On January 18th, Con Ed issued a statement that demand for natural gas is “reaching the limits of the current supplies to our service area.” As a result, effective March 15, 2019 – in less than two months – Con Ed will not accept new natural gas applications. While there is uncertainty, one hopes the PSC and the Governor’s office will lead the effort to place pressure on Con Ed to reduce customer usage and find additional transmission lines to get natural gas into the service area. The issue is not a lack of supply, but the lack of capacity of the existing transmission lines to meet the demand; the existing infrastructure is inadequate.
While the impact on land use development is a concern, there are other fuel sources to power heat and cooking needs of new residential and commercial developments. Con Edison saw this day coming as it has encouraged customers seeking to abandon oil tanks and converting to natural gas to install a duel source burner. In those instances, when the natural gas supply is tight, customers are required to use the oil as their fuel source.
Now that a moratorium is being imposed, developers will consider electric – which is more expensive – or heating oil. For those considering heating oil, they will need to find space to locate a tank – either above-ground (taking away precious space for storage, amenities or rentable square footage) or underground. Either way, developers need to take into consideration potential environmental liabilities when considering using heating oil tanks.
Liabilities arise from contamination of soil and groundwater due to leaking tanks, pipes or spills during delivery. Even a new system poses a risk due to the potential for improper installation, spills during deliveries or lack of monitoring and maintenance. There is also a host of regulatory compliance obligations pursuant to Westchester County Department of Health guidelines. Fuel storage over a certain size need permits, as built plans, periodic monitoring, signage, fill ports painted a specific color, monitoring and a variety of other obligations. Failure to comply can result in costly fines imposed by the County.
Developers and subsequent owners of these buildings need to be aware of their ongoing obligations and may wish to explore the availability of insurance to protect against the risks. Developers and owners should also consult with their attorneys as to the impacts on existing land use approvals, contractual obligations and environmental liability. The length of the moratorium is not known, but it hopefully will be temporary and developers have alternatives that in most instances will allow development to proceed.