Navigant Research Blog

New York Details Its Energy Vision

Brett Feldman — August 27, 2014

The New York State Public Service Commission (PSC) has released its latest straw proposal on its Reforming the Energy Vision (REV) proceeding.  It includes recommendations that incumbent utilities take on the central Distributed System Platform (DSP) role, at least in the short term.  This was one of the most controversial issues in the REV plan, with the potential for the utilities to be stripped of many of their responsibilities by the PSC and replaced by a new independent entity.  PSC staff decided to stick with the utilities – partly for substantive reasons, partly out of expediency.

The paper includes a table comparing the roles of a utility versus a DSP, exhibiting a great deal of overlap.  So the utilities can breathe a major sigh of relief with that recommendation, knowing that they will maintain many pivotal duties.  But the paper does point out that utilities do not currently have all of the capabilities and competencies needed to successfully operate the DSP and will need to hire new staff with different skill sets, as outlined in my earlier blog on utility hiring trends.

Seeking Alignment

Also noteworthy, from the standpoint of demand response (DR) and distributed energy resources (DER), is the recommendation that all utilities be required to develop DR tariffs, including fees for storage and energy efficiency.  PSC staffers are wary about the potential effects of the pending U.S. Circuit Court case on Federal Energy Regulatory Commission Order 745 on DR compensation, which could complicate DR participation in wholesale markets like the New York Independent System Operator (NYISO).  On the other hand, the report is rather light on recommendations for expanding time-of-use rate structures, which may also encourage increased DR participation.

Addressing the concern about a lack of coordination between retail and wholesale markets, the report states that market rules allowing DER participation in both markets must be aligned to ensure that DER interaction is efficient and properly valued.  The PSC argues that this goal can be accomplished with DSPs acting as aggregators in NYISO programs.  That’s a threatening statement to the third-party DR aggregators that would not want the utility/ DSP to compete with them in the wholesale markets.

Are Smart Meters Necessary?

From the consumer perspective, the report references a recent survey of residential electricity customers in New York that found that, although few customers say they are knowledgeable about their electricity usage, many place a high value on easy access to information regarding their energy use, the price of electricity, and methods for controlling their energy costs.  This indicates the potential for substantial increases in residential customer adoption of home energy management and DER products.

Notably absent from the REV plan is a recommendation regarding advanced metering infrastructure (AMI).  Electricity cost and rate increases are sticky political issues in New York currently, and PSC staff did not highlight AMI as a requirement for achieving REV goals.  The only reference to AMI actually speaks to how to avoid it: “To the extent that the cost of advanced metering equipment presents a barrier to customer adoption of DER programs or time variant pricing, utilities and market participants should consider alternatives to AMI technologies to enable program delivery.”  In other words, the report acknowledges that AMI functionality may be useful for REV purposes, but doesn’t say how that functionality can or should be achieved.

Comments on the straw proposal are sure to be plentiful from all sides.  I view this plan as less aggressive than the original REV paper, but ultimately, it is more achievable in the short term – which may help build momentum for the longer-term transformation.

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