Former Chairman, President & Chief Executive Officer, Consolidated Edison
2017 Wall Street Forum with Con Edison CEO John McAvoy '76
Brought to you by Fordham Prep!
About John Mcavoy
John McAvoy, former Chairman, President, and CEO of Consolidated Edison, has spoken publicly about his personal history and his work at the utility. In a 2021 podcast appearance, McAvoy discussed his past as a convicted armed robber and his subsequent transformation into an Ironman triathlete. He stated that he believes any successful individual has a "moral obligation to reach back and help other people," and described his own journey as involving "small incremental steps" toward change. During his tenure at Con Edison, McAvoy discussed the company's sustainability initiatives and hiring practices. He stated that the company had reduced its carbon footprint by 48 percent and advocated for energy efficiency programs, noting that the utility had provided $350 million in rebates and incentives to customers since 2009. McAvoy also described the company's smart meter program as "transformational," and said Con Edison was hiring, having added 3,500 employees over five years. He emphasized the importance of a STEM-capable workforce and noted that the company partnered with organizations like the Energy Tech School in Queens.
Transcript (31 segments)
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Host1:11
I hope everyone's enjoying their lunch. We're going to get started with our program this afternoon. It's a real pleasure for me to welcome Fordham Prep class of 1976 John McAvoy here today. John is a native son of the Bronx. He and his two brothers went to Fordham Prep, Bernie '69 and Michael '74. John is currently chairman and chief executive officer of Consolidated Edison and CEO of its principal subsidiary, Consolidated Edison Company of New York. John joined Con Edison in 1980. In his last post, he served as president and CEO of Orange and Rockland Utilities, which is a ConEd subsidiary. Prior to his leadership at Orange and Rockland, he served as senior vice president of central operations. His responsibilities there included oversight of the electric transmission system, more than a hundred substations in and around New York City, the company's primary control center, engineering and construction activities, electric and steam generating plants, and the world's largest steam system. John serves on the board of directors of the American Gas Association, Edison Electric Institute, the Partnership for New York City, the New York State Energy Research and Development Authority, and the Mayor's Fund to Advance New York City. He also serves on the board of trustees of the Intrepid Sea, Air & Space Museum. Following his graduation from Fordham Prep, John attended Manhattan College, where he received a degree in mechanical engineering. He also holds an MBA from New York University and is a graduate of the David Rockefeller Fellows Program. John and his wife Cathy, a retired high school math teacher, raised their three daughters in Somers, New York. Kelly and Siobhan are high school teachers and graduates of Holy Cross and Providence College, and Jacqueline, a nurse, is a Fairfield University graduate. So the Jesuit education continues to be passed down in the generations of the McAvoy family. And with names like these, I take it you'll be celebrating on March 17th, although you also have Italian in your background. And John is known to like a good pizza, from Brooklyn to the Bronx and all over, he can tell you about New York pizza. We're also fortunate to have the chairman of our board of trustees, Jim Rowan, class of 1982, returned again this year to moderate the Wall Street Forum. It's a special year for us to call Jim out because it is his final year as chairman of the board at Fordham Prep, and he is leaving an extraordinary legacy of hard work, treasure, talent, vision, strategic initiatives in the wake of his leadership of the board. Jim is chief operating officer at Renaissance Technologies, which is a global hedge fund management firm. Jim is a triple Ram, having graduated from the Prep and Fordham University with both a bachelor's degree and an MBA. And I know we're all looking forward to the conversation. So please join me in welcoming today's speaker John McAvoy and our moderator and questioner Jim Rowan. Thank you.
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Jim Rowan4:56
Literally, Alan, so exactly certainly. With that introduction, you can help me with my utility bill. So you can even turn to look, John. If it's alright, maybe we could start high level. Maybe we could talk about how the energy sector has evolved and how that has affected Con Edison.
