany, NY—February 20, 2014—In an historic decision that will serve as a nationwide model, the New York State Public Service Commission today unanimously approved an Order 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. Today’s decision, which was issued in the context of Con Edison’s petition for changes to its rates, also orders the continuation of the Storm Hardening and Resiliency Collaborative.
The rate case was initially filed January 25, 2013 and called for a $2.4 billion spending increase, which included $1 billion in storm hardening in response to damage caused by Superstorm Sandy and other extreme weather events. The Storm Hardening and Resiliency Collaborative, which took place simultaneously with the rate case litigation, 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 Order will confirm Con Edison’s voluntary 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.
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 coalition presented scientific testimony on climate change, 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 planning and storm preparation efforts.
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 Collaborative, Con Edison and the parties agreed on an interim design standard to protect critical infrastructure from future floods. 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 critical peak pricing to reduce load during heat events, creating rate options for customers that will encourage smart charging of electric vehicles, and empowering 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.”
The working groups will also explore ways to utilize energy storage, and increase demand response projects. The order will include a call for Con Edison and other parties to embark on a study to quantify low-risk methane leaks in order to prioritize and accelerate their repair. In accordance with the Order, the work of the collaborative will continue through at least 2014.
Environmental Defense Fund Attorney Elizabeth Stein said that “continuing the Storm Hardening and Resiliency Collaborative paves the way toward a resilient 21st century electric and gas system that provides the clean, reliable, affordable energy New Yorkers need. We look forward to collaborating with Con Edison and stakeholders in New York City and Westchester on this exciting opportunity to increase the flexibility of the energy system, while reducing its climate pollution impact.”
“Electric-drive vehicles are an important part of our clean energy future and this settlement recognizes the important role of Consolidated Edison and other utilities in setting rates that encourage the smart charging of electric vehicles,” said Luke Tonachel, Director of Vehicles and Fuels at the Natural Resources Defense Council. “We look forward to working with the company and the PSC on new solutions that modernize the grid and deliver the benefits of clean, electric transportation to consumers.”
Pace Energy and Climate Center Staff Attorney Andrea Cerbin said this Collaborative “will be a vital tool in producing a grid more inclusive of distributed generation and other demand-side measures that will create a more dynamic and resilient grid. This will be a first step towards building a utility of the future, capable of integrating distributed resources and adapting to future extreme weather events.”
Columbia Center for Climate Change Law Director Professor Michael Gerrard said, “The Con Ed settlement serves as a model for how public utility commissions across the country should require the companies they regulate to ensure that essential services are still provided in the face of future climate change. We are extremely pleased with Con Ed’s receptivity to considering recent scientific projections rather than basing its investments on historical events. We look forward to continued collaboration with Con Ed on the Climate Change Vulnerability Study.”
Professor Gerrard added, “Heat waves drive up the demand and lower the supply of electricity, creating a potentially dangerous situation for the very old, the very young, and other vulnerable populations; in hot weather, brownouts that shut down air conditioning can be lethal. The Con Edison study will for the first time focus on this peril and determine how to protect against it.”
In addition to the Collaborative, the Company has agreed in the rate case settlement to pursue measures other than traditional “poles and wires” to meet expected load growth and maintain reliability. Such “nonwires” alternatives are a tremendous step away from traditional utility models by the Company to engage smarter 21st Century demand-side measures to meet the needs of its customers. One such project will take place in Brownsville, Brooklyn and will save rate payers money while creating a more resilient and efficient grid. Some of the demand-side measures the Company could use to meet demand growth are targeted energy efficiency, clean distributed generation, demand response, as well as pricing signals to users, and distributed energy resources.
About the Con Edison Rate Case:
Initially filed in January of 2013, the case reached a successful settlement in December of 2013. The full text of the Joint Proposal (settlement document) can be found here. The settlement included a three year rate plan for steam and gas and a two year rate plan for electric.