Welcome to the Deep Dive. Today, we're peeling
back the layers on one of the most foundational
companies in American history, Consolidated Edison,
or just Cone Ed. Right. You sent us a stack of
sources detailing this massive energy provider,
and what we found goes far beyond just, you know,
utility bills. Oh, much further. This is a story
of explosive history, both literally and figuratively.
We're talking nearly 200 years of operation and
infrastructure so vast it connects Thomas Edison,
Tammany Hall, and the world's largest steam system.
Our mission today is to really synthesize the
complexity of ConEd. I mean, we are looking at
an enterprise with over $70 billion in assets,
according to 2024 data. $70 billion. And it holds
this. singular, essential, and let's be honest,
often deeply controversial role in the New York
metropolitan area. So we're going to trace its
journey from a 19th century gaslight company
to a 21st century energy distributor. We'll highlight
the staggering scale of its systems, so much
of which is hidden, and the accountability challenges
that inevitably come with powering nearly 9 million
people. Okay, let's unpack this. We have to start
with a history lesson that predates the Civil
War, because the story of this utility is...
Just it's completely tangled up with the physical
and political growth of New York City itself.
Absolutely. The lineage here is extraordinarily
long. And the earliest corporate predecessor
of Con Ed wasn't even about electricity. No,
it was about light. Gaslight. Exactly. Light.
That company was called the New York Gaslight
Company, and it was incorporated by the 46th
New York State Legislature way back on March
23, 1823. That's the starting point. The move
from, you know, oil lamps and candles to gaslight
must have been a massive leap forward for a city.
I mean, revolutionary technology for the time.
It was completely transformative. And what gave
this new company its huge early value wasn't
just the tech. It was the politics. Of course.
On May 12, 1823. the New York Gaslight Company
received the exclusive right, the franchise,
to lay gas pipes south of Grand Street. Exclusive.
So a monopoly. A monopoly. In a rapidly growing
city, that kind of control over infrastructure
in the most valuable commercial district, that
was the single most vital piece of the puzzle.
It completely insulated them from competition
and guaranteed a revenue stream. And the stability
of that revenue must have been obvious right
away because just a year later, 1824, this little
company was listed on the New York Stock Exchange.
It was. And this is where the historical significance
really lands for you, the listener. That listing
in 1824, it means that Con Ed's earliest ancestor
holds the record as the longest continuously
listed stock on the NYSE. That's incredible.
Think about all the economic upheavals, the wars,
the depressions, the regulatory changes since
1824. The fundamental necessity of utilities,
once you get that strong government franchise,
has kept that stock listed for two full centuries.
That remarkable duration. It doesn't just speak
to business savvy, but to political skill, because
building anything in 19th century New York wasn't
really an engineering problem, was it? No, it
was a political negotiation. It required being
completely immersed in the system. And that system
was Tammany Hall. Right. In the early to mid
19th century, if you wanted to expand any major
business, you needed the approval of the Board
of Aldermen. They granted the street franchises.
By the time we get to the Gilded Age, Tammany
Hall controlled the board. And by extension,
they controlled who got to lay pipes and wires.
And the sources show that the political machine
didn't just, you know, approve these businesses.
They were directly involved. They were fully
integrated. We see this most clearly during the
reign of William Boss Tweed. By 1871, Tweed himself,
the infamous boss of Tammany Hall, he was documented
as being a member of the board of the Harlem
Gaslight Company. Which was a precursor to Con
Ed. One of the many precursors. This early history
just shows you that the utility was born from
this fusion of state sanctioned monopoly and
raw political patronage. I mean, it's the original
blueprint for how large American corporations
operated in cities. So Tammany Hall provides
the political consolidation and then the technological
consolidation happens as these gas companies
start merging together. Exactly. On November
10th, 1884. Six of the big gas companies, including
the original New York Gaslight and the Harlem
Gaslight Company, they all merged to form the
Consolidated Gas Company of New York. Makes sense.
Consolidation. It was all about efficiency, streamlining
operations across the city that was just exploding
in size. The future of light wasn't gas anymore.
It was electricity. And this is where the name
Edison becomes part of the corporate DNA, even
though he started out as a competitor. That's
right. Consolidated gas saw where things were
headed, and they bought the Edison Illuminating
Company in 1901. Thomas Edison had founded that
company in 1880, pioneering DC power. And his
initial system was tiny, right? Incredibly small.