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John Mcavoy5:21
First, I want to thank you, Jim, for the introduction. Thank you for having me. It's a real privilege to be here with so many other Prep alumni and others who are associated with the Prep community and the Prep family. So thanks for having me. There's so much going on in the energy industry, and I'll tell you, much of it is very exciting. A couple of things that drive it: I would start with technology. A lot of technologies that have been around for decades are either commercial now or close to being commercial, and in many cases are competitive with more traditional sources of energy, sometimes with subsidies, increasingly close to being competitive without subsidies. So electric vehicles, battery storage, fuel cells, solar and wind, building management systems, those types of things are things we've talked about for years. When I started in Connecticut in 1980, we were working on a fuel cell. We had a pilot project on 14th Street on the East Side. And my predecessor, four times removed, who was CEO, had an electric vehicle they were experimenting with. The same type of things today are commercial, largely competitive, and that's driving a lot of change. One of the things that's interesting is that so many of those technologies are on the customer side. They're not a new way to build a central power plant, but different ways close to where the energy is being consumed to produce, store, and manage electricity. And I think that has a lot to do with the second thing driving it, which is the customer. Customers today want more individualization, they want more choice, they want more access to information. And although not all, many want to make their own energy decisions. So having those new technologies really melds with the impact of an Uber-type environment from the customer side, making it so that many more of those new technologies are being taken advantage of. And the last thing driving a lot of change in the industry today is energy policy. There are many different aspects of energy policy, but in particular, continued focus on lower zero emissions, renewable energy, and reducing impact on the environment. There are many different studies out there that forecast the growth in solar and renewable in this country. Pick which one you want, they all show significant increases over the next several decades. That's a big part of where the future is.
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Jim Rowan7:56
So, John, it's a great lead-in. We've had a change in administration. You had a very kind of global or eco-friendly administration, and now we have one that seems to be deregulating, easing up on cracking oil. Do you see that playing a role, or can these more green technologies stand on their own?
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John Mcavoy8:15
Well, certainly the change in the federal posture on a number of things will have an impact. If you look at the EPA, the Environmental Protection Agency, their most notable legislation in the second term of the Obama administration was the Clean Power Plan, very significant emissions targets reductions for 2030. But when you focus in closer and look at the Northeast and in particular New York State, the fact that the Clean Power Plan may not come to fruition — and it was already being challenged in the courts even before the change in administration — for New York, we largely already met many of the emissions guidelines. We have virtually no coal in the state. We have about 25% renewable in terms of electricity put out, about 25% nuclear, other zero emissions. So really, for New York, more energy policy is driven within the state. One example: the state has a Clean Energy Standard that was established by the governor last year, and that requires that renewable energy produced 50% of the electricity consumed in the state by 2030. That is a much more aggressive target that will have much more impact on changes in the energy industry in this state than the federal legislation would have.
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Jim Rowan9:35
I'm going to that leads into the question on Indian Point. In a sense, clean energy, they're talking about maybe shutting it down in 2021. What does that actually mean? Where is that source of energy going to come from? And will that drive up prices?
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John Mcavoy9:50
So the governor and the owner of Indian Point Energy announced an agreement about a month and a half ago to shut the plant down. There are two plants there, one in 2020 and one in 2021, with a provision to keep it running for up to another five years if needed. The idea of shutting down Indian Point is not something that just came upon us in 2016. It is something we have been looking at and evaluating and planning for, most notably about six years ago, 2011, 2010 timeframe, knowing that the governor had a desire to shut down Indian Point. We worked with the New York Independent System Operator and staff at the Public Service Commission to do studies around what would happen if the plant shut down by 2016. We picked 2016 because one plant's license expired in 2013, the other in 2015, so 2016 would be the first summer potentially without the plants. We saw that the shortfall, in round numbers, was about 1,600 megawatts. We designed three major transmission projects, all of which went into service prior to summer of 2016 as planned, making up about 700 or 750 of the 1,600. We identified energy efficiency improvements specifically targeted to alleviate the loss of Indian Point. We also looked at distributed generation and clean heat and power alternatives, about another 200 megawatts. So in round numbers, we already have about 1,000 of the 1,600 megawatts that would be needed, unrelated to any policy changes. There have been some plants that have come and gone on the system in New York City, but most notably, there is a new plant being built in Orange County called Clean Power Ventures in the town of Wawayanda, that's about 600 megawatts. So to really know whether or not everything is suitable yet for an Indian Point shutdown, the study has to be redone. That's being worked on and will likely be out later this year. But in all likelihood, from a reliability perspective, it's within striking range, and we've got five years to get there. So the door that you have to make up for the 2,000 megawatts of Indian Point loss is really a much smaller number, probably one that will be manageable. We'll know for sure when the study results are public.
