New York to Review "Utility" Practices to Best Promote Demand Elasticity, Customer Empowerment (ESCOs Bypassed?)

New York yesterday unveiled an initiative to, "create the power grid of the future and forever change the way consumers buy and use energy."

"Under the Reforming Energy Vision (REV) initiative, utilities will actively manage and coordinate a wide range of distributed resources, or generate electricity from many small energy sources and link them together." (all emphasis in story added).

Under the PSC, New York initiated a proceeding which was said to, "lead[] the nation in developing new policies to encourage and reward consumers to use new technologies to control energy usage."

"The proceeding will also examine how the State's regulatory practices could be modified to incent[] utility practices that best promote energy efficiency, renewable energy, least cost energy supply, fuel diversity, system adequacy and reliability, demand elasticity, and customer empowerment," a news release from the governor's office said.

Though the PSC is currently evaluating how to promote value-added services from ESCOs, we would not be surprised if the new proceeding places utilities in a greater value-add role, on a variety of fronts (at a minimum, TOU rates and peak-time rebates, etc.), transitioning utility commodity supply service away from a "plain vanilla" product.

To wit:

"The best example of the value of modernizing the electric grid is the current inefficiency of peak demand. Peak demand for electricity happens on the hottest days of the summer when electricity demand skyrockets, but only temporarily. While it is understandable and prudent to ensure that demand for energy can be met at all times, it is also inefficient and costly. As a result, consumers are now forced to spend hundreds of millions annually to maintain the full capabilities of a system that is needed only on the very hottest days of the summer. Finding ways to reduce peak demand represents the single largest savings opportunity for consumers in New York. The only way this savings can be realized is by modernizing the grid, and incorporating new technologies that are now available and continue to be developed all the time," a news release from the governor's office said.

"In the not-too-distant future, a typical residential customer might choose to install so-called smart appliances that share information automatically with the utility. With smart refrigerators, air conditioners and hot water heaters, the utility could signal tens of thousands of appliances in a particular region to change their usage to lower demand when demand for electricity skyrockets on a hot summer day. Meanwhile, consumers might install rooftop solar units that could feed excess power to batteries that [] reduce power demand when the system needs it most. Consumers may even have apps on their smart phones to enable remote control of air conditioners so on the hottest days, one can return to a cool residence without the need to power the air conditioners when not home," the news release said.

"Actions such as these will lower overall energy costs as the utilities become more efficient. New transmission lines and power plants won't have to be built, and expensive peak power won't have to be used. When consumers become partners with the utility in the consumption and distribution of electricity, consumers reap the benefit of lower costs. These benefits apply equally to commercial and industrial customers. The changes will have a direct and lasting impact on millions of residential, commercial and industrial customers in New York," the news release said.

"As part of the initiative, the PSC will examine how existing practices should be modified to enable utilities to actively manage and coordinate distributed energy resources and provide a market enabling customers to optimize their energy priorities, provide system benefits, and be compensated for providing such system benefits. And consumers won't have to sacrifice their comfort as existing practices change accompanied by reductions in their utility bills," the news release said.