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A proposed $2 billion rate hike has Gov. Hochul demanding a redo, and the utility giant says rising property taxes and other costs necessitate higher charges to energy consumers.
Gov. Kathy Hochul shows at her Midtown office a letter she sent to the state Public Service Commission about rejecting Con Ed’s rate hike proposal, Feb. 11, 2025. Credit: Alex Krales/THE CITY
Prepare for more sticker shock: Con Ed wants to raise your energy bills again.
An average electric customer could see their bill increase by over 11%, while gas customers could see jumps of more than 13%, starting as soon as Jan. 1, 2026. Con Ed, with its 3.4 million electric and 1.1 million gas customers in New York City and Westchester, announced the proposed rate hikes earlier this month.
Gov. Kathy Hochul, who has been sensitive to any measures that could raise household costs, on Tuesday sent a letter asking the Department of Public Service, which regulates utility companies, to reject Con Ed’s rate increases and to audit the company’s management compensation.
“Go back to the drawing board and figure this out, but you’re not going to get that kind of rate increase from our hardworking New Yorkers, ”Hochul said during a Manhattan press conference.
In a statement, Department of Public Service spokesperson James Denn said the agency would look for cost-saving measures.
But the department does not decide on rate increases: the state Public Service Commission — a body of seven governor-appointed members — must vote to approve them. This takes place after an extensive process of public review and negotiations between Con Ed and the Department of Public Service, which is the staff arm of the Public Service Commission. The PSC typically greenlights a smaller hike than utility companies initially propose, and usually directs the company to stretch the increase over multiple years.
Con Ed says its bills are going up and that it has no choice but to share the pain with customers — above all, for new and rising property taxes, which the utility says account for over one quarter of the $1.6 billion it seeks in electric revenue and 15% of the $440 million it seeks for gas revenue.
The rest would go to energy efficiency incentives, information technology and affordability programs, and staffing and equipment necessary to deliver electricity, as well as some steps to comply with New York State’s 2019 climate law. The rate increase does not include the power itself, which the utility sells at cost. Con Ed is allowed to make a financial return on its investments to its system.
View of the Manhattan skyline from the East River, April 25, 2023. Credit: Ben Fractenberg/THE CITY
In a statement, Con Ed spokesperson Jamie McShane said the utility works with customers to make utility bills more affordable, and pointed out that the company ties pay to performance on several customer service metrics.
“Con Edison, as we always have, stands ready to work with stakeholders and the public to balance all of these priorities and continue to deliver safe and reliable power while using our customers’ dollars as efficiently as possible,” McShane said.
Recurring Rise
If you’re having deja vu, it’s because the state approved a rate increase of about 12% over three years for Con Ed electric customers in 2023. Before that, in 2020, Con Ed implemented a state-approved electric rate increase of about 13% that also took place over three years.
PSC Chair Rory Christian acknowledged during a state budget hearing in January that the PSC must “do more” to keep rates affordable.
“Throughout every rate case, we review every filing to ensure that what we do ultimately approve is absolutely necessary for the safety and reliability and the continuity of the systems,” Christian said.
As demand grows and New York experiences more extreme heat and flood events that strain the grid, it’s important to maintain and upgrade the wires, substations and other equipment to prevent outages.
But because of new equipment coming online and rising tax bills, property taxes are the biggest driver of the electric rate hikes and second-largest driver of the gas rate hikes. Con Ed estimated its customers will pay over $3.2 billion in property taxes in 2026.
Some of the work Con Ed wants to undertake — and raise rates to pay for — involves maintaining its gas pipes, which is work some environmental advocates have criticized in the past because they could further entrench reliance on fossil fuel.
Still, many of the projects Con Ed wants to invest in relate to complying with the state’s Climate Leadership and Community Protection Act of 2019, which mandates New York to obtain its electricity from zero-emissions sources by 2040 and to reduce planet-warming emissions — a task mainly achieved by shifting away from fossil fuels.
According to Con Ed, some of the investments the company would make with higher rates would go toward making sure the electric grid can support those transitions to electricity, such as people relying on electric cars and heat pumps instead of gasoline-powered vehicles or gas-burning boilers.
The proposed hikes — and their association with the CLCPA — have attracted the ire of the New York State Republican Committee, which is framing the routine rate hike as a referendum on Democratic governing, blaming Gov. Kathy Hochul’s “radical energy policies,” according to a statement.
“These massive Con Ed rate hikes are a direct result of her war on affordable energy, forcing hardworking families to pay more just to heat their homes and keep the lights on,” said GOP Chair Ed Cox. “New York Democrats’ reckless green agenda is making life unaffordable, driving citizens and businesses alike out of the Empire State, as we continue to lead the nation in outmigration.”
The CLCPA became law under former Gov. Andrew Cuomo, not Hochul, and rate hikes from utilities are routine, no matter if the utility provides gas or electric service.
Turning up HEAT
The rate hikes come as nearly half a million of Con Ed’s 3.1 million residential customers had unpaid bills at least 60 days past due, amounting to $948 million, according to the most recent data the company submitted to the state.
Though Con Ed said it provided over $300 million in bill discounts through its Energy Affordability Program last year, Alicia Corp, direct services supervisor at the Public Utility Law Project, said she worried the rate hikes would further squeeze customers already behind on their bills.
“For many households, particularly those on fixed [incomes] and [with] low incomes, another rate hike would only deepen their financial distress and force difficult decisions between keeping the lights on, heating their homes, and affording other basic necessities,” she said in a statement.
As the legislative session kicks off in Albany, some state lawmakers have introduced bills that would tackle the rising costs of energy.
Sen. Kevin Parker (D-Brooklyn), chair of the Senate energy committee, introduced a package of eight bills meant to strengthen utility customer protections and support transparency around energy charges.
There’s also a huge push by environmental advocates around another bill, known as the HEAT Act, which would direct the PSC to come up with a plan to regulate the gas system in line with the state climate law and would cap utility bills at 6% of household income. The idea behind the HEAT Act is to change the status quo, in which ratepayers subsidize new gas hook-ups to customers and continue to pay for investments in an aging gas system.
Last session, the state Senate passed the bill, but the Assembly did not. This year, the Assembly hasn’t yet introduced its version, and Hochul, who included elements of the HEAT Act in her executive budget last year, did not include anything related to it this year.
Finance Committee Chair Sen. Liz Krueger (D-Manhattan), the HEAT Act’s sponsor, in a statement pointed to the measure as necessary in the wake of Con Ed’s proposed rate hikes.
“If we want to make real progress on reining in rate increases for all New Yorkers, we must pass NY HEAT this session,” she said.
One analysis by the NY Renews coalition, consisting of environmental, faith and labor community groups, and the think tank Switchbox estimated the HEAT Act could save New York City utility customers $142 on average per month.
Laura Shindell, New York State director at Food and Water Watch, called on Hochul to fight to include the HEAT Act in the budget, rather than “squabble with Con Ed.”
“NY HEAT would ensure energy bills from all utilities are capped and affordable,” Shindell said, “while creating mechanisms to transition our homes off fossil fuels that keep energy costs high while polluting our home.”
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