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Con Edison Faces US$25 Million in Penalties for 2019 Manhattan, Brooklyn Outages

Nov. 23, 2020
Two separate July 2019 power outages left more than 100,000 customers without electric service.

Governor Andrew M. Cuomo recently announced that Con Edison now faces US$25 million in penalties and possible license revocation from the New York State Public Service Commission (PSC) following an investigation into the utility's failed response during large-scale power outages in Manhattan and Brooklyn in July 2019. The utility has an opportunity to contest the penalties, but should the commission confirm any of these apparent violations and if Con Edison is shown to have failed in providing safe and adequate service, the commission will commence a proceeding to revoke or modify Con Edison's service territory certificate. The US$25 million in potential penalties is in addition to US$15 million in revenue reductions already applied to Con Edison by the commission because of these same 2019 outages.

"Like so many New Yorkers, I was outraged when this blackout occurred," Cuomo said. "Utilities are well-paid by consumers to keep the lights on and Con Edison failed miserably to perform the essence of its agreement with customers. I immediately directed the PSC to conduct a thorough investigation of the outage to determine who was to blame. I will do everything I can to make sure New Yorkers are compensated."

Outages such as the ones that occurred in July 2019 in the Con Edison service territory, which were non-storm related, called into question the company's ability to ensure reliable service during severe inclement weather. During the summer of 2019, Con Edison experienced two sizable outage events eight days apart. The first occurred on July 13, 2019, at approximately 6:47 p.m. This four-hour and 50-min outage caused approximately 73,000 customers to lose electric service on Manhattan's West Side from 5th Avenue to the Hudson River and from 31st Street to 71st Street. The second outage event began in Brooklyn on July 21, 2019, in the Flatbush system and resulted in the loss of electric service to approximately 33,000 customers over a two-day period.

The outages impacted commercial activities, residential buildings, transportation systems, and traffic control. Lights were out in many of New York City's popular nighttime destinations and public venues such as Madison Square Garden, Broadway theaters, Carnegie Hall, and restaurants. The subway system experienced widespread delays and limited service, as the Metropolitan Transportation Authority had to close various stations in Manhattan. While the underlying cause and conditions of these customer outages were different, the Manhattan and Brooklyn outage events led the Department of Public Service to question the company's performance during these events and its efforts to communicate critical outage information to customers, first responders, and elected officials.

Department staff began an investigation of the root causes of and the company's performance during the Manhattan and Brooklyn outage events. The department's detailed 13-month investigation resulted in a report with 13 recommendations related to the Manhattan outage event and 27 recommendations as a result of the Brooklyn event.

PSC Chair John B. Rhodes said, "A utility's first and most important job is to ensure the safety and reliability of its delivery system. Based upon the results of our thorough investigation, it appears that Con Edison has failed in that task and, as a result, we will now consider ways to penalize the company for its apparent failures, while also directing it to make improvements to ensure repeats do not happen again."

As a result of this investigation, Con Edison is now directed to answer these charges relating to conduct prior to, during, and after the Manhattan and Brooklyn outages, and pursue civil penalties and/or administrative penalties for its failure to adhere to rules and procedures regarding outage prevention and restoration. Based on current state law, the maximum financial penalty Con Edison could face is more than US$25 million — one of the largest penalties ever issued by the PSC. The penalties, should they be levied, would be paid by the utility's shareholders, not from ratepayer funds borne by customers.

The review of Con Edison's performance during the 2019 Manhattan and Brooklyn outages identified many opportunities for improvement that should be resolved by implementing and complying with the recommendations. To ensure timely implementation of the recommendations, Con Edison has been directed to respond within 30 days regarding both the implementation of the recommendations and why the PSC should not pursue penalty actions against the utility.

However, despite facing potential penalties, Con Edison was recently recognized by PA Consulting as the recipient of the 2020 ReliabilityOne Award for Outstanding Reliability Performance in the Northeast Region Metropolitan Service Area. Lance Becca, Con Edison's general manager for Brooklyn-Queens Electric Operations, also received a special ReliabilityOne award from PA Consulting. The selection of provisional recipients of the ReliabilityOne Awards is based primarily on system reliability statistics that measure the frequency and duration of customer outages. After selection, each company undergoes an on-site certification process that provides an independent review and confirmation of the policies, processes, and systems used to collect, analyze, and report a company's reliability results.

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