When he started, his system supplied electricity
to just 59 customers in a single square mile
of lower Manhattan. So the acquisition was a
brilliant strategic move by the gas company to
just dominate the emerging electric market. We
always talk about the war of currents, Edison's
DC versus Westinghouse's AC. This suggests that
after the war was technically won by AC, the
real battle was just who controlled the infrastructure
itself. That's a really sharp insight. The technical
battle may have favored AC for transmission,
but the corporate battle was all about market
share and who owned the wires. And after that
period of intense competition, you had over 30
companies distributing electricity in the region.
But by 1920, Consolidated Gas's electricity arm,
which was then called the New York Edison Company,
had just used its financial power and its existing
infrastructure base to crush the competition.
So they're the Consolidated Gas. gas company,
but their main product is clearly electricity.
How long did it take for the corporate name to
catch up? Decades. Which, you know, it says a
lot about corporate inertia. It wasn't until
1936 that the name finally changed. That prompted
it. The company's own annual report. It revealed
this stark fact. Approximately 75 % of their
gross operating revenue came from electricity.
They were basically an electric company pretending
to be a gas company. So the realization that
three quarters of their income came from electrons,
not methane, finally forced the change. Correct.
On March 16th, 1936, the stockholders voted to
change the name to Consolidated Edison Company
of New York, Inc. It just reflects that major
operational shift from just light and heat to
being an integrated energy utility. OK, let's
fast forward to the modern era. The whole utility
industry goes through deregulation. How did Ken
Ed... adapt its structure for that? The structure
changed fundamentally in the late 90s. After
deregulation in New York State, Consolidated
Edison Inc. was formed on January 1st, 1998.
It became a holding company. Which is a pretty
typical post -deregulation move. It is. This
parent structure lets the main company own the
regulated utilities, but also potentially some
non -regulated energy services. It insulates
the core utility from non -utility risks and
allows for, you know, more diversified shareholder
returns. What are the key subsidiaries that are
actually managing the services we all use today?
It's a tiered structure. The heart of it is the
Consolidated Edison Company of New York, Inc.,
or CECONI. That's the regulated utility for electric
and gas in NYC and Westchester, and importantly,
that unique steam service in Manhattan. Then
in 1998, they acquired Orange and Rockland Utilities
Inc. That's another regulated utility serving
a big 1300 square mile area in southeastern New
York and northern New Jersey. And the third piece?
The third piece is Con Edison Transmission Inc.
That part focuses on the big stuff, high voltage,
electric and natural gas transmission projects.
They're the literal bridges between the power
sources in the service area. So when we look
at the money specifically for the regulated utility,
what defines their business today? While using
2015 data, The hierarchy is crystal clear. Electricity
is the engine. Over 70%, 70 .35 % of their sales
revenue came from electric service. Gas was the
next biggest truck at about 13 .6%. And that
unique Manhattan steam system accounted for about
5%. So while we talk about the history of gas
and the uniqueness of steam, the economic reality
is that Kahn is overwhelmingly an electric company.
That sets us up perfectly for part two, because
we absolutely have to talk about that grid. The
scale of this infrastructure, I mean, most of
it hidden right under our feet. What's fascinating
here is the sheer infrastructure scale, particularly
how much of it is hidden from view. It makes
the maintenance and the complexity just exponential
compared to overhead systems. We're talking about
engineering marvels that span thousands and thousands
of miles operating in the most demanding urban
environment on Earth. Let's start with that electrical
network, the subterranean web that's responsible
for that 70 percent revenue figure. Those mileage
numbers in the sources were astonishing. They
really defy easy visualization. The ConEd system
includes a staggering 93 ,000 miles of underground
cable. 93 ,000 miles. To give you some perspective,
that's enough insulated copper and steel cable
to wrap around the entire Earth 3 .6 times. So
why is managing 93 ,000 miles of underground
cable so much more challenging than, say, overhead
lines in a suburb? Oh, the complexity is multidimensional.
First... just access. Maintenance means tearing
up streets, navigating subway tunnels, working
around a thousand other pipes. It's a logistical
nightmare. Second is heat. With overhead lines,
heat just radiates away. But underground, all
that heat from the electricity is trapped. It
requires specialized conduits and cooling techniques
to stop the cables from literally melting down.
