Key Takeaways
Electricity prices in New York have increased by 36% since 2019, nearly three times as fast as in the rest of the country.
Despite this, during the recent July 4 heat wave, Con Edison shut off electricity to over 5,000 customers in the Riverdale section of the Bronx.
With prices 44% higher than the U.S. average, New Yorkers are already suffering from high utility bills, but New York continues to push for more intermittent energy sources such as wind and solar, which have driven prices higher.
Utilities in the state are looking at larger increases even as investments in renewables have diverted funds from operating costs and routine infrastructure maintenance.
The state’s continued adherence to its climate policies and net-zero emissions goals means New Yorkers may be facing even higher prices as electricity is being transformed by government policy into a luxury good.
A heat wave over the Fourth of July weekend tested the U.S. power grid, with more than 20 cities reporting record high temperatures. Despite the extreme heat, the grid held up fairly well, although electricity flickered in areas such as Cape Cod, Massachusetts, and New York City. In the Big Apple, Mayor Zohran Mamdani told residents to switch off their lights and keep thermostats at 78 degrees, though City Hall was not suffering, as parts of the municipal government were kept at temperatures as low as 54 degrees. Despite that, Con Edison shut off electricity to over 5,000 customers in the Riverdale section of the Bronx, leaving residents there without air conditioning. Affected residents were directed to city cooling centers for relief.
Con Edison had decided the N.Y. grid could not handle the load, saying the shutoffs were necessary to reduce strain on the grid, protect equipment, and speed up restoration. The company also cut voltage by 8% in areas of the city as a precaution to protect equipment and keep service running while crews worked.
While Riverdale residents were cut off from electricity on July 2, Madison Square Garden had the electric power to host a rehearsal dinner for the wedding of Taylor Swift and Travis Kelce. The couple planned to marry at the Garden on July 3rd, with a reception expected to run into Saturday morning, with about 1,000 guests attending. The dichotomy was clear between providing electricity to the ultra-rich and to a working-family neighborhood.
New York City’s electrical grid strains each summer, most likely due to the city’s population density, aging infrastructure, and growing electrification mandates. The state has been reducing dispatchable energy resources, including nuclear power, as part of its energy transition policy. The N.Y. grid needs investment, maintenance, and realistic planning. But New York is a blue state that suffers from fracking bans and climate policies that increase the cost of electricity for its residents without providing reliability. Reliable infrastructure is a core responsibility of government and the public utilities that serve Americans. While Con Edison made the operational decision on July 2, the city sets infrastructure priorities, negotiates utility agreements, and decides which neighborhoods receive investment and which receive information about cooling centers.
In response to that responsibility, New York Governor Kathy Hochul has a new proposal for residential customers that grid operators call “demand response,” which is used with large commercial and industrial companies. The customer allows the utility company to adjust the home’s “smart thermostat” by a couple of degrees on days when electricity usage is high, which would reduce air conditioning use during heat waves and save energy. In turn, the utility company would reduce the household’s electric bill by $25 a month for a full year, for a total of $300. The demand response proposal allows Hochul to avoid the real investment the N.Y. power grid needs while increasing the centralization of control over individuals’ choices.
New York’s Climate Policies
Under the Climate Leadership and Community Protection Act (CLCPA), New York must reach 70% renewable energy by 2030 and net-zero electricity by 2040. To meet the target, the state has been promoting very expensive offshore wind power off the coast of Long Island, as the law requires 9,000 megawatts of offshore wind energy by 2035. It also requires 6,000 megawatts of solar energy by 2025 and 3,000 megawatts of energy storage by 2030. The state also has targets to cut greenhouse gas emissions by 40% from 1990 levels by 2030 and by 85% by 2050. These policies require substantial investments in wind and solar, as well as a statewide “cap-and-invest” system that has yet to be implemented.
In a cap-and-trade-and-invest program, large greenhouse gas emitters, such as industrial facilities, electric utilities, and/or fossil fuel suppliers, must meet a “cap” on emissions set annually by the state. The firms can reduce their emissions or purchase allowances from the state to emit carbon dioxide. They can also trade allowances with other firms. The price of the allowances is determined by the market and reflects the difficulty of reaching the cap set by the state. The revenues from the allowances are to be spent on carbon emissions-reducing programs. The companies that must participate raise their product prices based on the cost of the allowances they are forced to buy, thereby making energy more expensive for New Yorkers.
The program is similar to the Regional Greenhouse Gas Initiative, a regional cap-and-trade program that covers electric utility companies, of which New York is a member. There are 11 participating East Coast states, including New York. The other states are Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, Rhode Island, Vermont, and Virginia. Virginia recently rejoined after the state’s previous governor, Youngkin, had removed the state from the program. It is estimated that Virginians will pay $13 more per month on their residential electric bills starting in March of next year and continuing through February 2028, with Dominion Energy, Virginia’s primary utility, covering the costs of the program. Those costs could decrease if spread out over a longer time period, but new costs could be added as the emissions cap is reduced.
The state has continually found ways to tax residents in the name of climate change. N.Y. Governor Kathy Hochul signed a law mandating that the largest fossil fuel companies—deemed responsible for carbon dioxide emissions from 2000 to 2018—contribute $3 billion annually to a climate mitigation fund for the next 25 years. The companies that are taxed will add those costs to New Yorkers’ energy bills. The state’s Climate Superfund Act has not been implemented, as 22 states have sued to halt its implementation.
Conclusion
The Democratic-leaning Progressive Policy Institute warns that New York’s climate targets are veering out of reach as the state is far off pace: offshore wind capacity is just 1% of what’s needed for 2030, and energy storage stands at only 8%. Fossil fuels still produce nearly half of New York’s electricity, and the closure of the Indian Point nuclear plant in Westchester has further hindered progress toward the state’s clean-energy goals. Yet the state’s residents are paying increasingly high energy prices. Electricity prices are 44% higher than the national average. Residential electricity rates have risen by 36% since 2019, nearly three times as fast as in the rest of the country. Furthermore, NY utilities are pursuing additional rate hikes of around 20%, as investments in renewables have diverted funds from operating costs, routine infrastructure maintenance, and storm repairs.
