Consolidated Edison customers in New York City are facing a significant portion of their electricity bills allocated to cover the utility’s property taxes, an expense that has risen sharply in recent years. Analysis shows that approximately 21% of the average customer’s delivery charge goes toward Con Edison’s property tax obligations, a charge embedded within their monthly statements.

This situation stems from the city’s distinctive property tax system, which has long allowed local government to shift a considerable tax burden onto utility companies, with Con Edison being the largest affected entity. Between 2015 and 2023, Con Edison’s property tax bill for its electric system more than doubled, increasing from $1 billion to over $2.1 billion. State lawmakers in Albany have permitted this arrangement, despite its scale.

Experts note that no other major U.S. city imposes as substantial a property tax burden on utility consumers as New York City. Factors contributing to the rising tax assessment include increasing component costs, which underpin much of the property valuation, and state legislation such as the 2019 climate law that mandated upgrades to the electric grid, further inflating tax liabilities. However, the assessments are largely theoretical in nature, serving as a numerical basis for taxation rather than reflecting market-driven property values.

For residents, this translates into a hidden tax hike. Estimates indicate that the property tax portion adds about 5.4 cents per kilowatt-hour to electricity rates in the five boroughs. This surcharge equates to roughly $15 per month on the typical apartment’s electric bill and exceeds $32 monthly for a single-family home. Consequently, these tax costs contribute substantially to the higher residential electricity rates observed in New York City compared with other major cities in the eastern United States.

In addition to the property tax, customers also pay city sales tax and a gross-receipts tax on their electric bills, bringing the total New York City tax charge to around 8 cents per kilowatt-hour before considering state and other taxes borne by Con Edison.

While the New York State Public Service Commission (PSC) has expressed concern over the escalating property tax amounts utilities must pass on to consumers, it lacks the authority to prevent these charges. Nonetheless, the PSC granted Con Edison permission earlier this year to disclose the property tax component more transparently on customer bills. Starting in early 2024, consumers will see a detailed breakdown of their “delivery” charges, including the portion attributable to city property taxes.

The proposed transparency measure has met resistance from city officials. A spokesman for Mayor Eric Adams accused Con Edison of attempting to “mislead” customers by highlighting the tax charges. City leaders, including Mayor Adams and members of the City Council, have supported legislation enabling the ongoing tax-shifting to utilities, a mechanism that helps fund the municipal budget. Con Edison’s electric system contributed an estimated 6% of the city’s property tax revenues last year, up from 4.4% a decade prior.

Critics argue that this tax structure is designed to obscure the true extent of tax increases imposed on residents. Some suggest that the city could instead rely more heavily on sales taxes, which are more visible to consumers, but local officials prefer to maintain the current system to conceal the full tax impact from ratepayers.