And I imagine water is a constant enemy. A constant,
ongoing battle in a coastal city. Even the slightest
damage to cable insulation from construction
or just the ground shifting allows water in.
That leads to shorts and eventual failure. The
sheer density of it all requires this incredibly
complex, real -time computerized mapping just
to keep track of everything. It's one of the
most technologically challenging grids in the
world to operate. And that's just the stuff we
can't see. They still have a massive network
of traditional overhead wires. They do, mostly
in the less dense areas like Westchester and
parts of the outer boroughs. The system is complemented
by nearly 36 ,000 miles of overhead electric
wires. 36 ,000. That's enough to run a cable
between New York and Los Angeles 13 times. It's
the combination of the dense underground network
and the sprawling overhead one that makes the
scale so hard to grasp. And to bring power in
from outside sources, which they rely on heavily
now, they need extremely high transmission voltages.
Right. High voltages are key to minimizing energy
loss over long distances. Kahn's system uses
138 kilovolts, 300... 345 kilovie and even 500
kilovie transmission lines. Those 345 and 500
kilovie corridors are the critical arteries for
importing bulk power into the city. And since
they became primarily a distributor, not a generator,
those external connections are absolutely vital.
They have to work. They are the lifelines. Con
Ed has two major 345 kilovie interconnections
upstate. Those are the key access points for
regional power markets. And that includes the
ability to import hydroelectric power from Hydro
-Quebec. in Canada. And they're connected to
their neighbors, too. Yep. They have a 345 kilovee
connection with PSE &G in New Jersey and also
with Long Island. That facilitates crucial power
transfers during, you know, heat waves or local
generation failures. Are there any major future
projects they're anticipating to shore up that
supply? The sources highlight two key connections.
There's a planned, more direct, 345 kV connection
to New Jersey via the Branchburg -Romapo 500
kV line. And crucially, the expectation is for
the Champlain -Hudson Power Express HVDC line
to come online in 2025. HVDC. That's high voltage
direct current. Exactly. And that project is
a potential game changer. It's designed to bring
huge volumes of clean power directly into the
city, bypassing a lot of the current grid limitations.
Okay, moving from the electrical grid to the
medium that actually started the company. Yeah.
Gas. Even though it's a smaller revenue driver,
the gas system is equally immense. The gas system
is a reminder of Con Ed's founding purpose, and
that system has also scaled dramatically. It
consists of nearly 7 ,200 miles of pipes. 7 ,200
miles. Stretch that out, it would be enough pipe
to run from New York to Paris and back again.
And that system serves a very specific geographic
area within the metro zone. Correct. Con Ed's
gas service area covers Westchester County, the
Bronx, Manhattan, and certain parts of Queens.
But it's important to note the complexity of
utility zoning in New York. National Grid USA
handles gas service in Brooklyn, Staten Island,
and the rest of Queens. It's all chopped up based
on historical mergers. Exactly. Except for the
Rockaway Peninsula, which is served by National
Grid's Long Island operations. It's a real patchwork.
And the volume of gas flowing through Con Ed's
system. That gives you a sense of the constant
demand, especially for heating. It really speaks
to the continuous, massive energy requirement
of the city. The average annual volume of gas
traveling through Con Ed's system could fill
the Empire State Building nearly 6 ,100 times.
Wow. That is a truly staggering metric. It is.
All right, let's shift to the element that makes
Con Ed globally unique. The New York City steam
system. It's this almost forgotten marvel of
urban engineering. It is entirely unique. Con
Ed operates the largest commercial district steam
system in the world. And this system, it actually
predates Con Ed's final corporate form. It began
service in 1882 as the New York Steam Company.
And Con Ed acquired it later. They acquired the
system in 1954. So what's the scope of this steam
delivery today? Who uses it? It provides high
-pressure steam to nearly 1 ,600 commercial and
residential establishments in Manhattan. It spans
from Battery Park all the way up to 96th Street.
And the pipes are just running under the busiest
streets in the world? Roughly 105 miles of mains
and service pipes, yes. And this isn't just hot
water. This is superheated, industrial -grade
steam. How is it made? It's supplied from seven
power plants. Five in Manhattan, one in Queens,
one in Brooklyn. Plus, they get some extra steam
under contract from the Brooklyn Navy Yard. And
to produce it, these plants boil water to an
incredibly high temperature, 1 ,000 degrees Fahrenheit.
