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Municipalization eyed for New York City, Chicago

In the wake of recent back-to-back power outages, New York City Mayor Bill de Blasio raised the possibility of municipalizing Consolidated Edison, the investor-owned utility that serves the city’s five boroughs and Westchester County to the north.

Meanwhile, in the middle of the country, 22 aldermen of Chicago’s City Council have introduced an order that would authorize the hiring of a consultant to determine the feasibility of the city taking over investor-owned Commonwealth Edison.

On July 13, about 72,000 Con Ed customers on the West Side of Manhattan lost power as a result of equipment failure. By July 14, the utility had restored power to the affected customers, but not before both Mayor de Blasio and New York Gov. Andrew Cuomo criticized the utility and called for an investigation of the cause.

In a press conference after the blackout, Cuomo said he was “not interested” in Con Ed’s investigation of the cause of the blackout and said the state would conduct its own independent investigation.

Cuomo made a distinction between blackouts caused by unpredictable acts of nature and outages that are the result of what he called inadequate operation and maintenance of the system. The governor said the state has had “many issues” with Con Ed, and said, “Con Ed does not have a franchise granted by God.”

“We are getting to the point where Con Ed is going to have to deliver or we are going to have to find a different delivery mechanism,” Cuomo said. “We have replaced utility companies in other parts of the state. It can be done.”

On July 15, Con Ed said that its preliminary investigation found that blackout resulted because  a “relay protection system at our West 65th Street substation did not operate as designed.”

More recently, on July 29, the investor-owned utility said that since it issued its preliminary findings into the cause of the July 13 power outage, “we have conducted extensive testing of equipment and a thorough review into why our relay protection system did not perform as designed. Our engineers have determined the root cause and taken steps to prevent a recurrence.”

The utility noted that it identified a flawed connection between some of the sensors and protective relays at the substation and that it had corrected that condition.

“Out of an abundance of caution, we have taken preventive measures by isolating similar relay equipment at other substations,” Con Ed said.

Meanwhile, the heat wave that baked most of the Eastern United States the following weekend brought more outages to New York and prompted the city’s mayor to raise the possibility of municipalizing Con Ed.

On July 21, Con Ed reported that about 33,000 customers in Brooklyn had lost power. The utility had restored power to most of those customers by July 23 only to have another 11,000 customers lose power as a result of severe thunderstorms that swept through the city in the wake of the heat wave.

In the wake of the multiple blackouts, de Blasio publicly expressed his frustration with Con Ed’s response to the recent events and particularly with the utility’s timeline for an answer to the definitive cause of the Manhattan blackout. In an interview, De Blasio called for a “full investigation” of the blackout and said “it’s time to think of other options.”

“They don’t have the accountability of a public sector entity,” de Blasio told the NY1 media outlet. “They are regulated in a way that sort of makes them public. It’s a weird mix. I think it is a bad mix right now because the accountability levels are obviously way off.”

De Blasio said he would start with an investigation, but if that investigation does not yield better answers, “I for one, do think we need to think about some kind of public approach,” holding up as an example the city’s water system.

In Chicago, meanwhile, 22 aldermen of the 50-member City Council are pushing for a feasibility study on the municipalization of ComEd. One of the leaders of that group is Carlos Ramirez-Rosa, alderman of the 35th Ward who says that he, along with other members of the Democratic Socialists of America on the City Council, are pushing for the “democratization” of utility service, just as the city’s transportation system was taken over by the city years ago.

The proponents say municipalization could accelerate measures to reduce greenhouse gas emissions and lead to a more “progressive rate structure that ensures better rates for working-class Chicagoans.”

The proposed order by the aldermen argues that ComEd “has not shown a universal commitment to cooperative partnership with the City of Chicago nor taken sufficient action to address environmental, efficiency, and equity concerns.”

The aldermen said that municipal utilities “are a common and successful form of electric power provision across the nation, such as in cities like Austin, TX, Chattanooga, TN, and Omaha, NE, along with numerous communities within the State of Illinois.”

The order would have the city’s “Department of Fleet & Facilities Management commission a municipalization feasibility study to explore alternative options to the existing franchise arrangement.”

The proposed order would also give the city the right to review ComEd’s accounts to gather information necessary for the study.

ComEd’s franchise agreement with Chicago, signed in 1992, expires on Dec. 31, 2020. The proposed order calls for the study to be completed by Dec. 1, 2019.

Municipalization efforts have grown in the past several years. Boulder, Colo., in June increased its offer to take over Xcel Energy’s distribution assets for the city. In May, the city council of Pueblo, Colo., voted in favor of taking the next step in studying the feasibility of municipalization.

Also in May, San Francisco issued a preliminary study that found that public ownership of the city’s electric grid has “the potential for significant longterm benefits relative to investment costs and risks.”

More recently, San Francisco Mayor London Breed and City Attorney Dennis Herrera sent California Gov. Gavin Newsom a letter on July 24 “outlining their rationale for looking at buying PG&E electric equipment serving the city and asking to meet with him soon,” the San Francisco Chronicle reported.

And Maine Gov. Janet Mills in July signed legislation directing the state’s Public Utilities Commission to evaluate the creation of a consumer-owned electric utility that would take over the functions of the state’s existing investor-owned utilities.

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