Consolidated Edison Co. of New York Inc. received mixed results in its bid to avoid penalties for pandemic-related delays in its pipeline replacement program.
The New York City and upstate gas distributor prevailed in its petition to state utility regulators to forgive its failure to hit a 2020 target for removing leak-prone pipes. The New York State Public Service Commission also revised targets — expressed in miles of leak-prone pipe replaced — through 2022.
However, the PSC disallowed ConEdison from reaping benefits tied to other aspects of its pipeline safety program. The commission ordered the company to return to customers, with interest, any payouts linked to hitting those targets.
The Dec. 22 ruling illustrated how regulators could handle COVID-19's impact on pipeline replacement, leak detection and safety programs, a core aspect of gas utility rate cases. ConEdison consistently tops S&P Global Market Intelligence's annual ranking of gas utilities most actively repairing leaks.
In its latest rate case, ConEdison committed to replacing 85 miles of leak-prone pipe in 2020 and faced negative rate adjustments of 15 basis points after removing just 67 miles. The company said it was unable to hit the target due to the suspension of all nonemergency activity, first in March 2020 at the onset of the pandemic and again in October 2020 during a surge in COVID-19 infections.
Those work stoppages led to "significant reductions" in ConEdison's contractor workforce, followed by challenges in reemploying qualified workers and maintaining its workforce in the face of quarantines. ConEdison also said outdoor dining locations that sprouted up on streets throughout New York City limited its ability to conduct pipe removal.
The PSC determined the obstacles were beyond ConEdison's control and excused the 15-basis-point negative revenue adjustment incurred for 2020. It granted ConEdison's request to modify its cumulative 2020-2022 gas main replacement target from 270 miles to 247 miles.
New York City intervened in the proceeding, lodging its concern that ConEdison would be excused from liability in one aspect of its safety program while being rewarded in others. The city asked the PSC to extend relief to ratepayers by preventing ConEdison from realizing positive revenue adjustments for exceeding targets.
The PSC agreed that ConEdison should not be able to earn 1 basis point for exceeding its leak management target, 6 basis points for achieving above-target emergency response times and 5 basis points for topping its damage prevention goal in 2020. The commission ordered ConEdison to refund any revenues collected for the 12 basis points of combined positive rate adjustments.