1 ,000 degrees. So this is not your home boiler.
Not at all. This is industrial level thermal
energy. And the scale of production is incredible.
The uses are central to iconic New York buildings.
The system produces 30 billion pounds of steam
annually. And it's not just for heating in the
winter. It's also used for cooling in the summer
via absorption chillers. Right. It is the hidden
power source for famous landmarks you'd recognize.
The entire United Nations complex, the Empire
State Building, and the Metropolitan Museum of
Art. It is the unseen thermal backbone of midtown
and lower Manhattan. That massive physical system
is now being updated for the digital age. Let's
talk about the Smart Meter Project and how they're
trying to manage customer demand. The Smart Meter
Project was an essential modernization. ConEd
partnered with the Clara Smart Grid Solutions,
and they replaced over 5 million electric and
gas meters. 5 million. The bulk of that rollout
was completed in 2022, but they still ran into,
you know, resistance and access issues, which
stretched out the final completion. And there
was a specific temporary marker. they use to
keep track of this huge installation process.
Yes, a small detail, but it's indicative of the
scale. To visually confirm that a contractor
had replaced a meter, Con Ed used these lime
green colored seals on the electric meters. It
just highlights the massive logistical coordination
required to do something across millions of individual
locations. They're also actively preparing the
grid for the huge increase in load that's coming
from electric vehicles. Managing that load is
everything to prevent future blackouts. Con Ed
set up a program, partnered with a company called
Fleet Karma, that offered $500 rewards to EV
owners in New York City and Westchester. And
the goal was to manage demand. The programs done
was entirely focused on demand management. They
were incentivizing customers to charge their
cars only when overall energy demand is traditionally
low, you know, overnight. That way you avoid
straining the grid during peak hours. We've established
the scale of their distribution network. Now
we really have to pivot to their history with
energy generation, especially nuclear power,
and this complicated path they're walking today
with clean energy commitments. If we connect
this to the bigger picture, you see, Conant's
corporate journey is really defined by this evolving
strategy, from being a monopoly generator and
distributor to divesting entirely from high -risk
generation assets to focus on the stability of
regulated distribution. Let's start with Indian
Point. For many years, that was their biggest
power plant. It was a massive commitment to nuclear
technology in the mid -20th century. Kahn acquired
the land for the Indian Point Nuclear Plant in
Buchanan, New York, in 1954. The first reactor...
Indian Point One, went online in 1962. But that
first foray was pretty short -lived. It was.
IP1 only operated until October 1974. It was
shut down because its emergency core cooling
system failed to meet the rigorous new regulatory
requirements that the Atomic Energy Commission
imposed at the time. And the cost to upgrade
was just too high. Prohibitive. So they just...
retired the reactor. But they kept investing
in the site, building more reactors. They did.
They built Indian Point 2 and Indian Point 3
in the 1970s. But the regulatory burden plus
rising costs and, you know, public skepticism
after the IP1 shutdown led them to start divesting
almost immediately. IP3 was sold to the New York
Power Authority in 1975. The final major divestment
came after a steam generator leak in February
2000, which really heightened regulatory scrutiny.
So Indian Point 2 was sold to Entergy in November.
of 2000. So by the year 2000, Con Ed is out of
the nuclear generation business. This was a critical
turning point for the company's identity. It
fundamentally reshaped them. With the sale of
Indian Point 2, Consolidated Edison Inc. transitioned
from being an integrated utility -owning generation,
transmission and distribution, to being primarily
just an energy distributor. And that shift allowed
them to focus on the stable, regulated returns
of the distribution business. Exactly. Rather
than the higher capital risk and regulatory risk
that comes with generation, especially nuclear
generation. This transition leads directly into
the modern paradox we see in the sources. Yeah.
Public commitments to clean energy. but at the
same time, criticism for continued fossil fuel
investment. This is the most timely and complex
part of their modern operation. On one hand,
Con Ed made these significant public investments
in renewables. They initially invested $3 billion
in solar and wind projects. Then, in 2017, they
announced a plan to pour another $1 .25 billion
over three years into expanding their renewable
energy production facilities. And at its peak...
That portfolio was pretty substantial. It certainly
helped burnish their green credentials. Their
renewable portfolio reached over 1 .5 gigawatts
of operating capacity. And notably, three quarters,
75 percent of that came from solar energy. At
the time of that 2017 announcement, clean energy
was contributing about 8 percent of the company's
total earnings. They were positioning themselves
as a utility that was actively transitioning.
