Blumenthal, Murphy Request New York Public Service Commission Compel Consolidated Edison To Compensate Metro-North For Power Outage

Metronorth Losses Estimated To Be At Least $8-12 Million; Coned Paid $700 Million Annual Dividend To Shareholders

(Hartford, CT) - In a letter today to Consolidated Edison, U.S. Senator Richard Blumenthal (D-Conn.), joined by U.S. Senator Chris Murphy (D-Conn.) pressed the New York utility to reconsider its refusal to compensate MetroNorth for the substantial losses the rail line sustained during the 12-day power outage in September. Given ConEd’s refusal to date to acknowledge its financial responsibility to the rail line, the senators today took the added step today of asking that the New York Public Service Commission compel the company to compensate MetroNorth using funds from shareholder profits.  

MetroNorth has estimated its losses from the outage to be at least $8-12 million. ConEd has provided shareholders with an annual dividend of $700 million, indicating that the company can more than afford the refund without impacting ratepayers. In contrast, the financial burden of refunds paid to riders by MetroNorth will ultimately be borne by the riders themselves—those who suffered most due to the outage.

On Monday, Blumenthal chaired a field hearing of the Senate Committee on Commerce, Science and Transportation subcommittee on Surface Transportation and Merchant Marine Infrastructure, Safety and Security on the recent Metro-North power outage, receiving testimony from ConEd President Craig Ivey among others. At the hearing, Ivey testified that the power outage occurred when a freeze operation necessary to take an electrical cable off line to facilitate improvements at MetroNorth’s Mount Vernon substation resulted in the failure of the adjacent back-up feeder. While ConEd’s forensic investigation is ongoing, Ivey testified that the failure of the back-up feeder that led to the outage was directly attributable to ConEd’s work on the adjacent cable. Ivey further testified that ConEd had not warned MetroNorth of the possibility of such a failure.

Despite admitting that ConEd’s work was directly responsible for the power outage, and stating that the utility had not warned MetroNorth of possible risks, Ivey has stated that MetroNorth should bear sole responsibility for the cost of the outage.

“ConEd’s refusal to accept financial responsibility for the failure of its feeder cable—a failure it has already acknowledged occurred as a direct result of its own actions—is outrageous and unacceptable. While it is commendable that MetroNorth has already taken swift action to compensate riders for the 12-day service disruption, this cost should not be borne by the very commuters who were most inconvenienced by the outage. Not only does ConEd have an obligation to make MetroNorth riders whole, it has substantial profits from which to pay for such refunds without any impact to its ratepayers,” Blumenthal said. “Given ConEd’s repeated refusal to accept and acknowledge its financial responsibilities—as it has done in previous instances, I have asked the New York Public Service Commission compel the utility to do the right thing.”

“We need to ensure accountability when it comes to unacceptable power failures that leave hundreds of thousands of Connecticut commuters stranded for weeks at a time. We also need to make sure that outages and accidents like this one do not become the norm on the New Haven Line. How will we properly finance and maintain this vital rail line for decades to come? Those equally important questions deserve answers,” Murphy said.

Text of the letters is copied below.

November 1, 2013

Audrey Zibelman, Chair
New York Public Service Commission
Three Empire State Plaza
Albany, NY 12223- 1350

Dear Chair Zibelman:

We are writing to request the Public Service Commission (PSC) open a docket to order the Consolidated Edison Company of New York to pay all damages suffered by MetroNorth as a result of the power outage caused by a electrical feeder line from the Mount Vernon substation. From September 25, 2013 through October 7, 2013, MetroNorth was unable to operate at full capacity because of the lack of sufficient electrical supply.

The power outage occurred as a direct result of ConEd’s operation to freeze one of its electrical feeder cables, while it was taken out of service. As a result of the freezing operation, the second adjacent feeder line failed. Although the precise cause of the failure may be under continuing investigation, there is no factual question that he electrical feeder line is owned and operated by ConEd and it failed during a ConEd repair. At the October 28, 2013 hearing of the Senate Committee on Commerce, Science and Transportation’s Subcommittee on Surface Transportation and Merchant Marine Infrastructure, Safety and Security, ConEd President Craig Ivey denied any responsibility for the damages suffered as a result of the power outage. But his reason for denying responsibility – that MetroNorth requested service – defies logic, law, and basic fairness. ConEd should be held accountable by the Public Service Commission if it fails to acknowledge its obligation voluntarily.

ConEd has a history of electrical feeder line failures including failures that resulted in significant power outages in Washington Heights-Inwood (1999) and in Queens (2006). Reports issued by the Public Service Commission and the Office of the Attorney General subsequent to those power outages consistently raised concerns about the reliability of these electrical feeder lines and the need for significant improvements in the cable infrastructure.

Given the history of problems with electrical feeder lines and ConEd’s full control over the site of the failure of the Mount Vernon cable, ConEd should be held responsible for the damage suffered by MetroNorth as a result of the rail’s inability to operate at normal capacity during the 13 days of the power outage.

Under ConEd’s current tariff, commercial business damage claim payouts are limited. The Public Service Commission’s docket should waive those limits and order ConEd to pay MetroNorth damages – estimated to be at least $8-12 million to MetroNorth alone. Further, any damage payouts should come from shareholders, not ratepayers. With an annual $700 million dividend ConEd can afford to pay the damages resulting from its negligent operation of the freezing of the Mount Vernon substation electrical feeder line.

Thank you for your consideration of this request.

Sincerely,

Richard Blumenthal
United States Senator

Christopher S. Murphy
United States Senator


November 1, 2013

Craig Ivey, President
Consolidated Edison Company of New York
4 Irving Place
New York, NY 10003

Dear President Ivey:

Thank you for your testimony at the October 28, 2013 hearing of the Senate Committee on Commerce, Science and Transportation’s Subcommittee on Surface Transportation and Merchant Marine Infrastructure, Safety and Security. Based on your testimony regarding ConEd’s complete control over the operations during which the electrical feeder line failed and the historic problems with ConEd electrical feeder line reliability, we urge that you immediately reconsider your rejection of any liability for damages suffered by MetroNorth as a result of the lack of adequate electricity supply from September 25, 2013 through October 7, 2013.

We believe that ConEd bears an undeniable clear obligation, and should voluntarily acknowledge its responsibility financially for the full costs of the break down in service. Such voluntary action would spare ConEd and all parties the time and expense of formal agency proceedings and possible litigation.

During your testimony on October 28th, you acknowledged that ConEd owns the Mount Vernon electrical feeder line and that ConEd froze of one of the two electrical feeder lines, resulting in the second one failing without any backup or contingency plan for power to the railroad. ConEd should be held accountable for the damages to MetroNorth as a result of the electrical feeder failure including full refunds to consumers. During the hearing you acknowledged that there was absolutely no warning of risks to MetroNorth and no contingency plans for such risks. MetroNorth cannot be held responsible for risks that were not conveyed.

We urge you to acknowledge the full extent of your responsibility and that upon receipt of a verified damage claim by MetroNorth, you approve such claim and seek any necessary waivers of damage limits. To this end, we have written to the New York Public Service Commission to request that you be directed to pay MetroNorth for the damages that resulted from the electrical feeder line failure. Further, we urge you to take steps to ensure that any payment comes from shareholders rather than ratepayers and we note that given the 29% increase in net income from 2009 through 2012 to $1.14 billion, any damage claim from MetroNorth – currently estimated to be at least $8-12 million – is only a small portion of ConEd profits.

Thank you for your consideration.

Sincerely,

Richard Blumenthal
United States Senator

Christopher S. Murphy
United States Senator