On January 18, 2019, Con Edison announced the demand for natural gas from new development is outpacing its ability to supply the product to new customers. The demand is due to new construction and conversion from oil to natural gas. As a result, Con Edison announced that beginning March 15, 2019, it will no longer be accepting applications for new customers. However, even that end date could be moved up as Con Edison advises that “customers will be accepted on a first come, first served basis unless it becomes necessary to stop accepting new requests before the end of the enrollment period.” New buildings will be allowed up to 24 months to complete their projects.
The northern Westchester communities of Croton, Cortland, Buchanan, Peekskill, Yorktown, Somers, North Salem, Lewisboro and Pound Ridge are not affected by the moratorium. All of the rest of Westchester County is directly affected by the moratorium. Con Edison has announced that the moratorium applies to:
- New residential, and commercial and industrial customer gas service connections.
- Incremental gas load on existing residential, and commercial and industrial customer gas accounts, unless it meets one of the exceptions.
- New gas usage for heating, hot water, laundry, and cooking.
Con Edison has also announced there are certain exceptions:
- Small business customers in the food/beverage industry may email Con Edison to find out if gas is available prior to signing a lease. No new services will be installed, but they may be able to use an existing service for cooking.
- Customers with planned renovations who already have natural gas. You can reconnect your gas service provided that the renovations do not add a significant amount of gas load.
With little fanfare, a Con Edison filing in October, 2018, noted a concern about its ability to meet growing customer demand and that “a temporary moratorium on new gas customer connections remains a possibility.” That day has arrived and there is no known end date for the moratorium and it will depend upon the construction of new infrastructure to provide adequate supply to meet the demand. Massachusetts imposed a moratorium on new gas connections by National Grid on October 8, 2018, but that was due to safety concerns regarding over pressurization of the supply pipes and the moratorium was lifted two months later. In February, 2018, the California Public Utilities Commission proposed a moratorium on new commercial and industrial gas connections, but that was due to concerns about the utility company not being able to meet demand and the moratorium was not enacted as demand did not exceed supply. It seems as though Westchester customers are in unchartered territory.
So, what does this mean for development in Westchester? Unfortunately, it adds uncertainty to a development boom and may well have a chilling affect. The impacts are far reaching and will affect affordable housing developments, residential, commercial, new restaurant uses, among others. There will likely be a scramble to secure a “Will serve” letter from Con Edison or locate alternative sources such as electric or fuel oil as the energy source. Land use Boards and Lenders will seek certainty and want assurances that if a project proceeds, that a natural gas connection or other energy source will be provided.
Developers and business owners will need to consider the legal implications of Con Edison’s moratorium. Did the real estate purchase contract envision the inability to get development rights due to the inability to get a natural gas connection? Will amended site plan approval be required if an underground oil tank will be located on the property? Will a Landlord be in breach of a lease for a new restaurant tenant if a gas connection cannot be provided? These and other questions will need to be answered in the coming months as developers, businesses and residents come to grip with the new reality. More information can be obtained by clicking here to visit Con Edison’s Natural Gas Moratorium webpage or contacting the land use, environmental and real estate attorneys at Keane & Beane. For more information, contact attorney Nicholas M. Ward-Willis at firstname.lastname@example.org and request to be added to future Legal Alerts or seminars on this topic.