ConEd's twisted pipeline to double profits

Welcome back to #FuckConEd Summer. We've covered 10 facts about ConEd every New Yorker should know, why ConEd's responsible for the ground beneath our feet exploding, and ConEd's assault on batteries.

Greetings from New York City, where it's as humid as the Amazon rainforest.

Speaking of Amazons, how 'bout that 7.65 gigawatt methane gas plant Jeff Bezos is building in Texas, set to become the largest single source of pollution in the United States?

And speaking of new gas infrastructure...

Did you know Con Edison is building $3 billion worth of new methane gas pipelines and related infrastructure over the next three years... even though New York must legally stop burning natural gas by 2050?

It's true. They're building pipelines with 80-year lifespans knowing full-well they gotta shut it all down in just 20 years' time.

So... why are they doing that?

And who will be on the hook for paying off those pipelines after they've been forced to retire?

And how come ConEd always replaces leaky gas pipelines when they could repair them for 10x less money?

These are the questions we'll be answering in today's post.

For the reader with 2 seconds...

The answers are: 1. Profit, 2. We will, and 3. Profit

For the reader with 2 minutes...

1. The Public Service Commission (PSC) approved a plan to give ConEd nearly $3 billion of ratepayer money to build gas infrastructure
2. I couldn't find a budget line in the plan for making repairs to existing leaky gas pipelines: only lines for full-on replacement. ConEd cannot profit from repairing infrastructure; they only profit from building new stuff.
3. A new gas pipeline has a designated lifespan of 80 years... but the law is clear: New York needs to reduce emissions by 85% by 2050. That means no more gas.
4. If we actually follow the law (big if), ConEd will be forced to prematurely retire pipelines that still have ~55 years of useful life
5. ConEd knows this. And they don't mind. That's because of stranded cost recovery, a mechanism that allows ConEd to make their gas customers pay for the pipelines even after they're no longer in use
6. Not only will customers pay off the remaining balance... they'll pay ConEd a ~10% profit on top of that balance, too. Each and every month for another 55 years. So the more pipes they build before 2050, the more profit they'll make.
7. Plus, ConEd will get to build the non-pipe alternatives (NPA) we'll need to replace all the gas infrastructure they're building... which we will also pay for
8. This is how ConEd gets to profit twice: once for all the gas infrastructure and a second time for the stuff they'll build to replace it
9. This double-dip profit plan will raise our already egregious utility bills while slowing down the clean energy transition
10. What would a publicly owned utility do differently? Robots. Lots of robots.

For the reader with 10 minutes...

What does the CLCPA say, exactly?

The one thing methane-addict Kathy Hochul didn't screw up in the Climate Leadership and Community Protection Act is this: New York still needs to reduce greenhouse gas emissions by 85% from 1990 levels by the year 2050.

Even with her dishonest new methane accounting, an 85% reduction still means the near-total elimination of fossil fuel combustion. Gas heating and gas-fired power plants are two of New York's largest sources of emissions, so both will absolutely have to go.

ConEd is building $3 billion worth of gas infrastructure by '29

If you scroll alllll the way down to Appendix 11 on page 220 of ConEd's most recent rate case, you'll see that the PSC has authorized ConEd to spend nearly a billion dollars in 2026, 2027, and 2028 on new gas infrastructure.

The majority of that money is earmarked for replacing existing, leaky pipes with brand new ones.

But doesn't ConEd need to replace leaky pipes?

It's true that we don't want pipes leaking methane all over the place. Unburnt methane is 83x worse for climate change in the short-term vs emitting plain old carbon dioxide.

But you don't always have to replace a leaky pipe to fix the problem. Often, you can just repair the leak.

It is much, MUCH cheaper to repair an existing pipe than it is to dig up, cut out, and replace it with a new segment. That cost differential is only getting wider thanks to emerging technologies that include, yes, pipe-repairing robots.

But ConEd doesn't want to let the robots cook, because they aren't allowed to make their 9.4% profit on repair jobs. They only profit on new construction.

Won't repairing gas pipes extend their life, too?

Sure, but the leaking pipes are typically very old, which means that customers have already paid them off. Extending their lifespan is okay, assuming we actually follow our law and get off gas by 2050.

