REV comments

8/10/2019 REV comments

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STATE OF NEW YORK

PUBLIC SERVICE COMMISSION

Proceeding on Motion of the Commission in ase 14-M-0101

Regard to Reforming the Energy Vision

Reply Comments of the Joint Utilities to Comments

on Staff's August 22, 2014 Straw Proposal on Track One Issues

WHITEMAN OSTERMAN HANNA LLP

Paul L. Gioia, Esq.

Attorney for Central Hudson G as and E lectric Corporation,

Consolidated Edison Com pany of New York, Inc., New York

State Electric Gas Corporation, Niagara Mohawk Power

Corp orat ion d/b/aNat ional Grid, Orange and Rock land

U tilities, Inc., and Rochester G as and Electric Corporation

One Commerce Plaza

Albany, New York 12260

t) 1.518.487.7624

e) [email protected]


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TABLE OF CONTENTS

EXECUTIVE SUMMARY

THE JOINT UTILITIES RESPONSE TO PARTIES INITIAL COMMENTS REGARDING

THE STRAW PROPOSAL

I.

CUSTOMER ENGAGEMENT

II.

DATA ACCESS, PRIVACY AND A DATA EXCHANGE:

III.

DISTRIBUTION SYSTEM PLANNING PROCESS

IV.

BENEFIT COST ANALYSIS

V.

MARKET POWER AND UTILITY ENGAGEMENT IN DISTRIBUTED ENERGY RESOURCES

VI.

INTERCONNECTION PROCEDURES

0

VII.

CLEAN ENERGY PROGRAMS

1

VIII.

MPLEMENTATION OF REV

5

CONCLUSION

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EXECUTIVE SUMMARY

Central Hudson Gas and Electric Corporation, Consolidated Edison Company of New

York, Inc., New York State Electric & Gas Corporation, Niagara Mohawk Power Corporation

d/b/a National Grid, Orange and Rockland Utilities, Inc., and Rochester Gas and Electric

Corporation (collectively the Joint Utilities ) appreciate the opportunity to provide these Reply

Comments to clarify and respond to issues raised in the initial comments of parties to Developing

the REV Market in New York: DPS Staff Straw Proposal on Track One Issues ( Straw Proposal )

in the Proceeding on Motion of the Commission in Regard to Reforming the Energy Vision

( REV ) proceeding.

The REV proceeding proposes a major shift in the current model for the planning and

delivery of electricity services in New York State. The Joint Utilities see the implementation of REV

as a multi-year, phased, and iterative process, which has already begun, and will continue to evolve as

experience is gained through the use of timely and well-thought-out demonstration projects and

related work focusing on new resources, technology integration/innovation, and customer

preferences and demands. Even with well-designed and well-executed customer engagement efforts,

it will take time for mass market customers to take advantage of innovative REV opportunities.

Various parties echoed the Straw Proposal statement that REV will require years of iterative

planning and increasingly granular design determinations. ' The Joint Utilities agree, and are

prepared to make a long-term commitment to this process.

While the Commission must consider the diverse interests and views of all parties in this

proceeding, the utilities are the only parties subject to the obligation under the Public Service Law to

provide safe and reliable service at a reasonable cost to all customers. The Joint Utilities agree with

numerous comments relating to the potential net impact of REV implementation on customer bills.

The implementation of REV must take into account this impact for all customers, including both

REV participants and non-participants, with particular attention paid to low- and moderate-income

See e.g. Comments of Consumer Power Advocates ( CPA Comments ), p. 2; Comments of NRG

Energy, Inc. ( NRG C omm ents ), p. 21.

2

See e.g. Comments of AARP and Public Utility Law Project of New York, Inc. ( AARP & PULP

Comments ), pp. 1, 15-16; Comments of National Fuel Gas Distribution Corporation ( NFGDC

Comm ents ), p. 6; Comments of the City of New York ( City of NY Com ments ), p. 15; Comments of

New York State Department of State Utility Intervention Unit ( UIU Comments ), pp. 14-16;

Comm ents of Multiple Intervenors ( MI Com ments ), p. 6; and Comm ents of Nucor Steel Auburn, Inc.

( Nucor Steel Comments ), pp. 7-11.

