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New York To Allow Utility Affiliates (And Utilities) To Own Distributed Resources Under REV Framework

February 27, 2015

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Copyright 2010-15 EnergyChoiceMatters.com
Reporting by Karen Abbott • kabbott@energychoicematters.com

The New York PSC will allow utility affiliates to own distributed energy resources (DER) under its Reforming the Energy Vision framework, in which the utility operates as the distributed system service provider.

"To prohibit these affiliates from offering DER services would limit the choices available to customers and might have the effect of dampening customer engagement in DER markets," the PSC said.

"An additional and important concern is that many customers have preexisting relationships with utility affiliates operating as ESCOs," the PSC said.

The PSC will require several protections to prevent favoritism to utility affiliates. These include requiring (at utility expense) a third-party monitor of RFPs for DER services

The PSC will consider further protections, including not only refinements to the code of conduct but also, potentially, caps on market share.

"Market share caps might be appropriate for any type of service provider including, but not limited to, utility affiliates," the PSC said.

While utilities will be permitted to own DER, the PSC said that utility ownership of DER will not be allowed unless markets have had an opportunity to provide a service and have failed to do so in a cost-effective manner.

More specifically, utility ownership of DER will only be allowed under the following circumstances:

1) procurement of DER has been solicited to meet a system need, and a utility has demonstrated that competitive alternatives proposed by nonutility parties are clearly inadequate or more costly than a traditional utility infrastructure alternative;

2) a project consists of energy storage integrated into distribution system architecture;

3) a project will enable low or moderate income residential customers to benefit from DER where markets are not likely to satisfy the need; or

4) a project is being sponsored for demonstration purposes.

See Related REV Stories Below:

New York Hopes to Incubate Online Marketplace/Platform for Retail Energy, Laments Lack of "Standard" Retail Contract

N.Y. Directs Staff to Investigate, Report on Supplier Consolidated Billing

No Surprise: Utility Picked As N.Y. Distributed System Platform Provider, PSC "Expects" Tariffs, Not Auctions, to Govern Initial Distributed Procurements

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