Politicos, Business Leaders Detail Dramatic Economic Impact of Natural Gas Moratorium on Westchester

John Jordan | February 2019

New Rochelle Mayor Noam Bramson testifying at the PSC Commission hearing at the White Plains Library

WHITE PLAINS—In two separate hearings on Wednesday, county, city and business leaders bemoaned the potential economic impact of Con Edison’s moratorium on new natural gas connections for most of Westchester County scheduled to begin on March 15.

Some described the current situation as “a full-blown crisis” with the potential to bring new commercial, multifamily and affordable housing “to a grinding halt.” Yonkers Mayor Mike Spano in written testimony given to the New York State Public Service Commission said the moratorium if allowed to continue for a protracted period could be a “death sentence for Westchester and its communities.”

Those who testified before Administrative Law Judge Anthony Belsito and Cindy McCarran, deputy director, gas and water for the New York State Public Service Commission, charged that the moratorium is already causing some developers to question their investments in the county and imperil the billions of dollars of new development pipelines on the drawing boards in the county.

State Assemblywoman Amy Paulin and others criticized both Con Edison and the PSC for the lack of notice given to the natural gas shortage problem. Con Edison stated that in filings with the PSC in 2017 it informed the commission that a moratorium could be an option if tight market conditions for natural gas continued.

Con Edison’s Ivan Kimball, vice president of energy management for Con Edison, briefed meeting attendees at the afternoon session and Kim Boden, vice president of gas operations for the utility, spoke to those who attended the public hearing at the evening session. Both explained that natural gas usage in Westchester and the entire New York metro region has grown considerably and the demand has far outpaced the supply. Combine that with a regulatory environment that has seen numerous gas pipeline projects be rejected by state regulatory authorities or abandoned by their developers, the pipeline supply into the area has not increased. In fact, the last year a pipeline was approved to connect to the Con Edison system was 2013.

They noted that since the utility announced last month the impending moratorium on new natural gas connections, customer applications for natural gas connections have doubled, which has led to a corresponding quadrupling of natural gas volume requested.

Those who file an application for natural gas prior to March 15, will have two years to complete their project. For major development projects still in the early stages, this timeline is virtually impossible, city officials and developers told Real Estate In-Depth.

The PSC approved earlier this month Con Edison’s Smart Solutions program, which includes a host of mostly non-pipeline initiatives geared at enhancing supply and fostering new energy uses.

Westchester County Executive George Latimer asked both Con Edison and the PSC to delay the implementation of the gas connection moratorium until at least Aug. 1, 2019, which would be a month after the PSC issues a report (due July 1) on its investigation into the natural gas supply issue in Westchester.

“This move to abruptly and quickly halt new gas-line hook ups in Westchester County will be a tremendous blow to our economic development,” Latimer said. “This blow is particularly serious in our major cities where development has been the base of their economic revival efforts.”

Westchester County has conducted a survey of projects that could be impacted by the moratorium. Latimer said that a total of 16,000 residential units are in the development pipeline and another two million square feet of commercial projects are on the drawing boards in affected municipalities. The projected loss in construction jobs would be somewhere around 28,500 and the loss of permanent jobs would be between 5,000 to 7,500 positions.

Latimer said the county’s efforts to build much-needed affordable housing would also be stalled if the moratorium were in effect for any significant length of time.

A host of municipal officials, including White Plains Mayor Tom Roach and New Rochelle Mayor Noam Bramson testified that many multifamily and commercial projects valued in the billions of dollars could be impacted in their respective cities.

Yonkers Mayor Mike Spano in written testimony given to the PSC requested that an independent assessment be conducted as to whether there is indeed a natural gas supply crisis that warranted a moratorium. He also called for a short-term solution that would bring natural gas into Westchester, “while a long-term sustainable plan for renewable energy is developed that doesn’t throw the local economy and tax base into a tailspin.”

Mayor Spano continued, “Ultimately this moratorium is going to cost the people in lost jobs, lost housing, lost taxes and lost economic growth. This gas moratorium without a viable energy alternative is a death sentence for Westchester and its communities.”

Business Council of Westchester Vice President and Chief Operating Officer John Ravitz said the root cause of the natural gas supply problem has been the lack of gas transmission pipeline supply, caused in part by the state’s unwillingness to approve pipeline projects, coupled with a dramatic increase in consumer demand for natural gas. “We now have the worst of both worlds, no available new gas supplies and no viable alternatives,” Ravitz said.

The BCW, which has established a task force to deal with the issue and formulate possible solutions to the supply problem, “urges in the strongest terms that the PSC review the current situation and offer realistic, quickly achievable solutions starting with exploring ways and a willingness to expand the existing supply pipelines,” Ravitz testified.

PSC spokesman Jim Denn when asked by Real Estate In-Depth what regulatory powers the agency has and whether it could order Con Edison to delay or lift the moratorium once instituted, responded, “The Public Service Commission has commenced an investigation to determine whether or not the moratorium is warranted and needed. Depending on the outcome of that investigation, the Public Service Commission will decide what the next steps will be.”

John Jordan
Editor, Real Estate In-Depth