Con Edison's $1.6B ask: How a future test year and stacked riders hide the real bill impact

Con Edison filed a rate case with New York regulators in January 2025 seeking $1.6 billion in additional annual electric delivery revenues, a move that will reshape how and when New York customers pay for grid service.^[1][5] This is not a story about whether rates will rise; it is a story about which mechanism moves the money and who absorbs the risk.

Start with the revenue requirement. Con Edison's initial ask represents an 18 percent increase in base delivery revenues, or 11.4 percent of total electric revenues.^[1] Under rate-of-return regulation, that total is derived from a formula: rate base multiplied by authorized return on equity, plus operating expenses, plus depreciation, plus taxes. The utility's rational move is to grow the rate base, because every dollar of capital it owns earns the allowed return. The question the Public Service Commission must answer is which test year it uses to set that base. A historic test year uses audited past costs; a future test year lets Con Edison set rates on projected rate base and projected capital spending, earning returns on plant it has not yet built. The difference is regulatory lag, the only discipline rate-of-return regulation has. Kill the lag, and you kill the incentive to control costs.

Equally important is what lives outside the base-rate case. Riders, trackers, and surcharges recover specific costs with minimal scrutiny and no general-rate-case true-up. Con Edison operates fuel-cost pass-throughs that shift 100 percent of fuel-price risk to ratepayers while the utility keeps the capital return for owning the generation or transmission asset. It operates grid-modernization riders that fund capex programs between rate cases, meaning no offsetting review of claimed savings. Each rider is a ratchet: it moves revenue closer to real-time recovery, shrinks the share of the bill a commission actually examines in a contested case, and leaves the return on equity untouched. The New York Energy Consumers Council, intervening in prior Con Edison cases, has documented interventions saving ratepayers over $6 billion in the last decade.^[2] That intervention window is closing: the PSC and Con Edison negotiated a joint proposal in November 2025, which was finalized in January 2026, reducing the cumulative incremental revenue requirement for electric by $5.637 billion over three years compared to the initial ask.^[2] The settlement is a win on the headline number; it does not address the structural problem.

The rate design, how much of the bill lands on the fixed charge versus the volumetric rate, is where the risk transfer lives. A higher fixed charge means ratepayers pay more simply to stay connected, regardless of whether they cut consumption or add rooftop solar. Con Edison has consistently sought to raise fixed charges to recover revenue independent of usage. This shift weakens the incentive for conservation and undermines the economics of customer-sited renewables. New York City residential customers will see average increases of about 5.7 percent in summer 2026 bills, mainly due to higher supply charges, while Westchester customers may see decreases of 2.8 percent,^[6] a divergence that reflects unequal rate design across customer classes and service areas.

Who was in the room? Con Edison's rate-case team is a line item on your bill; the utility recovers its own advocacy costs. The public's side, consumer advocates, intervenors like the NYECC, must fund their own presence. The outcome of the joint proposal reflects negotiating power, not a cost-of-service audit. The settlement reduced the ask, but did not eliminate fuel-cost pass-throughs, did not consolidate riders into a multi-year performance-based rate plan, and did not anchor the authorized ROE to actual cost of capital in a rising-rate environment.