By William Opalka
ALBANY, N.Y. — Standard utility rate cases in New York can now be expected to include innovative rate designs and programs to encourage energy efficiency and clean energy technologies following Tuesday’s action by the Public Service Commission.
In its approval of the three-year Consolidated Edison rate plan (16-E-0060, et al.), the PSC also passed a companion order that advanced the state’s Reforming the Energy Vision initiative (15-E-0229).
Con Ed’s March 2016 filing was in compliance with the PSC’s December 2015 Targeted Demand Management Program order, which allow utilities to propose non-wire alternative (NWA) projects that replace or defer the need for transmission and distribution infrastructure through customer-side distributed energy resources or load reductions.
The commission’s latest orders specify the utilities’ incentives for such investments, with most the financial benefits returned to ratepayers.
“This is a big step on the way to implementing REV,” Commissioner Gregg Sayre said at the meeting. “The REV orders only give us a framework and policy guidance on this process, and it’s in cases like this where the rubber meets the road and real progress is made.”
A benefit-cost analysis would be performed for any NWA, with various checkpoints set up through the approval and implementation processes to verify its viability, the order states.
The order adopts Con Ed’s proposed incentive mechanism, but the commission reduced the utility’s proposal of a 50-50 split of the benefits between shareholders and ratepayers. The order provides 30% of the net benefits to shareholders and 70% to ratepayers.
“As the commission articulated in the REV Track Two Order, incentive opportunities should be financially meaningful and structured such that they encourage enterprise-wide attention at the utility and spur strategic, portfolio-level approaches beyond narrow programs,” the order states. “Further, incentive opportunities should be commensurate with the level of financial risk borne by utility shareholders.
“The 30% sharing adopted here represents a financially meaningful incentive opportunity that should encourage Con Edison to pursue the innovative portfolio-level approach to implementing NWA projects, while producing significant net benefits to customers and reflecting the financial risk required of Con Edison shareholders,” the order continues.
Commissioner Diane Burman abstained on the Con Ed order, “consistent with my past voting record.”
Burman says she prefers a “holistic approach” rather than deal with these items individually. “I think there’s a lot here that is affecting other items that are still policy decisions that have not had finality, and we will work through that,” she said.
Con Ed is already using demand management in a pilot program, the Brooklyn-Queens Demand Management program. It deferred a $1.2 billion substation with a combination of energy efficiency, DERs and demand response. (See Overheard at the NYISO Distributed Energy Resource Workshop.)