Final Order from NYPSC on Con Edison Rate Case Reveals Especially Encouraging Language on Climate Change Directives

By: Elizabeth B. Stein, Attorney and Adam Peltz, Attorney

Source: Iwan Baan

Source: Iwan Baan

In Tuesday’s blog post, we discussed the recently concluded Con Edison rate case, its context, and its significance in advancing clean energy and grid resilience in New York. Today, we take a closer look at the final Order posted last Friday by the New York State Public Service Commission (the Commission) to uncover some of the more encouraging outcomes buried in this 300+ page document:

  • Con Edison agreed to various measures that allow for more distributed generation, i.e. on-site power generation, such as combined heat and power, rather than relying solely on power generation and distribution from the traditional, centralized grid. For example, Con Edison agreed to pay for some fault current mitigation, which enables distributed generation to be connected to portions of Con Edison’s grid where it would otherwise be prohibited, and agreed to develop an implementation plan for a microgrid pilot. Additionally, Con Edison agreed to treat customer-sited projects, including distributed generation, as integral parts of its system by considering them in its 24-month planning horizon. Because some distributed generation can operate in an ‘islanded’ mode, or separate from the main grid, and can thus continue operating in a power outage, distributed generation can play a critical role in improving resilience.
  • The Commission directed Con Edison to get input from the Storm Hardening and Resiliency Collaborative parties on non-traditional solutions to address a surge in demand in the Brownsville section of Brooklyn. EDF is particularly intrigued with this opportunity because we believe that enormous investments in grid infrastructure can be deferred by better managing electricity demand through generation closer to home – and that these same opportunities can enhance resilience in storm and/or heat-induced crises.
  • The outcome also advanced the cause of time-differentiated pricing, which is based on the idea that the time you use energy should be reflected in your bill. Noting that time-of-use rates may be particularly important for electric vehicle owners, the Commission approved the new voluntary time-of-use rate agreed upon in the settlement. In addition, the Commission commended Con Edison for plans to propose a pilot of a “time-sensitive” pricing structure that is not focused specifically on electric vehicles. EDF is particularly pleased with the pilot because time-differentiated pricing can help manage electricity consumption during a surge in demand that may occur in extreme climate events, such as a heat wave. This is a key element of climate resilience. In addition, as we argued in the case, time-differentiated pricing can control infrastructure costs because managing consumption can be cheaper than building out infrastructure while simultaneously reducing toxic and greenhouse gas emissions since highly polluting sources can be avoided during peak periods. We are also pleased that the Commission has specifically directed the parties to the rate case to consider certain economic issues related to the design of time-of-use rates in order to inform the upcoming proceeding announced in the recent Energy Efficiency Portfolio Standard (EEPS) order.
  • On the natural gas side, Con Edison also agreed to significantly accelerate pipeline replacement and tighter leak repair targets. Although Con Edison does a good job of finding and fixing leaks that are an immediate threat to public safety, the utility has a backlog of more than 1,000 leaks of which they are aware but have no immediate plans to repair. To address this, EDF, Con Edison, and other parties jointly proposed a project to more aggressively identify and quantify leaks throughout its system and to develop a program that will permanently reduce Con Edison’s leak backlog. EDF expects that this new approach will enable Con Edison to improve the prioritization model they use to determine which pipes to replace, resulting in greater overall leak reduction for each dollar spent on replacing or repairing pipe. By reducing its leak rate, Con Edison can save customers money currently squandered on lost gas, improve system resiliency in case of flooding, and, critically, reduce its greenhouse gas footprint.
  • With the participation of Collaborative parties, Con Edison will conduct a comprehensive climate change vulnerability study. The Commission framed this initiative as one with statewide implications, stating that other New York utilities are expected to similarly consult the most current data available on climate change impacts to their regions and adjust system planning and budgets accordingly.

The Commission’s Final Order Calls for More than Just Grid Hardening

In the Order, the Commission approved a pathway for the review and funding of conventional storm-hardening projects, but also applauded Con Edison’s progress toward a more flexible grid. The Commission specifically noted the need for flexibility in achieving resilience, which it said encompasses more than storm-hardening. To that end, the Commission quoted the definition of ’resilience’ used in the report of the Governor’s NYS 2100 Commission: “Resilience is the ability of a system to withstand shocks and stresses while still maintaining its essential functions.” Moreover, the Commission distinguished climate change adaptation from climate mitigation, saying the two must go hand in hand. The Order states, “[R]esilience efforts must be accompanied by a continued commitment to reduce carbon emissions in order to mitigate long-term risks that will continue to challenge our adaptive capabilities.” The Commission’s instruction that the Collaborative should continue work on “reducing natural gas leaks and therefore methane emissions” underscores this important insight.

At the same time, the Commission reserved some of the most holistic questions about grid resiliency – including the role of distributed resources in the electric system as a whole – for exploration in the upcoming proceeding announced in the EEPS order, which the Commission has now indicated will include “a comprehensive inquiry and redesign of the regulatory framework, to ensure economic, efficient, reliable, and resilient electric service while reducing emissions.”

The Commission’s strong endorsement of the settlement and the forward-thinking Collaborative process bodes well for shrinking Con Edison’s climate footprint and adapting its systems to future climate conditions. As a result, this historic Order provides an exciting and unique opportunity for Con Edison and the New York City area – the birthplace of the legacy centralized grid – to lead the state and the nation toward a 21st century electric and gas system.

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