Deregulation disaster I: Con Ed prices higher under state policy meant to save consumers money


You need a boat or a sled dog to visit places in the US where electricity costs more than what Con Ed charges.

Con Ed’s retail prices have long been the highest of any major US utility company. Alaskan villages and small islands off the New England coast – where the cost of generating power is unusually high – are just about only places in the country where homeowners and renters pay more per kilowatt hour than Con Ed customers.

Gov. George Pataki’s deregulation of the state’s electric markets in the late 1990s was supposed to ease the prices charged by Con Ed and other New York utilities. But there’s no getting around the data: These two graphs show that since deregulation, Con Ed’s prices have actually gone up.

Con Ed percentage premium over US average prices

In the six years before deregulation kicked in, Con Ed’s average consumer retail price as measured by the US Energy Information Administration was between 88 and 97 percent higher than US average prices, the graph above shows.

In 2000, the first full year of deregulation, Con Ed prices shot up to 124 percent over the national average. And they’ve stayed at 100 percent over the US average every year since then, the US Energy Information Administration data says.

The graph below tells the same story, but with the actual prices measured by the Energy Information Administration.

Con Ed retail prices compared to US average retail price

It shows again that while the national average residential electric price is up, Con Ed’s price is up even more.

The wide price gap is not entirely Con Ed’s fault. Most of the price hikes appear to be the result of generating costs Con Ed and the state Public Service Commission do not control. What you pay Con Ed to maintain the wires that run to your home is still tightly regulated by the PSC. But what you and Con Ed pay the companies that generate electricity is lightly regulated.

These charts only cover residential rates. They include both Con Ed’s cost of delivering power to your home, and Con Ed’s cost of buying it from generating companies. The rates are what government number-crunchers figure to be the total per kilowatt hour cost paid by homeowners and renters to power air conditioners, TV sets and light bulbs. Business and industry typically pay rates that are even higher.

If you want to see the source for this data, start at the US Energy Information Administration page here. I pulled out the Con Ed and national average data from individual EIA publications.

The data shows deregulation has been a disaster from consumers’ point of view. But it’s also hard to see how the state can undo all the damage its policies have done to consumers’ pocketbooks — it’s sort of like putting toothpaste back in the tube. When the state deregulated electricity, Con Ed and other utilities in the state were ordered to sell off their generating plants, and a new infrastructure had to be created in which generating companies could offer some electricity at auction.

Expect rates to go up even more as Con Ed prepares to spend more than $1 billion fortifying its systems against the next Hurricane Sandy-like disaster, an issue the state will deal with in the company’s pending request for a rate increase.

More on deregulation in a future post.


About Bill Sanderson

I'm a New York-based journalist, and a former reporter at the Concord Monitor in New Hampshire, the Bergen Record in New Jersey, and the New York Post. My work has appeared in The Wall Street Journal, and Politico New York. Twitter: @wpsanderson.
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One thought on “Deregulation disaster I: Con Ed prices higher under state policy meant to save consumers money

  1. Thomas Myers says:

    Brilliant as always! That’s exactly the right economic comparison.

    I’d be curious how their costs compare with other utilities. I bet that’s all in the public domain since they are regulated monopolies to a great extent. I’d bet a dollar doing business in New York City is expensive. Also, the City loves to tax anything that can’t “up and move.”

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