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Gotham Gazette

The Place for New York Policy and politics

Citizens Union

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Lighting The Way

by Derek Alger

When New Yorkers were socked with high Con Ed bills over the summer, and there was dark talk of a looming energy crisis, many people complained; more worried. Yet fewer than three percent of Con Ed's customers switched to a different energy company, even though doing so is now as simple as choosing a new long-distance telephone company. All it takes is a phone call.

Now it is winter and there IS an energy crisis -- in California, where there is so little electricity to go around that they are rolling out blackouts to conserve power. And New Yorkers are complaining and worrying again.

The New York State Public Service Commission last week unanimously voted to add about 0.5 percent to New Yorkers' electricity bills, in order to fund energy conservation programs, including one encouraging the use of wind power.

U.S. Senator Charles Schumer has called on the Federal Energy Regulatory Commission (FERC) to conduct an immediate analysis of New York's wholesale energy market in an effort to ensure that "New York does not follow California down the road to crippling power shortages and even higher prices tomorrow."

"The truth is that nobody really knows if we're going to have a crisis like the one in California," says Allen Zerkin. "One of the consequences of deregulation is that there is some uncertainty as to how much electricity can be generated under peak demands; nobody has the comprehensive view the way Con Ed used to have." Zerkin, a professor at the NYU Wagner School of Public Service, recently helped convene NYC Energy Dialogue, a forum of business leaders, academics, environmentalists, community groups, and government agencies to find out what the facts really are, "and how to meet the short-term and long-term energy needs of the city." Zerkin will also be the moderator for a public forum on New York City energy policy entitled "Power for the People," which will take place at the Urban Center of the Municipal Art Society on February 7, and is likely to attract a lot of concerned New Yorkers.

One New Yorker does not sound so worried. "New York will avoid the financial crisis faced by California utilities and banks," Allen Thurgood predicts. "But," he adds, "New York consumers will still have to protect themselves against unanticipated price hikes." There is a way that individual consumers can do that right now. They can buy from his company. Thurgood is the founder of a company with a wonky name and a worthy cause, 1st Rochdale Cooperative, a non-profit company supplying electricity to consumers in New York City.

"We have always subscribed to the philosophy," Thurgood says, "that customer choice means customer control."


Deregulation seemed like a good idea. Theoretically, by encouraging the creation of competing energy companies, the consumer would benefit because the rates would be lower. While many acknowledge that this may still happen in the long run, no one knows for sure by how much or for how long.

The plan to deregulate in New York was phased in over three periods beginning in June, 1998, when just a few companies were allowed to purchase electricity from independent suppliers. Phase 3 began last year when all customers in New York City could opt to remain with Con Ed or choose another energy company.

Many of the newly-sprouted alternatives to Con Ed do indeed offer lower rates. Six out of eight independent electric suppliers reportedly charged less per kilowatt hour this summer than Con Edison, which charged 13.4 cents per kilowatt, though its rates vary monthly. Orion Energy Services charged 9.5 cents per kilowatt hour and ECONergy Energy Co. 9.8 cents, but both companies also have varying monthly rates. Con Edison Solutions, owned by Con Ed, charged 9.2 cents per kilowatt hour, (plus a $4.95 per month customer service charge). Inc. charged 8.73 cents. But the best buy, at 8.5 cents per kilowatt hour, was from the only non-profit company, 1st Rochdale Cooperative.


As an electric co-op, 1st Rochdale is owned by the customers it serves. There are no outside investors seeking to make a profit.

Originally (three years ago) the company's customers were all housing co-ops. Traditionally, housing co-ops have suffered from escalating energy costs, which have been equally divided among apartments, and included in the co-op member's monthly carrying charges.

"The concept behind 1st Rochdale was simple," Thurgood says. "Co-op members together can purchase commodities at lower prices than they could individually. Thiis can apply to energy as well, where the many can get a better rate than the few."

Today, anyone in New York City can decide to become a 1st Rochdale customer. Whether one chooses 1st Rochdale or another energy services company, Con Ed will continue to transmit and deliver electricity to customers.

"Companies like 1st Rochdale do not affect supply," Zerkin explains. "They are alternative retailers, who have to go into the same wholesale marketplace to buy the power that Con Ed goes to, now that Con Ed is also a retailer. They can't alter the fundamental structure, but they can offer an alternative to individual consumers and businesses. "

The possibility of a small annual savings, though, clearly has not been enough of an inducement for most customers to switch from the familiar giant.

"That's true of the small individual customer," concedes Gregory Wortham, 1st Rochdale's chief operating officer. "But large companies, like hotel chains and office towers (all the name companies who might be recognized on a billboard) have switched."

According to Wortham, while only some 3 percent of customers have switched from Con Ed, those who have, represent 11 percent of the city's demand for electricity.

Customers range from office towers and housing cooperatives to small business and individual families. Recently, 1st Rochdale signed contracts for energy management with the Battery Park City Authority to do consulting to suggest ways that the massive complex, whose tenants include some top names in the financial community, can cut energy costs.


Though it is an urban co-op, the concept of 1st Rochdale is more familiar in a rural setting. Indeed, more than two years ago, it was accepted as a member of the National Rural Electric Cooperative Association (NRECA), which represents almost 1,000 rural electric cooperatives that serve more than 30 million people in 46 states. In fact, close to half of all electric power lines in the United States are owned by electric cooperatives, accounting for about 10 percent of the electricity generated in the country. These cooperatives are actively involved in promoting national energy and environmental research.


1st Rochdale also recently hooked up as a partner with The Touchstone Energy alliance, the country_s largest affiliated utility network, serving families and businesses through member-owned cooperatives across the United States. There are currently over 560 Touchstone Energy Cooperatives in 38 states, delivering energy and energy solutions to over 15 million customers.

At a press conference last month in Manhattan, 1st Rochdale and Touchstone Energy announced the unveiling of 1st Rochdale's Green Apple Renewable Energy Program, which includes exploring the use of solar power. Under a pilot program launched with the help of the U.S. Department of Energy and the N.Y. State Energy Research Development Authority (NYSERDA) (which has given out a $375,00 grant), solar panels will be installed at the Amalgamated Housing Cooperative in the Bronx and at East Midtown Plaza Cooperative in Manhattan, two housing cooperatives that house 2,500 families.

"Electricity flows through wires the way water flows through a garden hose," says Tom Thompson, 1st Rochdale's vice president of sustainable energy. "Solar panels generate power right on the site where it is consumed, thus eliminating the need for wires."

Thompson also points out that solar power is most efficient in New York City on the hottest, sunniest days of summer because the sun generates the most power just when people all over the city are turning on their air conditioners.

If buildings were served by solar power, Thompson adds pointedly, it would have been especially useful in averting the July 1999 blackout.


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