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The REV Revs Up in New York: Part 1

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The past month has been a big one for New York’s ongoing effort to restructure its distribution-level utility systems to create a robust market for distributed energy resources (DER). The New York PSC started the so-called Reforming the Energy Vision (REV) docket in early 2014 and, after more than a year of work, released a number of important orders and guidance documents in just the past few weeks. These actions will shape the remaining aspects of the REV proceeding and will also begin to create opportunities at the customer level in the coming months.

PSC action taken

The most comprehensive action that the PSC has taken was releasing its 140-page order deciding the policy issues central to the implementation of the REV goals, known as REV Track 1 Order. In the order, the PSC made the following decisions:

  • “Decisively” adopted an approach to the current challenges facing the electricity industry that embraces the use of markets and competition at the distribution level to allow for much greater adoption of distributed resources, which will reduce costs, reduce environmental impacts, and increase the system’s resilience to extreme weather events.
  • Found that the utilities will be in the role of the Distributed System Platform, providing integrated system planning, grid operations, and market operations for the distribution level markets contemplated by the REV vision. The PSC would consider functionally separating the DSP operations from the rest of the utility structure.
  • Limited the utilities’ ability to own DER. The limited exceptions to the general rule are for certain kinds of storage for reliability purposes, areas such as low-income customers where the market might not be developing and the public interest warrants development of that market segment, and, finally, in the area of demonstration projects.
  • Supported implementing a digital marketplace to help facilitate market development. This online marketplace will be available for both commodity and other DER products, and will be developed in the coming months on a collaborative basis involving Staff, the utilities, third party suppliers, DER providers, and other experts in the field.
  • Announced two billing-related collaborative processes, one to address possible improvements to the billing format and information on utility bills and the other to investigate and evaluate ESCO consolidated billing, but the PSC declined to expand the functionality of utility consolidated billing at this time.
  • Expressed strong support for demonstration projects, which would test both the technical feasibility and customer acceptance of innovative of DER solutions, and directed utilities to engage third parties and develop concepts for the demonstration projects.
    • Additional demonstration projects can be proposed after that date, and the Commission expects “ongoing development” of such projects.
    • Utilities will also be allowed to defer costs associated with demonstration projects until their next rate cases. These costs will be the greater of $10 million and half of a percent of a utility’s revenue requirement for delivery service, which amounts to approximately the following: ConEdison: $135 million; Orange & Rockland: $10 million; Central Hudson: $10 million; Niagara Mohawk (National Grid): $36 million; RG&E: $10 million, and; NYSEG: $18 million.
    • Demonstration projects are currently under development in the context of pending rate cases for Central Hudson, ConEdison, and Orange & Rockland.

All in all, the REV has clearly reached top gear in New York! We will be posting a Part 2 REV update next week, so be sure to be on the lookout on our blog.


Posted: March 27, 2015