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Jim Rowan12:17
Are you familiar enough to talk about the differences between Indian Point and Fukushima Daiichi?
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John Mcavoy12:27
I am. In full disclosure, I worked at Indian Point for many years earlier in my career when it was at the time Con Edison owned the plant. There are two different types of nuclear reactors primarily: a pressurized water reactor and a boiling water reactor. Indian Point is a PWR, Fukushima Daiichi was a BWR. When you look at the designs, they are substantially different. That being said, neither plant is designed to have no electricity at all. The plants include a reactor that has decay heat, and to remove the decay heat, you need to have some source of electricity. So a total loss of electricity like occurred at Fukushima Daiichi is largely an unacceptable condition in any large commercial plant. That being said, I can't speak for the Daiichi design in terms of backup power systems, but the plants, including Indian Point, have multiple backup systems established by a lot of regulation, and they had to further increase them as a result of the Daiichi situation.
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Jim Rowan13:33
One last question on the topic. In preparation for this conversation, it seems that the spent rods are too dangerous to move. So when they're talking about closing it, it's really basically going to be somewhat entombed versus hazardous material being moved. Is that correct?
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John Mcavoy13:50
A bit. The main problem with the spent fuel, not just for Indian Point but at all nuclear plants throughout the country, is that there is no federal storage facility. One of the things that was established in the '60s was that the federal government agreed they would take all the spent nuclear waste from all power plants. That is the agreement under which every plant got a license. You've heard of Yucca Mountain; that was going to be the federal storage facility. Billions of dollars were invested in it. It has since gone off the rails, and the original plan to finish Yucca Mountain as the storage site is no longer being actively pursued. So the problem isn't that it's too dangerous to transport; transportation mechanisms exist. We used to transport nuclear fuel in this country in the '60s and '70s. Other countries do it routinely. The transportation design is there and it's operational. But there's no place to put it. So what happens is it all gets put in what's called on-site storage containers. It's not exactly like being entombed; it's more like if you think of a railroad car with a tanker on it, it's specially designed to house and allow even more nuclear fuel to be stored. It's generally put on a concrete pad outside of the plant where it was previously used.
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Jim Rowan15:13
Thank you. Maybe we can move on to global warming and what I guess is now developing a requirement for resilient infrastructure. We all remember Sandy. Many of us, either working in the city or where we live, felt the impact. So how is Con Ed preparing for global warming, rising tides, heavier storms?
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John Mcavoy15:34
A little bit on Sandy. We had established a design criteria for our system that was based on the highest levels ever seen in New York City, going back to 1821, the hurricane that occurred there. The highest flood level ever seen at the Battery was 11.1 feet. We had added a little buffer to that and said we design everything for 12.5 feet, almost a foot and a half. That stood for almost 200 years as acceptable. Sandy came in at 14.1 feet, three feet higher than had ever been seen at the Battery, and that's why it had such a dramatic impact on our system and infrastructure in general. As a result of that, we entered into a climate change collaborative with the city and many other third parties. The idea of doing this collaboratively is that it doesn't make a whole lot of sense if Con Ed has one design criteria, the city has another, and individual building owners have a third. You really want to all agree on what we should be designing to. So we went through that, did a climate change study with a number of climate change experts, and agreed to a criteria that's hopefully not too technical here: FEMA plus three. FEMA lays out flood maps, the 100-year flood map. Basically, the agreed-on design criteria, and of course FEMA redid the flood maps after Sandy since the world changed. So everything now is being designed to FEMA plus three. We implemented a four-year, billion-dollar resiliency program to implement that standard. In many cases, we've been able to find ways that the investment we make, that billion dollars, not only protects us against the next Sandy but is serving to reduce customer impact and customer outages on normal days. So the idea that during smaller storms, the resiliency benefits reduce outages is very important. During things like water main breaks with flooding, underground facilities that may have in the past resulted in outages, we've worked to make them waterproof and submersible. In round numbers, we've avoided about 200,000 customer outages as a result of the resiliency improvements that were placed in service.
