New York City residents are paying some of the highest electricity rates in the eastern United States because the city government has effectively turned Consolidated Edison into a primary tax-collection agency. By layering property taxes, utility gross-receipts taxes, and standard sales taxes onto delivery charges, the city has created a regressive system that forces customers to pay significantly more than the actual cost of power, with the burden falling heaviest on those already struggling with the city’s cost of living.
Why are New York City electric bills so high?
The core of the issue lies in how the city treats utility infrastructure. According to a report from the Manhattan Institute, city government has treated Con Edison like a “cash machine” for nearly a century. Under current rate-setting rules, the city can increase taxes on electricity infrastructure at will, and those costs are automatically passed through to the consumer in the form of state-approved delivery charges. Because the city holds a local monopoly on delivery, residents have no alternative provider to turn to for relief.
The scale of this “stealth tax” is substantial. Between 2015 and 2025, Con Edison’s property tax liability for its New York City electric system more than doubled, ballooning from $1 billion to $2.1 billion. If these taxes had merely kept pace with inflation, customers would be paying roughly $700 million less this year. As the NY Post reported last month, these costs are often hidden from the average ratepayer, though Con Edison is now looking to update billing statements to show exactly how much of a monthly bill is inflated by city property taxes.
What is the cumulative tax burden on households?
While the base cost of electricity is set by the market, the delivery portion of a bill is heavily taxed by the city. When you combine the property taxes passed through to customers, the archaic gross-receipts tax—a relic of the Great Depression—and the 4.5% sales tax, the effective tax rate on electricity delivery is staggering. For apartment dwellers, the city levies the equivalent of a 36% tax on delivery; for single-family homes, that figure climbs to 41%.
To put that in perspective, the combined state-local tax on marijuana is only 23%. This means that in the eyes of the city’s tax code, electricity is treated as a significantly more taxable commodity than cannabis. For a typical apartment-dwelling family, this resulted in $270 in city taxes embedded in their electric bills last year, while owners of single-family homes paid over $560.
| Category | Annual Tax Impact (Estimated) |
|---|---|
| Typical Apartment | $270 |
| Single-Family Home | $560+ |
Who bears the brunt of these costs?
The current structure creates a regressive burden that hits renters and homeowners alike, regardless of their ability to pay. Because these taxes are baked into the delivery rate, they are effectively unavoidable. This creates a direct conflict with the city’s stated goals of increasing affordability and promoting widespread electrification, such as the transition to electric heating and vehicles. When the cost of moving electricity into a home is artificially inflated by nearly 40% through taxation, the economic barrier to switching away from fossil fuels becomes significantly higher.
The Manhattan Institute notes that the city is currently an outlier among major U.S. municipalities, both in the sheer size of the utility property tax burden and in how effectively that burden is concealed from the average ratepayer. While the city has been spending money faster than it collects it for the last four years, this reliance on utility-based revenue has become a crutch for balancing budgets.
Can the state intervene to lower rates?
Because the city’s tax-grabbing scheme relies on rules originally set by the state, local officials cannot fix the problem in a vacuum. Any meaningful reform would require the governor and the state Legislature to step in. A primary recommendation from policy analysts involves ending the city’s ability to tax the gross receipts of utility companies and requiring the state Public Service Commission to ensure that every dollar saved is returned directly to ratepayers.
The property tax issue is more complex, as it is tied to the city’s broader, long-overdue property tax system. Experts suggest that the state could limit the effective tax rate on utility properties to match the rates paid by commercial and industrial parcels, or exempt utility equipment from the property tax system entirely while taxing only physical land and buildings. Such a move could return more than $1 billion to customers annually. With the state government itself paying these inflated Con Ed rates for its own buildings, there is a clear fiscal incentive for Albany to pursue these reforms in the upcoming executive budget proposal.
