When a business says “No new customers please,” something has gone very wrong. When that business is a major utility, the first place to look for the responsible parties is in the halls of government.
Earlier this year, Consolidated Edison imposed a moratorium on new natural gas connections in Westchester County, New York. As of mid-March, the utility stopped accepting applications for new gas hookups “until [they] can align demand with available supply.” Accepting new customers could mean unreliable service for existing customers, largely because of constraints on interstate pipelines necessary to deliver the natural gas. Con Ed noted that a spike in demand, fueled by existing customers switching to gas from oil and a construction boom in the area, had created these supply constraints. Since 2011, Con Ed has converted 2,900 buildings in Westchester from oil to natural gas, The Wall Street Journal reported in January.
photo by Karen Green.
In April, Con Ed announced a deal that will provide for technical improvements in an existing pipeline. This would mean a larger gas supply beginning – ideally – in late 2023. The project still needs approval from state and local agencies, as well as the Federal Energy Regulatory Commission.
All of this took place against the backdrop of a problematic long-term New York energy policy under Gov. Andrew Cuomo. On the governor’s watch, the state has instituted a permanent ban on hydraulic fracturing (also known as fracking), a decision I described at the time as both tragedy and farce. Cuomo claimed that he had no real role in the ban, washing his hands of a decision that further pressured the economically strapped areas of his state beyond New York City and its environs. The ban followed years of punting in the form of ongoing studies of fracking’s potential effects.
New York policy under Cuomo has also discouraged the movement of out-of-state natural gas to and through the state. In January 2018, the state denied a water permit for a proposed natural gas pipeline that would have moved natural gas from Pennsylvania to upstate New York. The September prior, the Federal Energy Regulatory Commission overturned the state’s earlier decision to deny a water quality permit for a different pipeline. State regulators also rejected a permit for a pipeline from Pennsylvania in 2016; the company’s appeal nearly made it to the U.S. Supreme Court in 2018, but the high court declined to hear the case, allowing a lower court decision in favor of New York to stand. The state’s opposition to new pipeline construction, as well as to fracking, has not only hurt New York residents. It has also contributed to New England’s unreliable domestic gas supplies.
The unintended consequences of New York’s policies and the moratorium they induced include the inability to create new affordable housing in high-cost Westchester, as well as blocking the economic redevelopment of the county’s long-struggling urban areas including Yonkers, New Rochelle and Mount Vernon. Municipal officials and developers alike looked to the state for help when Con Ed announced its moratorium, but received no relief. Yonkers Mayor Mike Spano said of the moratorium in January, “Developers have made it abundantly clear to me that they would have to stop their projects if they’re unable to get (natural-gas) service.” So far, that is exactly what has happened.
Con Ed is trying to work around the constraints on its natural gas supply as best it can. The New York State Public Service Commission encouraged Con Ed to pursue solutions that did not involve new pipelines, approving a program aimed at lowering natural gas demand. The plan involved pointing customers toward alternatives such as geothermal and air source heat pumps, as well as electrical heating options. The commission called the measures the “early stages of a long-term, comprehensive approach.”
Encouraging customers to switch to electric heat might make a lot more sense if Con Ed’s electricity rates were not among the highest in the United States. Or if the utility’s electric grid did not already stagger under peak summer loads. Or – most important of all in Westchester – if Con Ed’s distribution network was not regularly subject to extended outages due to storms in the heavily treed suburbs, or simply due to old and unreliable infrastructure. Natural gas provides a heat source even when the lights are out, which can make a big difference after a major ice storm. Westchester occasionally gets those, too.
Environmental activists like to pretend that utilities and developers invent demand for new pipelines and consequences like the Westchester gas moratorium to line their own pockets. It is, in fact, a numbers game: You can only move so much of something at a certain rate of speed through a pipe of a particular size. To move more of whatever it is, you either need to move stuff faster (essentially the 2023 fix Con Ed is seeking), make the pipe bigger or get another pipe. Activists and the state politicians who cringe before them have blocked the last two options. Given the chance, they’ll likely resist even the first. Their opposition is not really to the pipelines, after all; it’s to the fuel.
Another day, we can debate the merits of long-term alternatives like renewable energy (which still needs to be transmitted through a power grid to be economic, and which also requires yet-unavailable battery storage to be reliable). Right here, right now, you can’t build anything in Westchester if you need to connect it to an uninterrupted gas supply.
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Larry M. Elkin, CPA, CFP®, has provided personal financial and tax counseling to a sophisticated client base since 1986. After six years with Arthur Andersen, where he was a senior manager for personal financial planning and family wealth planning, he founded his own firm in Hastings on Hudson, New York, in 1992. That firm grew steadily and became the Palisades Hudson organization, which moved to Scarsdale, New York in 2002 and to Stamford, Connecticut 15 years later. In 2005 the firm expanded to Fort Lauderdale, Florida, a branch office that became the firm’s official headquarters in 2017. The firm also added offices in Atlanta, Georgia in 2008; Portland, Oregon in 2012; and Austin, Texas in 2016. Larry is now based in Fort Lauderdale.
As president of Palisades Hudson, Larry maintains individual professional relationships with many of the firm’s clients, who reside in more than 30 states, from Maine to California, as well as in several foreign countries. In addition, he works closely with the firm’s Entertainment and Sports Team; Larry leads the team that provides business management to singer-songwriter Maddie Wilson and is a producer member of Film Florida. In 1997 Larry established the organization’s investment advisory business, which currently manages more than $1.4 billion.
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He wrote several of the chapters in the firm’s book, Looking Ahead: Life, Family, Wealth and Business After 55. His contributions include Chapter 1, “Looking Ahead When Youth Is Behind Us” and Chapter 4, “The Family Business.”
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The views expressed in this post is solely those of the post’s author.