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Jim Rowan18:04
I remember it wasn't the strength of Sandy, it was the tidal surge that created the issue, right?
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John Mcavoy18:08
I think it was still a tropical storm, flirted with hurricane category one. It was the surge that created such a problem. Two parts of the impact: first on the overhead system, the places where we have poles, Staten Island, Westchester, Orange, Rockland County, there was the wind, and the winds just tore apart trees, took down the electric system with it. That was a good portion of where the customer impact was. The other was flooding. It was a combination of full moon, tidal surge, the direction the winds were coming in at, and the strength of the winds. It was a superstorm. Sandy was a tropical storm by the time it hit New York, but right at the edge of hurricane force waves. So you put it all together and it was the perfect storm. By the way, it didn't feel perfect to us. It amounted to really unprecedented amounts of outage.
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Jim Rowan19:02
Okay, well, if we want to talk about disasters, what you read in the paper all the time now, more recently, is cyberattacks. James Comey of the FBI said there are two types of American companies: ones that have been attacked and ones that don't know they've been attacked. So I would assume that either state-sponsored espionage or ransomware, Con Ed is a prime target for disruption if you will. So is that something that concerns you? Are you preparing for it?
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John Mcavoy19:34
That is something that tremendously concerns us, and we put a tremendous amount of effort into preparing for it. When you think of how to disrupt normal life, normal actions in our country, the energy systems are pretty high on the list. And if you think of a place where you'd like to do it, New York is likely on the short list as well. So we take it from a perspective that we need to be ready for the best that anybody's got to offer. Frankly, we see attempted penetrations, not attacks but attempted hacking into our system on a daily basis, a significant amount, including from countries like China and Russia. Nothing new there; plenty of other companies see that as well. Our strategy is laid out around four elements: prevent, detect, mitigate, and recover. Prevention is what you spend most of the time talking about: you have the right firewalls, the right security mechanisms, you separate your networks so that if they get into one portion, maybe the email portion, they can't get into another portion like the part that controls the electric and gas and steam systems. We have all that, and of course we work to challenge ourselves. We hire hackers to try to get into our system. We benchmark very significantly with not only other utilities but other industries. And probably one of the things we benefit from the most is we have a really strong relationship with law enforcement: FBI, Secret Service, Homeland Security, Department of Energy at the federal level, and at the city and state level, NYPD cyber terrorism task force and the like. They really help us not only identify the nature of the current threat, because that's one of the things about cyber, the threat changes on a routine basis. Last year at this time, I don't think anybody knew what a distributed denial-of-service attack was using the Internet of Things until it happened. So your protection mechanisms have to be advancing as quickly as the nature of the threat. A little bit on detect, mitigate, and recover. I think the quote was something like, they don't know that they've been penetrated. Most cyber attacks don't occur on the day of the hack; it's usually three to six months afterwards. You could see this in many of the popular attacks. The attack on Sony didn't occur on the day of the release of a movie that North Korea did not look upon fondly. In all likelihood, they were already in. Same thing with the Christmas Day attacks on game consoles and other game toys. So you need to have detection mechanisms that are looking at the traffic: which computer is talking to which, which ones are at a higher utilization rate, which ones are dialing out in a way that's inconsistent with the way other servers dial out, or more so than they used to historically. A lot around detection so you can find it if it is inside before it finds you. Pattern analysis, analytics have really evolved there to make so much of that automated now, which is really helpful. And then the last: many large organizations with national stature, in many cases law enforcement and military pedigree, have been penetrated. So you have to go into it assuming that you're going to have to mitigate, you have to respond to it. You have to have procedures and processes to isolate it as quickly as possible, drop off the parts of the systems that are contaminated, and be able to manually, if necessary, still operate our energy systems. And finally, a recovery strategy. You can lose thousands of servers. Aramco is a good example where they lost tens of thousands of servers. Where are you going to get the technicians to handle that level of work? One of the things that the electric utility industry has that I think is fairly unique is called mutual assistance. Traditionally, mutual assistance was that when somebody has an overhead storm and the poles are down, if it happens in Pennsylvania, everybody tends to the aid of Pennsylvania. That has existed for decades. Now we've established that from a cyber perspective. So if one utility gets hacked and has to do a major rebuild of its system, we have protocols and pre-approvals so that other utilities can send their system analysts and technicians to help accelerate the recovery, and if possible, lend resources like servers.
