New York’s environmental and utility regulators are moving closer to a unified approach to building a cleaner, more robust, and affordable energy system.
The Public Service Commission (PSC), New York’s utility regulator, has been working to rethink how New York makes, moves, and uses electricity through its innovative Reforming the Energy Vision (REV) initiative. Specifically, it has been steering utilities toward a more decentralized electric grid, one that relies more heavily on distributed energy resources. These resources may be clean (such as energy efficiency or solar rooftops) but they may also be dirty (such as older diesel generators). While REV aims to encourage carbon emissions reductions, there is a risk that the initiative could cause environmental harm by driving adoption of dirty distributed energy resources. Getting environmental rules in place before REV becomes a driver of these types of emissions is a matter of real urgency. Read More
Despite its enormous relevance to the struggle to build a cleaner, greener electric system, New York’s ‘Reforming the Energy Vision’ (REV) proceeding is not fundamentally an environmental one. It is concerned with building a new electric marketplace for a broad range of energy resources, some zero-carbon and some not, which are expected to reduce total costs paid by tomorrow’s customers over the long term compared to what would be expected under a ’business as usual’ scenario.
My last blog post described the new electric industry market structure envisioned by New York regulators in the recent Track 1 order of the REV proceeding. As promised, this week I’m providing a closer look at the environmental implications of the new order.
While reducing carbon emissions is one of the six stated goals of the proceeding, it is not the sole thrust. Interestingly, the order begins a deep dive on what decarbonization means for the electric system and discusses various environmental issues at length, potentially raising their profile in the proceeding. Highlighting the importance of environmental issues is a welcome change, but, to accomplish the goal of emissions reductions, the devil is in the details. Read More
Nearly a year ago, the New York Public Service Commission (Commission) initiated a groundbreaking effort, called ‘Reforming the Energy Vision’ (REV), to overhaul the longstanding electric utility business model. In the months since starting the REV proceeding, the Commission has sought advice from Department of Public Service staff, industry stakeholders, and environmental non-profits, among others, quietly refining its vision while largely refraining from big pronouncements about the progress of the proceeding.
That changed late last month when the Commission issued its ‘Track 1’ order establishing the ‘vision’ component of the REV proceeding. We are now starting to get a better sense of what sort of future electric marketplace the Commission anticipates and what role utility companies would play in this new marketplace. We can also begin to assess the extent to which this new marketplace will lead to the improved environmental outcomes stated as a goal of this proceeding. Read More
With time-variant pricing, people can choose to run their dishwashers at times of day when electricity is less expensive.
Today, most residential electricity customers are charged the same price regardless of when the electricity is actually being used. Charging customers a uniform price for electric service looks a bit like buying groceries by the cart instead of by the items purchased (e.g., apples versus filet mignon) – simple, to be sure, but so riddled with inefficiencies that no one would actually propose operating a supermarket that way. A cartful of filet mignon may weigh the same as a cartful of apples, but the value of these items and the cost of bringing them to market is drastically different. Similarly, electricity costs differ depending on the time of day power is produced and delivered.
Time-variant electric pricing addresses this issue by charging customers different prices depending on when electricity is used, reflecting the true costs of producing and delivering electricity. This gives customers greater control over their electricity bills by allowing them to reduce their energy use at higher-cost times. A recent blog post by my colleague, economist Beia Spiller, explained how time-variant electricity pricing can benefit customers, utilities, and the environment, and described several different types of time-variant pricing.
Given its compelling economics, one would think time-variant pricing would be widespread. Part of the reason it’s not is sheer inertia, but there’s more to it than that. Read More
New York’s “Reforming the Energy Vision” (REV) proceeding aims to reform the state’s long-standing electricity system to lay the groundwork for a cleaner and more efficient grid that allows for more customer choice and competition from third-party energy services companies. Forming the centerpiece of this 21st-century vision is a platform that would smoothly integrate innovative energy services and solutions into the existing grid, allowing them to compete on equal footing with electricity from centralized power plants.
Currently, the electric industry comprises three functions: generation, transmission, and distribution. Generation refers to making electricity, traditionally from large, centralized power plants. Transmission refers to sending that electricity along high-voltage wires to substations closer to electricity customers. Distribution refers to delivering the power from the substations to homes and businesses. In its recent straw proposal, the Department of Public Service Staff (Staff) recommends splitting the distribution function into two parts, one performing the traditional delivery service and the other serving as the Distribution System Platform Provider (DSP), to grant equal priority to energy solutions that are not centralized, such as on-site, distributed generation and energy efficiency. Read More
In the last week of December, the New York Public Service Commission issued an Order that signals big changes coming soon to New York’s electric utility landscape. The Commission made it clear that it wants clean energy resources, including on-site, distributed power generation (such as solar PV), energy efficiency and energy load management strategies, to play a central role in how the energy system brings value to customers. In contrast to the peripheral role clean energy resources have played in the past, the Commission is now ready to make them a priority, signaling a willingness to transform the regulatory landscape.
The Order was one of a trilogy arising from three intertwined proceedings, all of which were considered by the Commission on December 19, 2013. One of those three – perhaps the most concrete and immediate – was a proceeding concerning the initial capitalization of New York’s Green Bank, a new entity that aims to advance clean energy funding in New York State. That proceeding addresses a proposal to leverage ratepayer funds and private investment to systematically address market barriers to private financing of distributed generation, energy efficiency and demand management projects, with an ultimate goal of building a clean energy marketplace that can stand on its own. The other related proceedings concerned two New York State programs that draw on the same funding sources that are now being made available for the initial capitalization of the Green Bank: New York’s Renewable Portfolio Standard (RPS) and the Energy Efficiency Portfolio Standard (EEPS).
This Order concerns various proposals to improve and streamline the EEPS programs. Some of these changes are effective immediately, such as the elimination of duplicative reporting requirements. Other, more substantive program modifications – such as the changes to the structure of EEPS and other clean energy programs, as well as the responsibilities of various entities (including the Commission’s Staff, the New York State Energy Research and Development Authority (NYSERDA) and the utilities themselves) – are to be addressed through a new “E2 working group,” which is to be formed by February 1, 2014. This new working group is tasked with “sharing and developing concepts for an optimized E2 portfolio that supports a scale-up of energy efficiency and overall system efficiency,” for a program launch by the end of 2015. Read More