Con Edison Steam Pipe Explosion Victims Face Financial Hardship While Utility Executives Rake in Big BucksSep 4, 2007 | Parker Waichman LLP, LLP
The Con Edison steam pipe explosion last July dealt a harsh financial blow to businesses forced to remain closed for many days after the blast. Yet even as Con Edison refuses to reimburse business owners for all of the losses they incurred as a result of the steam pipe explosion, executives at the utility are doing quite well for themselves. According to a New York Daily News article, more than a half-dozen executives make more than $1 million dollars a year. And at least 40 others receive salaries that top $300,000 a year.
At the top of the list is Con Edison CEO Kevin Burke, who according to the Daily News makes a total of $4.7 million from his salary, stock awards, incentive offers and other benefits. And should Burke get fired, he can count on receiving $11.2 million in termination payments, and another $5.4 million in pension benefits.
Despite his extravagant salary, Burke could not even be bothered to show up at a New York City Council hearing in early August to discuss events surrounding the steam pipe explosion. Instead, Bill Longhi, senior vice president for central operations, was sent to answer City Council’s questions. Despite a $448,000 compensation package, Longhi was unable to provide Council with any answers as to why the steam pipe exploded.
And the perks of being a Con Edison executive don’t stop at salaries. According to the Daily News, Con Edison’s top brass receive a host of valuable benefits. They include stock options, a company car, free financial planning and income tax advice. In the case of Burke, the incentives also include chauffeur service. This is amazingly generous, considering that the utility company was "forced" to cut funds for steam system maintenance from $23 million in 2004 to $10 million in 2006.
None of this could be comforting news to the business owners forced to close while Con Edison cleaned up its steam pipe mess in July. The 84-year-old steam pipe that exploded was part of a network Con Edison used to heat and cool Manhattan buildings. One person died as a result of the July 17 blast, and many others were injured. Since the explosion, a host of questions have been raised regarding Con Edison’s maintenance of the steam pipe network.
Many businesses in the Lexington Avenue corridor sustained damages, and then suffered more financial losses while streets around the explosion site were closed for clean up. Shortly after the explosion, a group of business owners held a news conference pleading with Con Edison to reimburse them for lost business. That request was repeated at the August City Council hearing.
But Con Edison has maintained that it will follow its usual policy of reimbursing customers for electrical disruptions. That policy pays for damaged good and equipment, but does not allow Con Edison to reimburse a business for financial losses. At the City Council hearing, Longhi reiterated the utilities reimbursement policy, claiming that no utility in the country pays for business losses.