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Jim Rowan24:34
So John, we're actually cruising along, and I got the sign that it's 10 minutes before questions begin. Because I did want to talk about Fordham Prep and some of the again, I guess STEM, right? We talk about the science, technology, engineering, and mathematics. Your hiring managers, are they seeing candidates that are more prepared, less prepared? Could you give us a little insight into the types of folks that you're hiring and the qualifications that you're looking for?
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John Mcavoy25:06
A little bit on how we look from an employee side. Some things are kind of surprising to me. One of the things is that when I hired into the company in 1980, most people stayed for their whole careers. You came to the company, if you liked doing the kind of work, you stayed for the duration. I'm an example of that. That was true of many companies then, and many have seen that change. We have not, which is almost remarkable to me. I think our attrition rate is pretty much the same as it was. We have a lot of theories, no proven theories as to why that is, but I think there are a couple of reasons. First, we give our people a lot of responsibility relatively early on in their careers. That seems to be something that the people who work with us not only take advantage of but usually use it to drive them to look for more responsibility. Second, of course, compensation and pay have to be competitive, particularly in a high-cost area like New York. And third, and this is again theory, but we get to do a really special thing. Even though we are a publicly listed shareholder-owned company, we get to serve. We are really a public service company. We get to serve the greatest city in the world with work that is inherently important. You don't have to read a book to know that what we do is important. Unfortunately, from time to time, we get reminded when it's not there of the dramatic impact it has on our city, our communities, and our society. That's a pretty neat thing to have in a career, knowing you're doing something that really makes a difference. So our attrition patterns really haven't changed that much. The incoming workers, though, have changed very significantly in a number of ways. First, we've been very successful in having a much more diverse organization. With that diversity comes a lot of richness, a lot of breadth, a lot of innovation. The challenge that we're really focused on more now is one of inclusion. How do you make sure that you have a diverse organization but also an environment that really makes everyone feel included, everyone feel welcome, everyone part of the team? Because that's where you get maximum employee engagement. We've come a long way, and we're doing great in a lot of ways, but our surveys show that we have more work to do to create the environment we really want, that will continue to allow employees to be engaged at an even higher level. One of the things I think is common to many large organizations that you don't see in smaller companies is that there is an element of discretionary effort that employees can choose to give or not to give. You can in all likelihood survive at the mediocre level, putting out 80% or 85% for some substantial period of time in a large organization. Or you can be really engaged and excited about what you're doing and put out 130%. The difference is related to how employees feel about the company, if they feel trusted and respected, how they feel the company feels about them. So we're really working to change the entire relationship we have with our employees.
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Jim Rowan28:46
One question. If you were able to contribute your thoughts on the Prep curriculum, what do you think would be an area that you would recommend that the Prep or other schools focus on so that the students that are graduating going to college are ready to jump in and give 130%?
