What's Happening?
A Manhattan Institute analysis has found that over $22 of a typical New York City apartment's monthly electric bill, which averages around $118, goes towards city taxes. Consolidated Edison's (Con Ed) property tax bill for its New York City electricity
infrastructure more than doubled between 2015 and 2025, rising from $1 billion to $2.1 billion. These costs are passed on to customers through the delivery portion of their bills, at rates approved by the state. Additionally, a gross receipts tax applies to Con Ed's property tax expenses, effectively taxing money already used to pay another tax. The city also imposes a 2.35% tax on Con Ed's gross receipts and a 4.5% sales tax covering electricity delivery and supply.
Why It's Important?
This analysis highlights a significant, often hidden, component of New Yorkers' electricity costs, revealing that a substantial portion of utility bills is attributable to various city taxes. The increase in Con Ed's property tax bill, driven by rising infrastructure expenses and property values, directly impacts consumers. This 'tax-on-a-tax-on-a-tax' structure, as described by a Con Ed general tax counsel in 1982, obscures the true cost of energy and the extent of municipal taxation. Higher electricity bills, partly due to these taxes, also complicate New York City's efforts to reduce heat-trapping air pollution, as they increase the operating costs of cleaner technologies like heat pumps and electric vehicles, making it harder for residents and building owners to switch away from fossil fuels.
What's Next?
An agreement between Con Ed and the state Public Service Commission, reached in late 2025, will require the utility to itemize municipal property taxes on customer bills starting in early 2027. The Manhattan Institute recommends making this disclosure permanent and extending it to all public utilities with state-regulated rates. They also propose exempting utility equipment from city property taxes while continuing to tax the underlying land, with the stipulation that utilities pass these savings to customers. Lawmakers could also consider authorizing a higher electricity delivery sales tax to partially offset lost city revenue. However, any overhaul would face significant budget pressure, given the city's projected fiscal 2028 budget shortfall of $6 billion.
Beyond the Headlines
The issue of hidden taxes within utility bills raises questions about transparency in public finance and its impact on household budgets. When property taxes are embedded within energy bills, it can create a less direct and less visible form of taxation for residents. This lack of clarity can hinder public understanding of how their money is being spent and make it difficult to assess the true cost of living in the city. Furthermore, the compounding effect of multiple taxes on utility services can disproportionately affect lower-income households, exacerbating energy poverty. The debate over tax structure and disclosure also touches upon the broader challenge of funding municipal services while promoting environmental goals and ensuring affordability for residents.