But then in a dramatic strategic reversal. They
sold the whole thing off just recently. The sources
confirm it. A major divestiture in 2023. Con
Edison sold its entire clean energy business
to RWE. So what does that move signal? It signals
a corporate decision to retrench, to focus back
on the core regulated utility businesses, Seacony
and Orange and Rockland, which offer guaranteed
returns on infrastructure investment rather than
navigating the less predictable, more competitive
world of renewable power generation. And while
they were showcasing all these solar and wind
projects, critics were pointing out that the
company was still heavily committed to expanding
its gas pipeline network. This is the heart of
the paradox. The Energy and Policy Institute,
in a 2021 critique, pointed out that Con Ed was
continuing to invest heavily in updating and
expanding its gas infrastructure. And they specifically
called out unclean fracked gas. Yes, methane
gas produced by hydraulic fracturing. The criticism
wasn't just that they used gas, but that these
huge infrastructure investments lock the utility
and its customers into decades of future fossil
fuel use. It makes true decarbonization goals
much, much harder to achieve. If the company
is making these public environmental commitments,
how does that tension investing in both solar
and fracked gas get reconciled internally? Well,
the external analysis suggests that the corporate
incentives were misaligned with comprehensive
climate goals. Critics found that while executive
compensation policies did include renewable energy
growth goals as a factor, they did not reward
executives specifically for reducing overall
greenhouse gas emissions across their regulated
gas and electric operations. The incentive was
structured to reward asset growth, not necessarily
environmental stewardship across the whole enterprise.
That paints a really complex picture of corporate
mandates. But the reality... is, when you run
infrastructure this massive, the consequences
of failure are catastrophic. Which brings us
to the dark side of reliability. Here's where
it gets really interesting. Because when a massive
system fails, the failures are catastrophic and
they're memorable. New York has experienced this
over and over, and these incidents become part
of the city's collective memory. We have to start
with the 1977 blackout. It's become a cultural
touchstone. That event was iconic for all the
wrong reasons. The entire city of New York was
blacked out overnight on July 13th and 14th,
1977. The only exception was the Rockaways, which,
because of that split utility zoning, were powered
by LAL Co. And it was all triggered by lightning.
A cascade failure. Several lightning strikes
on substations led to a chain reaction failure
of the critical interconnects that link the city's
grid to outside power. The 77 blackout was tied
up with massive social unrest and looting. Decades
later, on the exact anniversary, a failure happened
again, though it was much more localized. Yes,
the 2019 Manhattan blackout. It happened on the
evening of July 13th, affecting about 73 ,000
customers. This one was caused by a specific
consolidated Edison cable that burnt out in a
transformer on West End Avenue. It wasn't a citywide
collapse, but the impact was huge. That three
-hour outage paralyzed the cultural heart of
the city. It shut down a huge part of the West
Side, from the 40s up to 72nd Street. It closed
subway stations, took out power in parts of Times
Square, Rockefeller Center. It showed that even
a very localized underground failure can bring
the world's most dense urban environment to a
dead stop. Blackouts are one thing. But Con Ed's
infrastructure has also been responsible for
fatal, violent explosions, especially with those
high pressure steam and gas systems. And these
incidents carry a tragic human cost. We can start
with the 1989 Gramercy Park steam explosion.
A pipe rupture killed three people and injured
24. And there was a major health concern afterward.
A damaged apartment building had to be evacuated,
not just for structural damage, but because of
extremely high levels of asbestos contamination
that the explosion released into the air. And
the cause was directly... linked to human error.
It was worker failure. The investigation cited
the failure of personnel to properly drain water
from the pipe section before turning the steam
back on. This caused the pressure to build up
and the pipe just ruptured. And then the company
made it worse. They did. Compounding the tragedy,
Coned later pleaded guilty to lying about the
extent of the asbestos contamination, and they
had to pay a $2 million fine. That combination
of engineering failure, human error, and corporate
dishonesty was just deeply damaging to their
public trust. And the incredible forces in that
steam system led to another major disaster almost
two decades later in 2007. That was the Midtown
Steam explosion right near Grand Central. An
83 -year -old steam pipe failed. It caused one
fatality and over 40 injuries. What did the investigation
find there? Independent experts found the cause
wasn't corrosion, but this rare phenomenon called
a bubble collapse water hammer. Can you explain
the physics of a water hammer in this context?