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John Mcavoy28:58
My recollection of the Prep curriculum was that it was pretty impressive, and I benefited in many ways. Probably because I went to engineering school at Manhattan College, and it was a very straightforward curriculum. Frankly, other than religion class, I don't think there was a whole lot of liberal arts. I know there wasn't a single English class. So whatever broad exposure I had to the world in general, I have come back to English and literature because it's so important. I got zero of that at the Prep, and I think that was really valuable to me personally. I see Mr. Ahearn, who was my homeroom class leader my freshman year and my English teacher sophomore year. I will tell you that the ability to communicate, no matter what you're going to do in your career, including being able to write well, is so substantially important. The exposure to literature — my wife and I were both born and raised in Parkchester in the Bronx. She went to Saint Ursula's Academy and then College of Mount Saint Vincent, very similar upbringing. She will still to this day say, 'How do you know about that?' and I remember reading this book, and she's mad about it, like, 'You know, where were my English teachers? Where was my literacy?' Thanks to Mr. Ahearn, and we talked about Jerome earlier, I think that's a really valuable addition. Given that I went technical for college, that was really valuable to me. But you started off asking about STEM. When you look at the statistics around engineering, the amount of progress we've made in terms of bringing in women and minorities is surprisingly poor. Women are about 15 to 20 percent of engineering graduates, about the same as it was ten years ago, about the same as it was twenty years ago. At the same time, more women graduate college than men, and in professions like medical, there are as many if not more women graduating. So really low amounts of progress there. And if you zoom in on mechanical and electrical and civil engineering, the numbers are even less, it's like 10 percent women. So a lot of work to be done there. And minorities similarly. For example, take Latinos, African Americans, and Native Americans, Alaska Natives, in round numbers, they are about 30 percent of the population but less than 10 percent of the engineering workforce. So there's a lot that we need to do there. One of my beliefs, and I think many organizations share it, is that it has a lot to do with exposure to what a career in a STEM-like field will be like. Many of us know what it would be like to have a career in education because we're exposed to education. Many parts of the medical field, what it's like to be a doctor or nurse, you're exposed to that as part of normal life. Law enforcement and the legal profession get more than their share of TV shows and movies. Even business gets in movies. But name a TV show or a movie where an engineer is the hero or heroine. There's 'The Accountant' movie just came out, so yeah. So there's not a whole lot of exposure to what it's like to have a career in many of the STEM fields. In many of our programs, we're working to reach out very much at the grammar school and high school level to help explain what the career is like in our company and in STEM in general, and particularly to focus on women and minorities so that we can potentially help turn the tide and provide more interest in them becoming long-term STEM career workers.
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Jim Rowan31:39
So John, we have the Business Club here, and they like to ask a few questions. So gentlemen, since you haven't graduated yet, please ask any questions.
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Student33:56
Circling back to green and renewable energy, how do you think New York is prepared for cheaper solar and possibly rooftop solar on homes? And how is competition going to work with Con Ed?
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John Mcavoy34:06
Let me tell you a little bit about my company's activities around renewables. We have three lines of business. One is the kind that you will know. One is Orange and Rockland Utilities, a regulated utility. Two are completely separate businesses: our clean energy business. We have solar and wind in thirteen states across the country. We are the fifth largest solar producer in North America. In the Southwest, we have very large solar facilities. The largest facility is about 30 miles outside of Las Vegas, it's 3,000 acres. If you know a solar panel, about two and a half feet by six feet, it's 1.1 million solar panels, just one of our facilities. We have wind in South Dakota, Nebraska, Minnesota. We have much more solar as well in Texas, Southern California, and we have smaller solar in the Northeast. So we are all in on renewables. We do it for two reasons: one, because we see it as such a large part of where the energy in this country is headed, and in addition to doing what we currently do well, we want to make sure that we are learning tomorrow's technology, becoming good at it, becoming competitive at it, and creating great earnings opportunities for us because it's growth. In addition to growing Con Ed and all other utilities, that growth is an opportunity for us. New York State has the renewable energy standard, the Clean Energy Standard that I mentioned: 50 percent by 2030. It's going to take a very significant build-out of renewables in the state to accomplish that. It can come from a host of different areas, and that's still to be determined. It could come from Canadian hydro if we decide we want Canadian hydro, and there are a lot of pros and cons going with Canadian hydro. It could come from large wind farms, which would largely be in the northern or western parts of the state. Or it could come from large solar facilities. Rooftop solar is a part of it, and we do some rooftop solar, although not a whole lot, but we do some. Clearly, if you're going to make large changes in the energy infrastructure to incorporate more solar, large-scale solar projects are much better. They are about 50% the cost of rooftop solar. So if we're going to make a real change in our energy economy and we want to do it in a way that is the lowest possible cost for customers, large-scale solar projects long-term is the way to go.
