Con Edison Steam Pipe Explosion has Small Businesses Asking the Utility to Pay UpJul 25, 2007 | Parker Waichman LLP
Business owners affected by last week’s Con Edison steam pipe explosion in New York City are demanding that the utility reimburse them for business lost as a result of the blast. But it looks like these businesses are in for a fight, because while Con Edison said it will reimburse them for goods, equipment and fixtures damaged as a result of the steam pipe explosion, it has no obligation to pay for business losses.
At a news conference yesterday, several business owners worried that they might not be able to recover financially without more help from Con Edison. The manager of a hair salon and spa on Lexington Avenue said that his business lost more than $50,000 because it was forced to close for several days following the explosion. Other business owners told much the same story.
The group said they placed responsibility for the blast on Con Edison, the owner of the 105-mile steam pipe network that held the ruptured pipe. They say that the company failed to properly maintain the pipes, and that is why the 84-year-old steam main ruptured last Wednesday. City Councilman Daniel Garodnick, who also attended the news conference, said that according to a Public Service Commission document, Con Edison had cut funds for steam system maintenance from $23 million in 2004 to $10 million in 2006.
Con Edison has maintained that it will follow its usual policy of reimbursing customers for electrical disruptions. That policy does not allow the company to reimburse a business for financial losses. Con Edison’s own lawyers will be responsible for determining how much reimbursement money a customer is entitled to. Some at the news conference were wary that the company’s lawyers would treat them fairly, and they did not agree with Con Edison’s assertion that Wednesday’s blast was a simple “electrical disruption”.
New York’s City Council has asked Con Edison representatives to meet with them on August 7th. They want to address the utility’s maintenance issues, as well as its reimbursement policy.
Meanwhile, Mayor Michael Bloomberg and Govern Eliot Spitzer announced that they have requested a disaster declaration from the federal Small Business Administration. If the declaration is approved, low interest loans will be available to help businesses make repairs and replace inventory.
Last Wednesday’s explosion occurred when a 24-inch steam pipe burst. The resulting explosion sent hot vapor and debris hundreds of feet into the air. One woman died as a result of the explosion, and as many as 40 people were injured.