What does that even mean? A water hammer happens
when water suddenly stops or changes direction
in a pipe. But in a steam system, it's different.
It happens when a massive steam bubble suddenly
collapses when it comes into contact with cooler
water. When that bubble collapses, it creates
a vacuum and the water rushes into that void,
slamming into the pipe walls with tremendous
force. The experts figured that this momentary
shock wave generated a force that was seven times
the pipe's normal operating pressure. It's seven
times. And it just instantly ruptured the pipe.
That sounds like a catastrophic, almost unpreventable
engineering event tied to just... The immense
force is required to operate that unique steam
system. Precisely. It highlights the immense
risk inherent in running a high -pressure, high
-temperature system beneath a densely populated
city. And the gas system has its own risks, as
the 2014 East Harlem explosion showed. That event,
preceded by a reported gas leak, was absolutely
devastating. It was an unimaginable tragedy.
On March 12, 2014, two apartment buildings just
exploded. It killed eight people and leveled
the structures. It was a horrific reminder of
the destructive power of compromised gas lines.
We also see deadly interactions between the electrical
and gas systems underground, as noted in the
2009 incident. This is a classic example of subterranean
complexity leading to danger. In Queens in 2009,
a fatal explosion happened while conned personnel
were actually on the scene investigating a problem.
What was the sequence of events? A fault in an
electrical feeder cable created a spark, which
then ignited a leak in a nearby gas line inside
a manhole. When a mechanic opened the manhole
cover, introducing fresh oxygen, the accumulated
gas ignited, causing the fatal blast. Wow. That
incident was a direct catalyst for a major change
in Con Ed's internal procedures for how they
handle outside gas leak calls. Now, to a hidden
failure that terrified the public, the issue
of stray voltage. The electrocution of Jody Lane
in 2004 was a truly shocking event. The death
of East Village resident Jody Lane and her dog
in 2004 really brought the issue of stray voltage
to the forefront. She stepped on an improperly
insulated service box that was leaking high voltage
current into the sidewalk. It exposed the systemic
hidden risk in the city's aging electrical infrastructure.
What causes stray voltage in these boxes? Why
is it such a problem in an old city like New
York? Stray voltage happens when the insulation
on underground electrical lines degrades over
time from water, age, or damage. The current
then jumps to nearby metallic objects, lamp posts,
manhole covers, service boxes, and energizes
them. And after the fatality, they were forced
to check everything. Following the fatality and
the regulatory mandate, ConEd was required to
test its equipment. During the next year, they
found 1 ,214 instances of stray voltage that
needed immediate repair. 1 ,214. That statistic
alone must have forced a radical change in their
maintenance procedures. The corner where she
died was renamed Jody Lane Place in her honor.
It became a permanent sobering reminder. And
beyond these localized failures, the company's
storm response, specifically during Hurricane
Sandy in 2012, also drew intense public and regulatory
criticism. What was the main failure during Sandy?
The massive storm surge caused historic flooding
across lower Manhattan. This resulted in a dramatic
transformer explosion at a Con Ed plant on the
east side. It was captured on video and it became
this symbol of the storm's power. And the response
from their subsidiary was heavily criticized.
While the main company worked to restore the
Manhattan grid, the subsidiary, Orange and Rocklin
Utilities, was heavily criticized for a slow
and poor response in its territory. Some of their
customers lost power for as long as 11 days.
Though in terms of communication, the company
did show an adaptation to the modern digital
age during that storm. They did manage their
public messaging well. Conad actively used platforms
like Twitter to provide real -time updates on
outages and restoration times. Their Twitter
account gained an impressive 16 ,000 followers
during the crisis, which just showed how essential
utilities had become in spreading immediate digital
crisis information. Now let's talk about a spectacular
failure that caused widespread panic, the 2018
Astoria Borealis. This incident captured the
public imagination globally. On December 27,
2018, a transformer short -circuited at a Con
Ed power plant in Astoria, Queens. In a sight,
that incredible blue glow illuminated the night
sky. It looked like something out of a sci -fi
movie. What was the scientific explanation for
that? The source of the light was intense arc
flashes. When the transformer short -circuited,
it created these powerful electrical arcs that
vaporized metal and heated the surrounding gas
into a plasma. That's what was emitting the light.