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customers. Given REV's long-term focus on reducing overall customer expenditures for electricity,

the joint Utilities are concerned about the relation of the timing and level of REV benefits to

potential customer rates and bill impacts. This concern exists because the Straw Proposal

contemplates: (1) the monetization of externalities; (2) expenditures related to demonstration

projects;

(3) expenditures related to new foundational investments; (4) potential expansion of other

utility or state programs (e.g., clean energy programs); and (5) expenditures associated with

maintaining existing infrastructure. In addition, overall the customer bill impacts of New York State

Energy Research and Development Authority's ( NYSERDA ) recent Clean Energy Fund ( CEF )

Proposal must be taken into account and considered with appropriate strategies that allow REV to

move forward as an element to achieve clean energy goals of the State, along with the re-envisioned

NYSERDA CEF.4

The Joint Utilities also agree with numerous parties urging that Track 1 and 2 efforts must

be coordinated in order to define a comprehensive REV framework.

5

This will facilitate efforts to

achieve the Commission's REV objectives over a reasonable transition period. This coordination is

required to address customer bill impacts and various matters relating to utility cost recovery, rate

setting, and revenue treatment including: (1) well defined rules for the recovery of REV related

expenditures and investments, and the treatment of possible revenue gains or losses from REV

related activities; (2) a Benefit Cost Analysis ( BCA ) methodology for the efficient valuation of

externalities; (3) incentive mechanisms (metrics, targets, size, and degree of symmetry); (4) net

metering; and (5) distributed energy resources ( DER ) pricing matters.

3

There is broad agreement supporting the value of demonstration projects.

See e.g.

Comments of

Columbia U niversity's Sabin Center for Climate Change Law , Environmental A dvocates of New York,

the Pace Energy and Climate Center, the Sierra Club, and the Vermont Energy Investment Corporation

(collectively Clean Energy Advoc ates ) ( CE A Comments ), pp. 31-3 2; Comments of ChargeP oint, Inc.

( ChargePoint Comments ), pp. 4-5; CPA Comments, p. 8; Comments of Direct Energy Services, LLC

and Direct Energy Business, LLC ( Direct Energy Comments ) , pp. 6, 23-24; Comm ents of Infinite

Energy, Inc. ( Infinite Energy Comments ), p. 9; Comments of Simple Energy ( Simple Energy

Comments ), p. 13; and Comments of Agreen Energy, LLC and Vanguard R enewables, LLC ( Agreen &

Vanguard Comments ), p. 11.

4

It is our understanding that NYSE RD A is in the process of clarifying cost and revenue data in its Ca'

Proposal.

5

See e.g.

Comments of Citizens for Local Power ( CLP Comm ents ), p. 2; UIU Comm ents, pp. 2, 5; MI

Comments, pp. 30-31; CEA Comments, p. 37; Comments of PSEG Long Island LLC ( PSEG LI

Comments ), p. 22 ; and Comments of Environmental Defense Fund ( ED F Comments ), p. 3.

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Finally, the Joint Utilities note that most parties support the utilities as the Distributed

System Platform ( DSP ) provider, and many parties also support utilities as DER providers. These

Reply Comments address the importance of the utilities as DER providers to the achievement of

REV objectives.

THE JOINT UTILITIES' RESPONSE TO PA RTIES' INITIAL

COMM ENTS REGARDING THE STRAW PROPOSAL

I.

CUSTOMER ENGAGEMENT

The Joint Utilities agree with the joint comments of AARP and PULP stating that customer

awareness and adoption are two very different things.

In our initial comments the joint Utilities

acknowledge that while opportunities to animate markets and engage customers exist, the challenges

must not be underestimated. Achieving REV benefits depends critically on the willingness of

customers to engage in new product and service markets, and to make behavioral and financial

commitments when particular offerings meet their needs and are cost-effective.

Encouraging utility innovation and targeted research, development, and demonstration over

the next few years is essential for the utilities to gain the practical experience required to

demonstrate the value of innovative products to customers, and to promote development and use of

these products over the long term.

II.

DATA ACCESS, PRIVACY AND A DATA EX CHANGE:

The Joint Utilities agree with commenters who raise concerns regarding data security and

customer privacy.' The joint Utilities currently manage these concerns in a manner that serves

customer interests and keeps utility information secure in accordance with federal standards and

guidelines, such as the North American Electric Reliability Corporation's Critical Information

Protection standards. Third parties gaining access to customer and operational data are not

generally held to the same standards today, and it is unclear whether they could be held to such

standards in the future. Therefore, these reasons support a Commission determination that the

Joint Utilities should continue to manage data sharing processes and platforms in the future.

6

AARP PULP Comments, p. 9.

7

See e.g.

