By Michael Kuser

The New York Public Service Commission on Thursday modified its value of distributed energy resources (VDER) compensation policy and authorized $43 million in state funding for solar and other community distributed generation projects in the Hudson River Valley and New York City (15-E-0751).

The commission’s order refines the compensation rules it set in 2017. “The decisions in this order improve the predictability, transparency and accuracy of DRV [demand reduction value], locational system relief value (LSRV), and capacity value calculation and compensation,” the commission said.

The order directs utilities to file tariff revisions within 20 days, to be effective June 1.

It also noted inconsistencies in utilities’ marginal cost of service studies and initiated a proceeding to “determine what methodologies will lead to the most accurate results” (19-E-0283).

The new rules incorporate, with modifications, most of the recommendations commission staff made in two white papers in December. (See NY Examines VDER Capacity Value Compensation.)

In a white paper on compensation, staff said that the current DRV and LSRV rules “may represent an attempt to achieve greater granularity and precision than is reasonable and possible in an open, administratively determined tariff mechanism.”

The paper said the commission must balance the desire to provide precision in compensation with “the risk that a more sophisticated tariff may result in price signals that do not fully incentivize and motivate developers and customers to make decisions based on the objective of maximizing grid value.”

Commissioner Gregg Sayre said that in restructuring the market for distributed energy, “paradoxically, we have to set market rules and even in some cases have to set prices in order to move toward our goals.”

Thursday’s order adjusts the calculation of DRV to reflect performance during a larger set of hours and to lock in the value for 10 years. It also changed the LSRV — the value of using DERs to avoid distribution system investments — giving such projects compensation for responding to utility calls. PSC staff had called for phasing out the program.

The rules expand Phase One net energy metering eligibility for self-serving projects under 750 kW; modify the Alternative 1 Capacity Value calculation to reflect NYISO monthly prices and solar PV load curves; and modify the Alternative 2 Capacity Value calculation to better reflect actual peak hours.

Commissioner Diane Burman voted against the VDER measure, saying the late delivery of the draft order — 9 p.m. on April 15 — did not give her enough time to be fully briefed on the matter.

“You can point to the staff white papers and say we just made modifications to that,” Burman said. “It’s not good enough, especially because it requires going through not just the white papers and looking at the potential modifications, but … looking at all of the different things that this hits.”

PSC Chairman John Rhodes acknowledged that he had previously heard Burman ask staff to try to get draft orders to the commission well ahead of a scheduled session. Commissioner James Alesi joined Sayre and Rhodes in approving the order.

Storm Response Faulted

The commission concluded investigations into utilities’ responses to storms in 2017 and 2018, including two nor’easters that struck the state last March that left hundreds of thousands of customers without power. The commission also established the Office of Resilience and Emergency Preparedness to improve the state’s ability to respond to the impact of severe weather events.

The PSC accepted a joint settlement agreement on New York State Electric and Gas’ and Rochester Gas & Electric’s responses to the March 8, 2017, windstorms, which cut power to 250,000 customers (17-E-0594).

While National Grid had restored service to 90% of its customers within 36 hours, and all of them by March 12, it took NYSEG until March 13 and RG&E until March 17 to complete work.

“It was disappointing at the time that NYSEG and RG&E took longer to restore service than National Grid, given relatively comparable service territories and damages,” Sayre said.

The settlement requires RG&E to spend $2.8 million and NYSEG $1.1 million on resilience programs and improvements to their emergency response practices. Administrative Law Judge Sean Mullany and Christian Bonvin, Department of Public Service chief of electric distribution systems, testified that the costs would not be reflected in the companies’ rate bases or operating expenses.

The PSC also issued a report on its investigation into the 2018 winter and spring storms, finding that NYSEG and Consolidated Edison “not only struggled with providing accurate [expected time of restoration] but also did not make optimal use of social media or their websites to keep customers and public officials well informed.”

The commission’s show cause order directed the utilities to provide a status report by April 26 detailing their implementation of the recommendations and to file revised emergency response plans (ERPs) by May 15 (19-E-0105, et al.).

Court Action Sought on NYSEG

The PSC also issued an order instructing its counsel to begin a special proceeding against NYSEG in the New York Supreme Court “to stop and prevent future violations” of commission regulations and orders by the utility (19-E-0288).

The order cited the DPS’ 77 recommendations for NYSEG in its report to implement in its ERP and its conclusion that the company may have violated its ERP on 20 occasions in the 2018 storms. It said the 2018 storms were just the latest in “a pervasive pattern of inadequate response and restoration performance,” dating to Superstorm Sandy in 2012.

Burman dissented, questioning the logic of going to court.

“Why would we today, if we have an issue with their pervasive lack of response, why would we say in the settlement and in here that we’re good with things?” Burman said. “Plus, we’re not factoring in other storms that have happened since then that, my understanding is, NYSEG got credit for doing well.”

Burman said she found seeking injunctive relief against NYSEG as dismissive of the commission’s authority, as if she was to tell her two children, “Wait until Daddy gets home; he’ll tell you to listen to Mommy.”

John Sipos, acting general counsel for the PSC, said he would characterize it a different way.

“This order … would authorize counsel to seek an affirmative judicial order requiring compliance,” Sipos said. “It is a tool that the commissioners have as part of their enforcement and compliance toolbox. I would respectfully suggest that it is a significant tool, and I would also add that … other state agencies also sometimes seek civil action in New York Supreme Court.”