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Lou Gallo36:52
My name is Lou Gallo, I'm from the class of '66. Now, although I don't look like it, I was 1966. At 7:19 businesses, and there were actually four of us who created the tables down there. Before I ask a question, I want to give you some assurance. I want to remind everyone in the room that what was said at a Prep function remains within the Prep community. But we're not screaming anything violent. Remember that. That's what I ordered a repeat of. You see that the other night too. If anyone violates that, the wrath of the Fool, the disciplinarian Father Shade, will come down upon you. I tell you, and if you don't know who that was and what that entails, ask any of us golden years. But my question is: what are your personal feelings about our country pursuing fracking? Is it worth it, or does the potential danger far outweigh any benefit? And a secondary point: does Con Ed have a program whereby they will replace what you've charged homeowners, like incandescent bulbs, with the more efficient energy-saving LED bulbs?
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John Mcavoy38:10
So one of the great parts of being a long-term Con Ed employee and having the privilege of being CEO is that you give up the right to have a personal opinion. As a company, we do not have a role in the production of natural gas. We buy natural gas at the transmission pipeline level. We buy it from wherever it is produced safely, reliably, and economically in accordance with all local laws. We do not take a position on what production method is appropriate. Similarly, on the electric side, we are largely out of the electric generation business. We only really have our steam plants, which was part of deregulation in New York State. So we don't take a position on nuclear power versus other types of power plants either. We have an opinion like everyone else, but frankly, no one's interested because it is not our role. On energy efficiency, I touched on renewables a couple of times. Energy efficiency in so many ways, we find for our service territory is even better than renewables, more cost-efficient, and provides more reliability and value to our customers. So we have energy efficiency programs for every type of customer, from single-family residential, apartment, or homeowner, right up to large commercial and industrial, and residential buildings too, like those in this area or in the Bronx. We put about 40 or 50 million dollars into those programs every year to subsidize and provide rebates for energy efficiency to our customers. It is one of the best win-win-wins because they reduce their bills, they reduce their impact on the environment, and we reduce the need for more generating sources. We've been doing energy efficiency programs like that for well over 10 years now. We are going to, for the next three years starting 2017, increase the amount we are investing significantly, and we are going to keep doing that going forward.
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Jim Rowan40:30
Other questions? We have our last question for one of our students over here.
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Lou Lombardi40:37
My name is Lou Lombardi, I'm the class of 2017. In macroeconomics, we've learned a lot about aggregate supply and aggregate demand, and we were just wondering how changes in OPEC oil prices affect Con Ed and how you respond to those effects in order to maintain the price level as well as the purchasing power of your employees and customers.
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John Mcavoy41:00
I was worried you were going to ask me to describe aggregate supply and aggregate demand and macroeconomic theory, Mr. Ahearn. That was close. We do not, and frankly New York State is not largely using fuel oil to generate electricity. So the only places we use oil are in our fleet, for our trucks and vans. There, we increasingly use probably about 40 percent of our fleet uses alternate fuels now: biodiesel, hybrids, full electric, and compressed natural gas vehicles. So it does not have a dramatic impact on us directly. But it does change the equation between customers who choose to heat their home with oil or with natural gas. What we are increasingly seeing is customers who want to shift to natural gas. Two main reasons: it's cheaper, and expectedly cheaper for many years, and it's so much more environmentally friendly. In round numbers, at any given time in the last couple of years, natural gas is about half the price of oil alternatives. So many, particularly large buildings, are moving over from fuel oil to natural gas. From an environmental perspective, it's about 40 percent less carbon emissions, no sulfur dioxides, 40 percent less nitrogen oxides, and no particulates. When we talk about air emissions, carbon is the thing that most things get measured by, and appropriately so. But for a densely populated city like New York, local air quality is extremely important. The difference in local air quality as a result of burning natural gas, which has basically no ozone precursors, compared to burning fuel oil, is very significant. New York City was determined to have the cleanest air it's had in 50 years in 2016, and conversion from fuel oil to natural gas is certainly a part of that.
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Jim Rowan43:11
Well John, thank you. Thanks. Thank you. No time. Great. Thank you so much.