But why was it so big and visible? Crucially,
the specific meteorological conditions that night
-low clouds and fog acted like a giant reflector
and lens, amplifying the blue light and making
it visible across the entire metropolitan area.
And the public reaction was immediate fear. Absolutely.
The sources track the panic. 911 calls spiked
dramatically, rocketing from about 500 in the
half hour before the event to over 3 ,200 in
the 30 minutes after. What was the actual impact?
The event temporarily shut down LaGuardia Airport
until it switched to backup power, caused extensive
delays on the Hashtag 7 subway line and a localized
outage on Rikers Island. The sheer visual impact
and the public fear of why it was so quickly
nicknamed the Astoria Borealis. Finally, let's
touch on a more mundane but pervasive operational
failure that causes daily headaches for New Yorkers.
The infamous stop tag system for broken streetlights.
The stop tag is a classic bureaucratic failure
point. A contractor assigns a stop tag when they
can't repair a streetlight or a traffic signal
because the problem isn't the light itself, it's
a failure in the power supply to the unit. The
problem is coneds. And historically, these repairs
have taken an absurd amount of time. The frustration
comes from the fact that reports indicated these
repairs could sometimes take over two years.
That's because fixing the issue means tearing
up busy city streets to replace failed underground
wiring. And the temporary fixes are an eyesore.
Right, the shunts. They're essentially... these
heavy duty overhead extension cords left in place
for months or years. Did Con Ed make any commitments
to fix this systemic delay? Yes. In response
to public and political pressure, Con Ed committed
in 2017 to fixing at least 90 percent of these
stop tag issues within a 90 day window. It was
a recognition that slow utility response was
impacting essential city infrastructure. We've
seen the sheer physical scale and the consequences
of failure. Now let's turn to how a utility this
magnitude is governed and held accountable. If
we connect this to the bigger picture, we see
the systemic challenge of policing a utility
that is, by definition, an essential monopoly,
especially when its operations are largely hidden
underground, which gives it this unique power
and anonymity. Let's discuss the major black
eye the company received, the bribery prosecution
that came out of the cleanup of the 2007 Midtown
steam pipe explosion. This scandal, uncovered
in 2009, was just a brazen display of corruption
within management ranks. Eleven Con Edison supervisors
were arrested for demanding over $1 million in
kickbacks, specifically related to the repair
work after that fatal explosion. How did this
scheme work, and how did investigators prove
it? The supervisors were running a simple but
effective scheme. They would approve payment
for contract work that was either completely
unnecessary or in some cases never even performed.
And in return for faster payment on legitimate
contracts, they demanded cash bribes. And the
FBI recorded them. They successfully used undercover
methods, including two retired Con Ed employees
and a construction company president who wore
recording devices to capture the suspects demanding
the kickbacks. So contractors were being shaken
down while the company was trying to recover.
from a fatal system failure, what was the ultimate
financial consequence for Con Ed? Well, the company
itself maintained they admitted no criminal wrongdoing,
but the Public Service Commission, the PSC, took
a very dim view of the lack of internal controls.
In April 2016, the PSC mandated that Con Ed pay
over $171 million back to its customers. That
compensation, which was about 1 .5 % of its annual
revenue, was for the failure to supervise its
employees. That is a remarkable demonstration
of how regulators can enforce corporate accountability,
even when the company tries to distance itself
from the actions of its employees. It reinforces
the principle that utilities operate under heightened
scrutiny. And yet, despite these massive failures,
fines and scandals, the company has simultaneously
received significant corporate honors and praise.
That strong juxtaposition is a persistent theme
in the sources. What are some of those honors?
Con Ed has been repeatedly recognized for its
stability and operational excellence. Fortune
magazine named it one of America's most admired
companies, even hitting second place on the top
10 list for electric and gas utilities in 2003.
And they've scored well in other metrics, too.
Highly in sustainability and diversity. They
got top utility rankings in Newsweek's green
rankings in 2014 and were recognized as a top
employer by publications like Hispanic Network
Magazine and Diversity Inc. So a company recognized
for stability and diversity on one hand, but
facing sharp financial critique on the other.
Let's get into the tax and lobbying criticism.
The critique by the nonpartisan group Public
Campaign in 2011 was particularly pointed. It
analyzed Con Ed's finances between 2008 and 2010.
