If you manage a portfolio of residential or commercial buildings in New York City, utility rates are never static. Every year brings a new round of rate adjustments from Con Edison, National Grid, and the NYC Department of Environmental Protection. Some changes are incremental. Others hit hard enough to blow a hole in an otherwise sound operating budget. The difference between property managers who absorb these increases and those who get ahead of them comes down to one thing: understanding exactly what is changing and why.
The challenge is that rate changes rarely arrive as a single, easy-to-read number. Electricity rates are split across supply, delivery, demand, and a constellation of surcharges. Gas rates fluctuate with commodity markets and seasonal demand. Water and sewer charges follow their own fiscal-year calendar, decoupled from the other utilities entirely. For a property manager juggling dozens of buildings and hundreds of meters, keeping track of all of these moving pieces is a full-time job in itself.
This article breaks down the key rate changes hitting NYC properties in 2026 across all three major utility categories. We will walk through what is driving each change, how it shows up on your bills, and what you can do right now to protect your bottom line. Whether you are building next year's budget or trying to explain a cost increase to ownership, this is the context you need.
Con Edison Electric Rate Landscape
Con Edison's electric rates for commercial and residential customers are built from multiple layers, each of which moves independently. The supply charge covers the cost of generating or procuring the electricity itself. The delivery charge covers the wires, substations, and infrastructure that carry power from the grid to your building. On top of these sit demand charges, system benefit charges, and a rolling set of regulatory surcharges that most property managers never examine closely enough.
In 2026, the delivery component is where the most significant movement is happening. Con Edison's most recent rate case, approved by the New York Public Service Commission, authorized a multi-year increase in delivery rates to fund grid modernization, storm hardening, and the buildout of distributed energy resources. For a typical 200-unit multifamily building on the SC-9 rate class, delivery charges now represent close to 42% of the total electric bill, up from roughly 38% just two years ago.
Supply charges, meanwhile, have been more volatile but directionally stable. Buildings that purchase supply through an ESCO or competitive supplier have some ability to lock in fixed rates, but those on Con Edison's default supply service are exposed to monthly market fluctuations. The gap between fixed and variable supply pricing widened significantly in 2025, and that trend is continuing into 2026.
Demand charges remain the most misunderstood component of commercial electric bills. A single 15-minute interval of peak usage can set your demand charge for the entire billing period. Buildings with aging HVAC systems, elevator banks, or poorly staggered startup sequences are particularly vulnerable. Time-of-use pricing, which Con Edison has been expanding, adds another dimension. Off-peak rates can be 30% to 40% lower than on-peak rates, creating meaningful savings opportunities for buildings that can shift discretionary loads like EV charging, laundry, and water heating to overnight hours.
The chart below illustrates how each component of a typical electric bill has shifted over the past three years. Pay attention to the delivery segment, which is growing faster than any other category.
Average Monthly Electric Bill Breakdown
Typical 200-unit multifamily building, Con Edison SC-9 rate class
National Grid Gas Rates
Natural gas rates in New York City follow a different rhythm than electricity. National Grid, which serves the majority of NYC's gas customers, structures its rates around a base delivery charge and a commodity charge that fluctuates with wholesale natural gas prices. The delivery portion is relatively stable and governed by rate cases filed with the PSC. The commodity portion can swing dramatically based on weather, pipeline capacity, and global LNG markets.
Heading into 2026, the gas rate outlook is shaped by two competing forces. On the delivery side, National Grid's pending rate case proposes a significant increase in base delivery charges to fund infrastructure replacement and methane leak detection programs. The proposal, currently under review, would raise monthly delivery rates by an estimated 6% to 9% for commercial heating customers if approved as filed. Even with typical PSC negotiation, property managers should budget for a delivery increase in the mid-single digits.
On the commodity side, wholesale natural gas prices have moderated from their 2022 and 2023 peaks but remain above pre-pandemic levels. Seasonal pricing continues to be the dominant pattern. Winter heating months typically see commodity rates two to three times higher than summer months, driven by demand from residential heating and constrained pipeline capacity into the Northeast. Buildings on interruptible service contracts face additional risk during cold snaps, when National Grid can curtail service and force a switch to backup fuel oil.
For property managers, the strategic question is whether to lock in commodity pricing through a fixed-rate contract or ride the market. In years with mild winters, floating rates tend to win. In years with sustained cold, fixed contracts provide valuable budget certainty. Given the elevated baseline of current prices, many portfolio operators are choosing to hedge a portion of their gas exposure, typically 50% to 70%, while leaving the remainder on market rates.
One often-overlooked factor is the impact of Local Law 97 and New York's broader decarbonization mandates on long-term gas economics. As buildings electrify heating systems, gas volumes per building will decline, but National Grid's fixed infrastructure costs will be spread across fewer therms. The result is likely upward pressure on per-therm delivery rates for years to come, even if commodity prices stay flat.
