By William Opalka

Central Hudson Gas & Electric’s decision to include distributed energy resource projects in its rate case before New York regulators is providing an early look into a utility’s and stakeholders’ approach to the state’s energy industry overhaul.

New York’s Reforming the Energy Vision, as spelled out in a February 2015 order by the Public Service Commission, requires utilities to propose demonstration projects by July 1.

Central Hudson included its proposal as part of its pending rate case (14-E-0318, 14-G-0319).

“We find there are opportunities to make our system smarter, better and stronger under REV and proposed projects that we feel will help achieve these goals,” said John Maserjian, a company spokesman.

Shaping the Rules

The demonstration projects and rate case are on separate regulatory tracks before the NYPSC. But by being first out of the gate, Central Hudson could help shape the rules.

Comments filed in response to the company’s May 1 list of proposed projects highlight the dispute over the extent to which utility ownership of DER will be allowed, even at the demonstration stage. (See New York PSC Bars Utility Ownership of Distributed Energy Resources.)

The Independent Power Producers of New York objected to the Central Hudson-owned community solar project, saying it violates REV’s prohibition of utility ownership, even under criteria for the demonstration phase. “As a private investor has proposed a community solar project, there is no reason, and it would violate the commission’s objectives, for Central Hudson to go forward with its competing proposal.”

Consolidated Edison Solutions has proposed its own community solar project and also objects to Central Hudson project ownership.

Need for Transparency

A coalition of intervenors representing commercial and industrial customers said “targeted demand response” identified as a solution to transmission congestion in the Central Hudson region is a worthy goal, but it called for more transparency. “The information necessary for other parties to evaluate this specific project, beyond the general concept, simply has not been made available … inasmuch as customers are being asked to fund the project, the relevant information as to the estimated costs and benefits of the project need to be disclosed, with ample opportunity for parties to comment thereon, prior to it being approved.”

The projects proposed by Central Hudson were the result of a collaborative process among competitive suppliers, environmentalists and consumer groups in the utility’s territory.

Project List

The demonstration projects are:

1. Central Hudson’s Community Solar: The project, expected to cost up to $10 million, would be owned by the utility and would sell energy to customers in 100-kWh blocks under a 25-year power purchase agreement.
2. SolarCity’s community solar: Similar to Central Hudson’s project, this 2.5-MW array would be located on Central Hudson property but owned by SolarCity.
3. Central Hudson’s demand response: The project will promote residential and commercial customer aggregation in three areas of Central Hudson’s service territory.
4. Central Hudson’s microgrid: Central Hudson would install generating capacity designed to meet critical power needs during an outage for customers that join. The project could integrate storage, local renewable and distributed energy resources and local demand response resources. A letter of intent has been executed with several customers and NRG Energy, which has prior microgrid experience in New Jersey and the Caribbean.
5. Central Hudson’s behind-the-meter services: The company proposes to demonstrate the viability of behind-the-meter services for 1,000 customers for six months at no cost to explore product and services made possible by smart devices; and
6. Citizens for Local Power’s community choice aggregation: Over 30 months, municipalities within Ulster County will engage in detailed energy planning, setting of goals and priorities, and other actions to create the first CCA “2.0” in New York. The project, which was not in Central Hudson’s original proposal, does not meet REV criteria of having competitive suppliers and third parties pay most of the demonstration costs. Central Hudson said it is willing to help, but as proposed, the nearly $800,000 in start-up funds would come from ratepayers.

PSC staff will review projects for compliance with the order. “If any are selected to move forward, they will fall under further review for REV compliance by state regulators,” Maserjian said.

Even if a project is not deemed to be a demonstration project, those deemed to have value will proceed in a different setting, according to the PSC.