N.Y. "Encourages" Utilities, Third Parties to Develop REV Demonstration Projects

The New York PSC is "encourag[ing]" utilities and third parties to begin working together to develop potential demonstration projects as part of the Reforming the Energy Vision proceeding.

Demonstration projects are intended to test various technologies, business models, distributed energy resource (DER) performance, and customer participation levels

The portfolio of technology neutral demonstration projects should include, at a minimum, those that will test various DER technologies and products that can be integrated into the utility distribution system planning and operations; customer engagement and response to various programs, pricing structures and technologies; and distribution service provider (DSP) technologies that will allow for the integration, visualization, and market operations related to DERs, the PSC said.

Examples developed to date include a Consolidated Edison demand-side management program for Brooklyn and Queens, and a National Grid microgrid initiative, among others.

"Among the many things the Commission is considering are methods for defining and quantifying how value is distributed between the customer, utility, and third party service providers, how revenue streams for these projects will be identified and supported by the allocation of costs among customer classes, the best way to consider cost recovery for these projects so that the cost recovery process itself does not become a barrier to the encouragement of such projects, and the best way to leverage private investment as a component of projects in order to minimize ratepayer costs," the PSC said.

"[U]tilities should explore opportunities in their demonstrations to work with and include various residential, commercial, institutional and industrial customer participants. Customer engagement and measuring customer response to DER and data sharing will be a crucial element of these demonstrations. Demonstrations should include opportunities for third parties to demonstrate how various rate designs, information sharing, and other technologies can be used to benefit consumers, encourage customer participation, and achieve REV's system efficiency and bill management objectives," the PSC said.

"Rather than following a traditional RFP/RFI method where the utility has pre-diagnosed the solution, instead utilities should identify the problem and the market should propose solutions, leaving the utility to determine which third party proposal provides the most valuable solution. In that regard, as part of utility outreach to potential third party partners, utilities should provide sufficient data to enable market participants to propose solutions to clearly defined problems, as data sharing may be essential to enable market participants to propose solutions. Also, proponents of demonstration projects should strive for third party ownership of DER, keeping in mind that any regime of third party ownership must be done in a manner that ensures safety, reliability and consumer protection," the PSC said.

One of the PSC's "principles" for demonstration projects is: "The market for grid services should be competitive. The regulated utility should only own distributed energy resources if market participants are unwilling to address the need and the utility is acting as the service provider of last resort (in this instance, 'provider of last resort' and 'needed' means that no one in the market is providing the solution and the distributed solution is less costly than alternatives for the problem)."