Wednesday, October 10, 2012
Midtown Developer Accuses Con Ed of Overcharging
It is not easy being green and trying to keep the electric company from raising your rates.
The owner of the Bank of America Tower in Midtown Manhattan is learning that lesson. For the second time in less than a year, it has accused Consolidated Edison of trying to overcharge for the sophisticated power plant in the building, which it has heralded as the most environmentally advanced skyscraper in the country.
Last November, the developer, the Durst Organization, persuaded state utilities regulators that Con Edison had overbilled it by more than $290,000. Now, the developer is asking the regulators to prevent the utility from increasing the annual gas bill for the tower by more than $85,000.
The disputes provide a glimpse into the underbelly of a 55-story building that the Durst Organization has called an icon for its efficient use of energy. The tower contains a cogeneration system that produces electricity to run the lights and computers in its offices and trading floors.
Mayor Michael R. Bloomberg and Gov. Andrew M. Cuomo have called for more buildings to generate their own electricity to reduce demands on the power grid and reduce waste. The Durst Organization argued in its complaint to the state Public Service Commission that the tower was meant to serve as “a demonstration project” for such plants, but that Con Edison’s billing practices could have a “chilling impact” on the development of others.
The current dispute centers on what the building does with some of the fuel it obtains from Con Ed. Most of the natural gas piped into the building from beneath 42nd Street near Bryant Park fires the power plant. Rather than waste the exhaust from that combustion, the system feeds it into a boiler that produces steam to heat and cool the tower.
But that equipment, known as a heat recovery steam generator, is not always sufficient. When it is not, a gas-fired backup system produces additional steam to help with the heating or cooling.
Until now, Con Edison had been giving the building a discount on the gas used by the backup system. But after another customer proposed using a similar system, Con Edison executives said they should not have been applying that discount to the Bank of America Tower. The lower rate is only for gas used to generate electricity, relieving some burden on the citywide grid, not for producing steam, they said.
“If the machine is being used to do essentially the same thing as a boiler would, we think that is not eligible for this rate because it’s not helping with the electric system,” Margarett Jolly, manager of distributed generation for Con Edison, said in an interview on Tuesday.
She said a decision by the regulators in Durst’s favor would set a precedent just as in-building power generation is catching on in the city and could shift more cost onto other customers. Durst estimated that the loss of the discount would cost the building $86,129 per year.
The developer likened the billing dispute to the one that it took to the commission in November. Durst said then that Con Ed’s overestimation of the building’s peak demand for electricity had resulted in improper charges of more than $290,000. The regulators agreed, but Con Edison has asked them to reconsider.