How will we get off gas by 2050?

By investing heavily in non-pipe alternatives (NPA).

Today, "non-pipe alternatives" is just a fancy way of saying heat pumps, the extremely efficient electric air conditioners that can both heat and cool a space.

ConEd provides rebates to a select sliver of home-owning gas customers who take the initiative to switch over to heat pumps through a program called the NYS Clean Heat program. The program constitutes a rounding error in their budget.

But at some point between now and 2050—hopefully sooner than later—ConEd will likely start investing in building out their own non-pipe alternatives.

My guess is they lean heavily into Thermal Energy Networks (TENs).

Perhaps you heard Mayor Mamdani's recent announcement about adding a TEN to the Chambers Street subway station redesign to cool down the sauna-like station platforms?

If the City's TEN goes to plan, I expect ConEd follows their lead.

NYC Wants to Use Thermal Energy to Cool Subway Stations - Inside Climate News

The stations can become “underground saunas” in the summer. An $800,000 pilot study could help lower temperatures.

Inside Climate NewsDerek Harrison

How's a TEN work?

Without getting too deep in the weeds, Thermal Energy Networks are a form of geothermal heating. They're kind of like Geothermal Lite. You drill a dozen holes to a depth of 500–600 feet, then use water-filled pipes to pump surface heat down into the bedrock, which absorbs the heat from the water in the pipes slowly over time. Heat can stay trapped down there in the bedrock for months, which means balmy summer subway platform air can be used to heat nearby buildings throughout the following winter.

It's a neat technology, and not a particularly new one. There have been over 3,000 TENs built in the Netherlands over the last 40 years, though their aquifer-based version works slightly different than what I just described. Hundreds of TENs are operational in other European countries.

Can ConEd legally build TENs?

Astute question! As a deregulated distribution utility, ConEd isn't able to build, own, or operate anything that generates electricity.

Perhaps you remember our series on Enhanced Geothermal Systems (EGS), which involve drilling deeeeep into the Earth, down to where it gets really, really hot, and pumping up that heat to make steam and generate electricity? EGS is the major leagues. But TENs don't drill anywhere near that deep. They're really just thermal batteries.

Besides, ConEd has explicit permission to build them thanks to New York's 2022 Utility Thermal Energy Network and Jobs Act.

So don't be surprised if in 5–10 years ConEd leans into building TENS... and leaves the rebate game behind.

Guess why?

Yup, ConEd can earn a profit by building Thermal Energy Networks.

Thus, the double-dip.

What's the double-dip again?

ConEd can profit by building billions of dollars worth of Thermal Energy Networks while collecting a second profit on the billions of dollars of gas infrastructure they already built that we can no longer use.

I hope ConEd starts building TENs as soon as possible, but I wouldn't be surprised if they wait until last possible minute to begin in earnest. That's because the more gas pipelines they build before the cut-off, the longer they get to collect.

Of course, there is an alternative to this madness: we can take over Con Edison and run it as a publicly owned utility.

What would public ownership do differently?

A publicly owned ConEd, unburdened by the profit motive, would do many, many things differently.

Here are three relevant ones:

1. We'd repair the leaky pipes instead of replacing them, saving billions of dollars in the process. It's really not that hard. Contract some pipe-repairing robots, capable of sealing pipes as small as four inches in diameter. There's even a company making these robots in New Jersey called Progressive Pipeline Management. PPM claims their bots are an order of magnitude cheaper (and cuter) than full-on pipe replacement. It is criminal that ConEd's not looking into pipe-sealing robots! Except it's, y'know, totally legal.
2. We'd massively invest in the heat pump rebate program. It's way, way cheaper to just give 10,000 households $10,000 to install heat pumps than it is to replace the gas lines servicing 10,000 homes.
3. We'd start building TENs ASAP. There's no reason to wait another ten years to move on this... unless you're trying to maximize shareholder profits. A publicly owned utility will still need to reckon with stranded gas assets. But the less partially paid-off pipelines we have on the books, the better it's going to be for our wallets, our lungs, and our future.

#FuckConEd Summer is almost over. Frankly, I'm excited to work on something optimistic for a change. But there's one more article I need to write first.

Until next time!