Water and Sewer
Water and sewer rates in New York City are set by the NYC Department of Environmental Protection and the NYC Water Board, following a separate fiscal-year calendar that runs from July to June. Unlike electricity and gas, there is no competitive supply market for water. Every property pays the same published rate per hundred cubic feet of consumption, with sewer charges calculated as a percentage of the water bill.
The trajectory of water rates in NYC has been consistently upward. The city's water infrastructure is among the oldest in the country, and the capital investment required to maintain and upgrade it is enormous. DEP has raised rates every year for the past decade, with annual increases typically landing between 3% and 6%. The 2026 fiscal year rate represents a 5.8% increase over the prior year, pushing the combined water and sewer charge past the $5.00 per hundred cubic feet threshold for the first time.
For multifamily buildings, water is often the most overlooked utility cost. Unlike electricity and gas, which tenants may pay directly, water and sewer charges are almost always borne by the building owner. A single running toilet can waste 200 gallons per day, adding hundreds of dollars per month to the building's water bill. Leak detection, low-flow fixture upgrades, and regular consumption benchmarking are among the highest-ROI investments a property manager can make in the current rate environment.
The table below tracks the five-year trajectory of combined water and sewer rates. Note the accelerating pace of increases in the most recent two years.
| Fiscal Year | Rate per 100 CF | YoY Change |
|---|---|---|
| 2022 | $4.10 | +3.5% |
| 2023 | $4.33 | +5.6% |
| 2024 | $4.57 | +5.5% |
| 2025 | $4.81 | +5.3% |
| 2026 | $5.09 | +5.8% |
What This Means for Your 2026 Budget
When utility costs rise, property managers need to separate two distinct effects: rate increases and consumption changes. A 5% rate increase on flat consumption is a very different problem than flat rates on a building whose consumption is climbing due to new amenities, additional tenants, or aging equipment. Blending these two signals together is one of the most common budgeting mistakes in commercial real estate.
For 2026, the combined rate impact across electricity, gas, and water is likely to add between 4% and 8% to total utility costs for a typical NYC portfolio, assuming consumption stays flat. On a portfolio spending $5 million annually on utilities, that translates to $200,000 to $400,000 in additional cost from rate changes alone. If your budget assumed flat rates from 2025, you are already behind.
The more sophisticated approach is to build rate escalation assumptions into your budget at the utility level. Rather than applying a blanket inflation factor across all utility categories, model each one separately. Electricity delivery charges are increasing faster than supply charges. Gas commodity pricing is volatile but delivery is trending up. Water rates are following a predictable upward slope. Each of these deserves its own escalation assumption.
Equally important is isolating the consumption variable. If a building's electric bill jumped 12% but rates only increased 5%, the remaining 7% is a consumption issue that needs its own investigation. Was it a hotter summer? Did the building add common-area EV chargers? Is a piece of mechanical equipment running inefficiently? Without separating rate and consumption, you cannot diagnose the true driver of cost increases or take targeted corrective action.
Property managers who present budget variances to ownership with this level of granularity, showing exactly how much of a cost increase came from rates versus consumption, build credibility and demonstrate operational control. It also makes the case for capital investments in efficiency far more compelling when you can show that rate-driven costs are structural and only consumption-driven costs are within your control.
Strategies to Mitigate Rate Increases
You cannot control what Con Edison, National Grid, or DEP charge per unit of energy or water. But you can control your exposure to those rates through three levers: procurement strategy, demand management, and efficiency investments. The property managers who consistently outperform their budgets are the ones who pull all three levers simultaneously.
On the procurement side, fixed-rate supply contracts for electricity and gas remain the most accessible hedge against rate volatility. The key is timing. Locking in a two-year electric supply contract during a period of low wholesale prices can save tens of thousands of dollars compared to riding the utility's default variable rate. For gas, partial hedging strategies that fix 50% to 70% of expected winter consumption provide budget certainty while preserving some upside if prices decline.
Demand management targets the peak-usage spikes that drive demand charges on electric bills. Simple operational changes like staggering HVAC startup times across buildings, scheduling elevator maintenance during off-peak hours, and installing demand response controls can reduce peak demand by 10% to 20%. Some buildings are also participating in utility-sponsored demand response programs, earning credits for curtailing load during grid stress events.
Efficiency investments have the longest payback but the most durable impact. LED lighting retrofits, variable frequency drives on pumps and fans, low-flow fixtures, and building envelope improvements all reduce the number of units consumed, making your portfolio less sensitive to rate increases regardless of which direction rates move. In the current rate environment, many of these investments pay for themselves in two to three years.
The checklist below summarizes the highest-impact actions you can take right now to protect your portfolio against the 2026 rate environment.