How City Hall’s tax-grabbing greed jacks NYC’s electric bills sky-high

Can New York City pols flip a switch to make living here more affordable?

Actually, it turns out, they can.

NYC’s electric rates have become the highest of any major city in the eastern United States.

The reason, as I explained in a new Manhattan Institute report, is that city government has treated its electric utility, Consolidated Edison, like a cash machine for almost a century.

Under New York’s rate-setting rules, the city can create or increase taxes on electricity at will, with the money needed to cover those costs automatically rolled into Con Ed’s next approved rate hike.

The cost of electricity supply is set by the marketplace, but delivery costs — where companies hold a local monopoly — are tightly controlled by the state.

And New York City has exploited that to the max.

The scheme starts with Con Edison’s property-tax bill, which totaled $2.1 billion last year on the electric system alone.

That’s more than double what it was just a decade ago.

If the city’s get from the grid had just kept pace with inflation, customers would be paying about $700 million less this year.

And while many factors — such as the rising costs of equipment replacement — impact Con Ed’s property-tax bill, the money to pay it comes from the same place: Con Ed customers, who are none the wiser.

As The Post reported last month, Con Ed is looking to show customers how much their bill is boosted by city property tax — an idea that Mayor Eric Adams’ administration didn’t love, and which Mayor Zohran Mamdani may actively resist.

The property tax is just the first layer, though.

Since the Great Depression — and ostensibly as a temporary “relief” measure — New York City has taxed its utility companies’ gross receipts.

The higher the property tax, the higher the gross-receipts tax, and the higher the state-approved delivery rate.

On top of this, the city charges its usual 4.5% sales tax on electricity delivery, as it does on other services.

On its own, this would be the most defensible part of the arrangement.

But add that to the burgeoning property tax and the archaic gross-receipts tax, and New York City is levying the equivalent of a 36% tax on electricity delivery to apartments — and 41% to single-family houses.

To put that in perspective, the combined state-local tax on marijuana is only 23%.

Should Gotham tax electricity more steeply than weed?

A typical apartment-dweller — last year alone — paid $270 in city taxes through his or her electric bill; the owner of a single-family house shelled out over $560.

How did things get this bad?

Even with its Con Ed cash, the city has been spending money faster than it came in for the last four years.

The only fix for this regressive arrangement would mean cutting elsewhere.

It won’t get easier any time soon.

Mamdani, despite punting billions of dollars in city pension costs and getting extra cash from Albany, still needs to close a $6 billion gap when he presents his budget early next year.

And while the city is the main culprit here, it can’t right the wrong on its own — because it got here by gaming tax rules set by the state.

The governor and state Legislature need to intervene.

They can start by ending the city’s ability to tax the gross receipts of utility companies, and have the state Public Service Commission require every dollar saved to go back to ratepayers.

For Con Edison’s NYC customers, that works out to about $300 million annually.

The property tax is a stickier wicket: The entire property-tax system is overdue for wholesale reform, something Mamdani endorsed as a candidate.

Here, lawmakers and the governor must resist the temptation for gimmickry, which is what created the current mess.

Instead, they could limit the effective tax rate on utility properties to the rate paid by commercial and industrial parcels — and again, require the savings to be passed to customers.

And they could go further and exempt utility equipment from the property-tax system entirely, taxing only their buildings and land.

Those savings, north of $1 billion, could also go back to customers.

Albany has a financial interest in seeing this situation reformed: State buildings, too, are paying these city-inflated Con Edison rates.

So a fix would be an appropriate addition to the governor’s executive budget proposal next year.

That wouldn’t just put money back in New Yorkers’ pockets; it would keep their city from snagging it in the first place.

Ken Girardin is a fellow at Manhattan Institute.