While cranking the air conditioner this summer, Queens residents might hear a faint sucking noise – that’s the sound of money being siphoned from their wallets.
Adding to a summer expense pinch that already includes ever-climbing gas prices, Con Edison announced that they might be forced to raise the price of energy up to 12 percent in the coming months – and up to $500 million annually – all because of a Federal Energy Regulatory Commission (FERC) decision.
On January 28, the commission issued an order allowing the Independent Power Producers of New York (IPPNY), a power producer, to raise the rate it charges Con Edison for energy. This rate hike then trickles down to the consumer, as Con Edison must charge more to cover expenses.
The rate hike goes into effect May 28.
A spokesperson for the power company said that Con Edison fought against the commission’s decision, as it will not bring them any extra profit but will instead bring them much of the blame from overcharged customers.
The rate hike stems from a misunderstanding of city property tax policy, according to Con Edison.
According to a letter written to FERC and signed by members of Congress including Representatives Anthony Weiner and Carolyn Maloney, existing generators are exempt from property taxes and two forthcoming city generators will also be property tax exempt. However, FERC is allowing power producers to raise the price of energy to include these taxes.
This, plus the current surplus of city generation, would provide city generators with windfall profits.
“This would allow the producers to be paid for taxes that they don’t all pay and would place an unfair burden on our customers,” said Allan Drury, spokesperson for Con Edison.
In previously published reports, Mayor Michael Bloomberg and Senator Charles Schumer said that they believe FERC made the decision because it thinks the city won’t guarantee property tax breaks to power generators, an assumption that Bloomberg and Schumer believe is misguided.
Bloomberg blasted FERC for the ruling and said they are giving the power generators a pile of cash because of a misunderstanding.
On his weekly radio program, Bloomberg advised cash-strapped city residents to prepare for the 12 percent hike on their electric bill by simply turning down the air conditioner.
“Use less energy and it makes the problem less of a problem,” he said on the WOR radio program.
Con Edison, Bloomberg, Schumer and the congressional delegation are asking FERC to reconsider the ruling.
Courier reporter Steve Mosco will be on "The Debrief with David Ushery" this weekend discussing this article. Click here for more information on the show.