CPA. Comments, pp. 2, 5; Comments of IBM Corporation ( IBM Comments ), p. 6; UIU

Comm ents, p. 12; and AARP PULP Comm ents, p. 8.

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Specifically, the Joint Utilities disagree with the joint comments of EnergyHub and

Alarm.com

, which support the use of a third party to operate a data exchange.

The Joint Utilities

do not believe that it is necessary or cost-effective to create a separate data exchange system. The

creation of a new data system would require multiple inputs and dedicated staff from all

stakeholders to provide constant updates and ongoing site maintenance. A new data system would

also likely preclude functionality appropriately tailored to each service territory. It would be more

timely and cost-effective to determine data sharing needs and where possible utilize and build upon

the existing utility systems that already provide many of the features and kinds of information which

may be needed in the future. Utilities operate these systems today and will work with third parties to

provide data needed to support the development of DER markets in a manner that appropriately

secures customer data and protects customer privacy. The Joint Utilities also will work

collaboratively toward the standardization of data systems, to the extent reasonably possible.

The Joint Utilities are also well positioned to successfully implement web-based tools to

provide additional information, services, and functionality that could be implemented under REV.

This is supported by studies conducted by Accenture and Opower indicating that utilities have

established strong brand recognition and trust with their customers.

These studies also support the

conclusion that utility websites are a highly effective channel for providing information to customers

on energy-related, value-added services.

Parties advocating for the development of new web portals or other new third-party sites

generally ignore or downplay the potential data security risks. However, at least one commenter,

Consumer Power Advocates, expressly acknowledges this risk as a potential data security issue,

asserting that any data link intended to support new utility services, especially any connection to

building management systems, could become a vulnerable portal for any number of nefarious cyber-

attacks.

1

The Joint Utilities agree, and emphasize that existing systems are already engineered to

address security concerns and will continue to do so as new functionality is made available.

Comm ents of EnergyHub and A larm.com

( EnergyHub Comments ), pp. 6, 10.

9

Accenture,

The New Energy Consum er Arehi tec t li s.

f i r the Future (201 4), p. 11 ; Opower,

Five U niversa l Truths

about Energy Consumers

(201 3), p. 6.

lo CPA Comments, p. 2.

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EnergyHub and Alarm.com

also suggest that a new and independent statewide system be

deployed in lieu of utility systems.l' As noted earlier herein, development and operation of this new

data system would be expensive and complex as it would require multiple inputs and dedicated staff

from all stakeholders to provide continuous updates and ongoing site maintenance. A new data

system would also likely preclude the specific functionality that must be tailored to each utility's

service territory. Moreover, a new data system would create unnecessary and costly redundancy

because utilities would continue to maintain and enhance their respective existing systems.

In addition to sharing the Joint Utilities' concerns about data access and privacy,

2 many

commenters express reservations about the Straw Proposal's support for opt-out data sharing, which

results in the automatic disclosure of customer information unless a customer initially takes an

affirmative action to opt-out .

3 The Utility Intervention Unit ( UIU ) speaks directly to this issue,

stating that it is very concerned with consumer protections being eliminated and that opt-out

could raise privacy and security concerns. ' Other parties agree, including the Buffalo Niagara

Medical Campus, which states that access to data should be at the sole discretion of the customer

and lamn opt-out arrangement, as suggested by the Straw Proposal, unnecessarily jeopardizes the

confidential and proprietary nature of that data, ' and the City of New York, which states that

access should only come on affirmative action by customers.

6

Other parties, such as the National

Electrical Manufacturers Association ( NEMA ), assert that data should be provided at the

customer's discretion, which would require an affirmative act or authorization (opt-in) in contrast

to the Straw Proposal's opt-out automatic clisclosure.

7

Other parties go further, including Nucor

Steel, which states succinctly that individual customer data should not be disclosed absent express

permission of the customer, and customer billing information should not be disclosed at all.

8

Missing from the comments in support of opt-out is any justification for relaxing existing

customer privacy and data security policies. As noted above, most comments that reference the

issue advocate for protection of customer privacy and data security in a manner consistent with the

EnergyHub Com ments, p. 2.

12

CPA Comments, pp. 2, 5; IBM Comments, p. 6; UIU Comments, p. 2, AARP & PULP Comments, p. 8.

13

Straw Proposal, p. 24.

14 UIU Comments, p. 12,

15

Comments of Buffalo Niagara Medical Campus ( BNM C Comments ), p. 2.

16

City of NY Comments, p. 14.

Comments of National Electrical Manufacturers' Association ( NEMA Comments ), p. 9.