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Host43:33
Well, thank you Jim. John, a very good conversation. Sorry we didn't have time to take more questions. I know many of you have them, but it was a lively conversation and close to my heart at the Prep. Because I know that if you graduated prior to '72, you talked about our building we inhabit as the new building, but it's not new. And we're making a lot of changes. Actually, very interesting to hear about solar because we are partnering, thanks to our strong relationship with Fordham University, we are partnering with a solar farm in Staten Island and a third party. Mike Higgins, our CFO, has really worked very hard on this. It's going to take our energy costs way down, and it's good to hear that that seems to be the way of the future. A couple of other people I want to thank: Paul Frank has sponsored our attendance at the Harvard Club, so thank you to Paul. I think you're here somewhere in the building. Yes, thank you Paul. You know, we're blessed to have John Freeman here too. We go back and forth between Yale and Harvard, so it's been a good rivalry. Good spots for us to be able to host these events, and we're very grateful for your support. Paul Williams is here. He has attended a record 14 Wall Street forums. Where are you? There you are, Paul. Several of you have sponsored the lunches. This is an upgrade from the Commons, you might be surprised to know that. But for our young men who are here today, I want to thank those who sponsored students: Kathleen Nawicki, Terence Fay class of '88, John Freeman '80, Bill McCabe class of '75, Jim Murray '85, Bill Rizzo '86, and Sparrows Fink Van Gatos '07. All of you sponsored seats for our students to be able to join us. I know it was impactful for you guys to be able to step out of the campus and know you could learn something just by coming to the Harvard Club and spending some time with people like John McAvoy and Jim Rowan. I'd like you to consider some events. We put cards at your table for things that are coming up. Ronan Tynan concert, less than two weeks. We have over 700 tickets sold. We're anticipating a great evening, and we hope that you would consider joining us. We will have brunch back here at the Harvard Club, seems to be a popular destination for us, and we're going to march up Fifth Avenue. The brunch and the parade happen, of course, on St. Patrick's Day. The last time the Fordham Prep marched in the St. Patrick's Day parade was over 20 years ago, so it's good that we can particularly have a way to mark and celebrate 175 years. The Dorrance Bicentennial, as your brother Joe prefers the Latin because he went to Regis, that's okay. But we talk about it as 175th, which is great. So we'll be celebrating on St. Patrick's Day. Our annual golf outing, you'll see information about that at your table. We were just able to book La Serena, which is a great spot for you and your wives to come and celebrate the 175th. We're going to have a dinner dance celebration at La Serena. It's a downtown Maritime hotel, owned by Joe Bastianich class of '85. That will be a great evening. That's going to be in the second week in May. We're still confirming the date, will get details to you shortly. And then April 2nd, with America Media, we're able to co-sponsor a forum on faith and racial justice. We invite you to come to the Prep. April 2nd is a Sunday, 3 p.m. We'd like you to come. We have lined up some top-rate scholars, university scholars, as well as alumni in this space who both study and comment in this space. I think it'll be a great way to spend an afternoon. We invite you and your families to consider being with us for that. I want to thank so many people who helped make this afternoon possible: our Vice President Jose Gonzales, our CFO Mike Higgins, and the Business Club that was able to be with us today. Suzanne Dowden, Aaron Trainor, CJ Johnson, who does video for us, and today is actually his last days moving up to the leafy environs of Dartmouth, so we're grateful for CJ's work among us. Larry Curran, and of course Dennis, it's great to hear a call out from the speaker Dennis for the great work you did teaching John and his classmates so many generations of Fordham Prep young men. So thank you to all of you. Lastly, one of the particular passions of our Chairman was the design of a 175th commemorative stein, a beer stein. Let me just have a show of hands: how many people have the stein? Okay, so we got to do a lot of selling that needs to go on today. The stein is unbelievable. We have it displayed out here. It might be hard to see, but let me tell you, this is an amazing piece of work. For a $500 donation, this stein is yours. And you want it to be yours. By the way, you can actually drink from it. Great stein. We want you to consider a $500 donation to the Prep for a stein. But I think we're doing a raffle, aren't we? Tommy McCarthy, there you are. So someone's going to win a stein right now. This is very exciting. Lots of exciting things. So thank you, especially to John. Thank you for bringing your brother Bernie. Thank you to Jim. And John, so many of your classmates came out to be with you today, as well as all of you. Thanks for coming to our Wall Street Forum, spending some time with us. God bless. And it is Mardi Gras. Lent begins tomorrow, Ash Wednesday. But thank you for everything you do for the Prep. Thank you for being here today. And thank you for your loyalty and support to our mission. God bless. Thank you.