During that time, Con Ed reported huge profits,
$4 .2 billion. And what was the issue? The report
noted that Con Ed spent $1 .8 million on lobbying
while, astonishingly, receiving $127 million
in tax rebates, meaning they paid zero federal
income taxes. How is it even possible for a company
making billions in profit to get tax rebates?
This is where you have to understand utility
finance. Utilities operate under unique tax codes
because they make these massive long -term investments
in capital infrastructure, pipes, cables, plants.
These regulations often let utilities use things
like accelerated depreciation or... So while
it's legal and common in the industry, the criticism
was directed at the optics and the timing. And
the optics were certainly made worse by the simultaneous
hike in executive pay. Absolutely. The critique
highlighted that during the very period the company
was getting $127 million in tax rebates, compensation
for the top five executives increased by 82%,
up to $17 .4 million in 2010. The criticism was
less about legality and more about the perceived
moral failure of maximizing executive wealth
while getting taxpayer subsidies and lobbying
legislators. Let's shift to a more physical and
lasting legacy. The cultural footprint left by
Con Ed's massive infrastructure, particularly
the adaptive reuse of its old buildings. The
industrial nature of Con Ed's original assets
means the buildings they occupy are often architecturally
unique. They're built for heavy loads and massive
equipment. When those industrial uses become
obsolete, the buildings become candidates for
really unique conversions. What are some examples
of these repurposed buildings? One of the coolest
cultural connections is a former Con Ed building
on West 53rd Street in Manhattan. Because of
its massive electrical capacity, its Edison history,
it was later converted into the studio for the
TV game show Let's Make a Deal. No way. But most
famously, it became a legendary recording studio
called Power Station, drawing directly from its
history. It was later renamed Avatar Studios,
but went back to being Power Station 2017. That
is a fantastic, fitting cultural irony. A power
station that powers music. Another example is
the Excelsior Power Company building, a former
substation in the financial district. Con Ed
sold it in 1978. It was renovated into a residential
apartment building and was eventually designated
a New York City landmark in 2016. These buildings
are like physical time capsules of the city's
energy history. Finally, let's acknowledge the
unprecedented operational challenges Con Ed faced
during the start of the COVID -19 pandemic. The
pandemic posed immediate, severe challenges to
essential services. The sources document the
human cost in 2020. 170 Con Edison employees
tested positive for COVID -19, and tragically,
three employees died. Utilities had to develop
rapid protocols to keep the essential workforce
operational. And how did the company respond
to its customers who are facing economic hardship?
Con Edison made a significant public pledge to
help. They committed not to shut off service
for electric gas or steam due to payment difficulties
related to the pandemic. And they also waived
any new late payment charges for all customers
during that period, recognizing how critical
utility access is during a national health emergency.
We've journeyed from 1823 gas lamps tied to Tammany
Hall, securing the single longest stock listing
on the NYSE through the War of Currents, past
a controversial nuclear history, and navigated
massive blackouts, fatal steam explosions, and
the incredible panic light show of the Astoria
Borealis. Conn, it isn't just a company. It is
the physical circulatory system of New York,
operating this unique global marvel that is the
world's largest steam system right beneath the
streets. This raises an important question. about
the unseen machinery that underpins modern life.
The sheer logistical and engineering effort to
keep 93 ,000 miles of underground cable running
reliably is just staggering. Yet the sources
demonstrate that the consequences of occasional
failure Whether it's the localized tragedy of
stray voltage, the systemic shock of grid collapse,
or the moral failure of a multi -million dollar
bribery scandal, show the incredibly high stakes
involved in maintaining such a complex aging
system beneath the world's most dense urban environment.
Our deep dive revealed a company trying to embrace
clean energy with one hand, investing billions
and touting its green profile, while continuously
investing in gas infrastructure with the other,
and then ultimately selling off its entire renewable
generation fleet to focus on regulated returns.
Given the fundamental tension between Con Ed's
historical investment in long -term gas infrastructure
and the associated criticism that executive pay
focused on asset growth rather than specific
greenhouse gas emissions reduction, How do you
think investor -owned utilities should best be
incentivized or perhaps more forcefully regulated
to achieve true comprehensive decarbonization
across all of their massive operational areas
without simply passing all of the capital risk
directly onto the consumer? It's a challenge
of balancing corporate fiduciary duty with a
critical environmental mandate.