Reforming the Energy Vision in NY

The New York Public Service Commission (PSC), which regulates the state’s electricity industry, is not known for challenging the status quo. So, several months ago, when it rolled out Reforming the Energy Vision(REV), a program aiming to give customers more choice and a greater role in managing and sourcing their electricity, a healthy dose of skepticism was in order.

The PSC has been traveling around the state, presenting the ideas behind REV and holding public hearings to gather feedback on its proposals. Calling for a new business model that would base the electric system on distributed energy resources, REV at first glance appears to position New York as a national leader in tackling grid modernization and promoting integration of renewable energy into the state’s power system.

According to the PSC, REV would turn the state’s utilities into what it calls “distributed system platform providers.” This new approach would enable the state’s utilities to track, trade, and forecast assets like rooftop solar, customer-sited co-generation systems, demand response, energy efficiency, and energy storage.

The big question regarding REV is whether the existing utilities should serve as the vehicle for managing and coordinating distributed energy resources. Think about it: if the utilities are both purchasing energy and managing the system, that’s a direct conflict of interest. It’s not hard to imagine utilities favoring their own assets over those of other parties. As many observers have pointed out, It’s crucial for the entity governing the distribution of energy to be independent.

Unfortunately, it seems as if utilities have gained the upper hand in controlling the process. If they succeed, it will choke off a key source of innovation. Right now utility revenues are based on how much electricity the utility sells; the more it sells, the more revenue it gets. With utilities in charge of the process, what incentive will they have to find other ways to generate revenue?

To its credit, the PSC is also considering allowing municipalities to pool the electric load from residents, businesses, and institutions and collectively purchase electricity, a process known as Community Choice Aggregation(CCA). CCAs are already allowed in several states, including California, Illinois, New Jersey, Ohio, and Massachusetts. If the PSC allows CCAs in New York, it would provide some check against the power of the utilities.

In any case, the key point is fairly straightforward: as New York turns more from fossil fuels toward alternative energy, it’s important that major utilities not dominate the process. Only if citizens make their views known to the commission, however, will they be stopped. Comments may be submitted to the PSC by clicking here.

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