Con Edison Hit With Largest Penalty in Its History for 2006 Blackouts

State utilities regulators hit the Consolidated Edison of New York, Inc. with an $18 million penalty yesterday for its service disruptions last year, the largest the state Public Service Commission has imposed against Con Ed. The blackouts included a nine-day blackout in western Queens effecting Astoria and Long Island City that left about 174,000 people without power for as long as nine days in July 2006, and other power failures in Westchester County.

The $18 million penalty is not intended to compensate customers for their losses during power failures. Instead, it will be spread to all customers in the system. It amounts to about $6 for each of Con Ed’s 3.1 million customers, including big corporations, and just 1.5 percent of the $1.2 billion in rate increases the company is seeking.

In early September, the commission’s staff recommended that the rate increase, which would take effect in April, be limited to $618 million. The maximum penalty the commission can exact from Con Ed for one year’s failures is $59 million. But the largest penalty it had previously imposed against Con Ed was $8 million in 2005.

In addition to Con Edison’s electrical services, the Public Service Commission of the New York State Department of Public Service regulates Con Ed’s gas and steam services. Within the New York State Department of Public Service, the Office of Electricity and Environment has responsibility for steam generators, steam production planning, and steam rates, charges, rules and regulations. The Office of Gas and Water has responsibility for the steam transportation system, and steam safety issues. This includes oversight and investigation of steam system accidents.

The Department’s authority regarding facility failure events such as the Con Edison steam pipe rupture on July 18, 2007, in Manhattan is granted as part of the New York Compilation of Rules and Regulations of the Public Service Commission (NYCRR). Thus far there have been 22 lawsuits, including personal injury actions, commenced against Con Edison regarding the steam pipe explosion. To date there has been no decision on Con Ed’s request that the Litigation Coordinating Panel in New York County schedule the completion of pre-trial matters in all lawsuits thus far filed and those to be filed regarding the steam pipe explosion, and that the court issue an interim stay of all such actions.

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