NY Is Improving Utility Planning, But More Progress Needed
The New York Public Service Commission’s latest order regarding utility planning requires some incremental improvements, but could have done much more to push the state’s utilities to invest in energy efficiency and other cost-effective, clean resources.
The order is part of the Commission’s “Reforming the Energy Vision” (REV) initiative, which aims to make the state’s electricity system cleaner and more affordable by improving utility planning to better harness the power of local energy resources such as energy efficiency, demand response, rooftop solar generation, electric vehicles and energy storage (known as “distributed energy resources” or DERs). To do so, New York has ordered the utilities to put together individual and joint Distribution System Implementation Plans (DSIPs), to act as a roadmap for utilities to plan, operate and manage the modern electric grid, and provide market players like developers of DER with the information they need to advance new projects.
The process itself is an innovative effort to pull back the curtain on utility system planning, and it has already resulted in key improvements in certain areas, such as planning for non-wires alternatives (using clean DERs like targeted energy efficiency and batteries to replace or defer the construction of costly substations or power lines). Utilities have put in a significant amount of work to assemble their plans, which make tangible improvements in some areas. Perhaps somewhat understandably given the rapid pace of change, the plans have not kept pace with the ambition of REV, creating a need for the Commission to step in and provide additional guidance as to clarify what is expected (and when).
On March 9th, the Commission issued an order responding to the utilities’ plans. The order requires some incremental improvements, but unfortunately it also leaves other critical areas unaddressed. Most importantly, the order doesn’t do anything to remedy the fact that most of the state’s utilities have not been actively planning to ensure that a robust market for DERs develops beyond the non-wires context. For energy efficiency in particular, it is critical that further direction be given immediately so that the state can achieve its ambitious clean energy goals.
Our hope is that the Commission’s order is only a first step to ensure that incremental improvements were made prior to Chair Zibelman’s departure from the Commission, and that the Commission still plans to follow through on key areas left unaddressed by the order.
Key Takeaways from the Commission’s Latest Order:
The Good: It creates a nation-leading framework for non-wires alternatives and requires more data sharing
New York’s utilities are using the targeted application of DERs to meet grid needs, rather than building expensive infrastructure upgrades, such as adding more substations, poles and wires. Each utility’s plan details a portfolio of non-wires alternatives. One of the most significant such effort in the country was initiated in 2014 (prior to the REV’s launch) by Con Edison, which is successfully implementing the Brooklyn Queens Demand Management Project (BQDM) to solve system constraints through roughly $200 million in clean DER solutions, rather than building a $1.2 billion dollar substation. Through their coordinated plan, the utilities proposed a set of criteria for identifying grid needs that can best be served by non-wires alternatives, and committed to improving their procurement to make it more centralized and easier for DER developers to participate in.
The Commission’s order requires the utilities to integrate non-wires solutions consideration more fully into their plans for new infrastructure projects as a matter of standard procedure, streamlining and coordinating the planning process. The order also explicitly requires the utilities to consider public policy goals in selecting non-wires alternatives, which will help ensure that clean non-wires alternatives are prioritized, and should help facilitate better outcomes like reducing emissions in low-income communities.
In addition, the order directs the utilities to develop a way to provide aggregated whole building energy data to more building owners so they are better able to manage and reduce energy use, as New York City building owners have been doing for several years as a result of the city’s local benchmarking requirements. The utilities had proposed sharing data with building owners only where there are at least 15 utility accounts in a building and no single account amounts to more than 15 percent of the usage. As we explained in comments, this so-called “15/15” standard would present a burden to building owners wishing to benchmark their buildings, drastically reducing the number of owners who can easily track and target reductions in energy use, and is not consistent with a multitude of utilities across the country that use a threshold of a much lower number of accounts. The Commission’s order directs the utilities to work with stakeholders to develop a less-restrictive standard to address building owners’ data needs within 90 days, thereby paving the way for a framework to be adopted that would facilitate, rather than hinder, building energy benchmarking and increased energy efficiency in New York State. The order also directs the utilities to consider a standard to disclose aggregated whole building data to the public, as New York City and many other large cities now do with information obtained through benchmarking ordinances.
The Bad: the order misses an opportunity to significantly advance electric vehicles
New York State has committed to speed up the growth of electric vehicles (EVs), opting into a Multi-State Zero Emissions Vehicle agreement to put 3.3 million such vehicles on the road by 2025 (which translates into approximately 850,000 EVs in New York). This will have enormous benefits, significantly reducing climate harming pollutants, lowering electricity bills for non-EV driving customers and boosting the local economy. (For more on the benefits of EV grid integration, see this report.)
The utilities’ coordinated plan submitted in November 2016 made incremental progress to advance these goals, committing to establishing an EV Readiness Framework to help integrate EVs onto the system by improving EV forecasting methodologies and creating education and outreach programs for customers. But their proposed time table is too slow. As we explained in several sets of comments, each utility should be establishing robust infrastructure development and rate design programs now in order to put the state on the path to achieve New York’s ambitious goals. Unfortunately, however, the Commission’s order does nothing to speed up this process.
And the Ugly: the order fails to require clear plans to ramp up energy efficiency and other clean resources
Time and again during the comment process on the distributed system plans we have explained the need for utilities to spell out how they will advance clean DERs beyond non-wires alternatives, in line with state goals. Doing so is necessary to establish the markets for clean resources promised by REV. Further, only a centralized process can fulfill the DSIPs goal of providing market visibility to developers and other stakeholders, and facilitate a comparison to state policy goals and energy system load forecasts.
But to-date, the distributed system plans have left this critical topic entirely unaddressed. The Commission’s latest order hardly even broaches the subject of proactively planning to advance more clean DERs, except insofar as it requires each utility to develop energy storage projects at two different locations by December, 2018. (Yes, you heard that right, the number is in the single digits. At least one of the state’s utilities, Con Edison, has already met it).
Nowhere is this void more important than for energy efficiency, which is in desperate need of shoring up. As we highlighted in a letter to the outgoing Chair of the Commission Audrey Zibelman, there is even more urgency to procure carbon-free energy efficiency given the recently announced planned retirement of Indian point nuclear plant (discussed further in this report). While Con Edison took the initiative to propose significant new near-term energy efficiency investments in its recently concluded rate case, other utilities have not yet followed suit and only a centralized state planning process can channel all utilities to meet persistent annual efficiency goals and build markets through procurement mechanisms like auctions and solicitations for clean resources.
While the Commission missed an opportunity to advance this resource in its latest planning order, it has recognized that energy efficiency is the cheapest and fastest way to reduce customers’ electric bills and reduce harmful greenhouse gas emissions. We trust that it will be high on the priority list for the future—especially for whomever Governor Cuomo nominates to succeed Zibelman as Chair of the Commission.
Conclusion
In sum, New York’s distributed system planning process has provided a helpful framework to modernize utility business models and operations. It has the potential to be a game changer to significantly ramp up clean energy, but for that ambition to be realized we need greater clarity and direction from the Commission than has been given by its orders to date.