18

Nucor Steel Comm ents, p. 5.

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Joint Utilities' proposed approach, i.e., disclosure subject to prior explicit consent. The Straw

Proposal suggests that automatic disclosure of customer data is appropriate to reveal opportunities

for near term DER products and services to consumer data, which would lead to solicitations and

advertisements by DER providers for such products and services.' The Joint Utilities disagree with

that position.

A few parties, primarily those that seek to offer consolidated Energy Service Company

( ESCO ) billing ( CEB ), comment that CEB is needed to increase customer engagement and

provide value-added services.2

The Joint Utilities provided comments as part of the Commission's

ongoing Retail Access Proceeding in Case 12-M-0476, wherein the utilities explained in detail the

significant complexities and concerns that must be considered when discussing the viability and/or

appropriateness of CEB. The Joint Utilities agree with Staff's recommendation for a stakeholder

process to address this issue and also point out that transition to a CEB model would need to

address a number of complex issues, including consumer protections and compliance with the

Public Service Law, the Home Energy Fair Practices Act, and the Energy Consumer Protection Act.

I II . DISTRIBUTION SYSTEM PLANNING PRO CESS

The Joint Utilities observe that several parties fail to appreciate the complexity of the

distribution system planning process. System planning must consider a myriad of disparate factors

including capital-intensive and long-lead system components (i.e., substations, sub-transmission

feeders, primary distribution feeders, etc.), the manner in which forecasts of load, weather, and

capability affect design requirements, and a dynamic planning horizon that may imply different

needs in different phases (i.e., one-year, five-year, and ten-year planning). The Joint Utilities note

that the complexities associated with open planning processes must be considered and

accommodated in the Distributed System Implementation Plan ( DSIP ) stakeholder process in

order to ma intain appropriate flexibility reliability and safety.

Because distribution planning can be relatively short-term (i.e., one year), it is necessary that

planning processes be responsive to compressed timelines for system enhancement. In order to

maintain safe and reliable electric service, in some circumstances the Joint Utilities must be allowed

19


20

Direct Energy Comments, p. 15; Infinite Energy Comments, p. 8.

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sufficient latitude to prevent lengthy, complex, and open planning processes from interfering with

the ability to respond in a timely manner.

Parties may also be unaware of common utility planning practices that would be difficult to

implement under an open planning system. For example, utilities often agree not to disclose

confidential information relating to economic development projects or upgrades with respect to

customers in highly competitive businesses. 2

Distribution system needs may hinge on a single

customer coming, going, or growing. In these instances, distribution projects must be implemented

in a timely manner to meet customer needs, and can often be scaled up or down or cancelled as

development progresses. Market-based alternatives to traditional transmission and distribution

( T&D ) investments may be challenged to accommodate these planning scenarios as well as

conventional system capacity enhancements.

IV. BENEFIT COST ANALYSIS

The Joint Utilities generally support comments that emphasize the importance of

considering customer bill impacts resulting from REV22 and reiterate that the central focus of the

REV initiative should be to create value for all customers.

A primary objective of the BCA framework and, separately, a DER pricing/valuation

methodology, should be to help New York achieve its energy policy objectives in the most efficient

and cost-effective manner, with a consideration for needed flexibility to evolve programs and

benefits over time so as to address any unanticipated benefits. Meeting this objective would help to

satisfy the expressed concerns of customer advocacy groups in this proceeding. In addition, the

Joint Utilities emphasize that the BCA framework must take into account bill impacts for all

customers, DER participants and non-participants, including low- and moderate-income customers.

The Joint Utilities also support efforts in Track 2 to evaluate rate designs that must necessarily

address fair and equitable cost allocation among customers.

The Joint Utilities note substantial areas of disagreement among the parties on key

components of the BCA framework.

2 3

A stakeholder process should be employed to appropriately

21

Non-disclosure agreements to protect competitive business needs are permissible and appropriate.

22

See e .g .

AAR P PULP Comm ents, pp. 15, 16; City of NY Comm ents, p. 15; UIU Comm ents, pp. 14-16;

MI Comments, p. 6; Nucor Steel Comments, pp. 7-11; and Comments of New York Geothermal Energy

Organization, pp. 2, 3.

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identify and address these issues. The stakeholder process would help ensure a rigorous evaluation

of how BCA framework options can advance the policy goals of the state and promote value for

customers.

The Joint Utilities join many parties in emphasizing the importance of advancing the BCA

framework to support REV design and implementation. This process will inform at least six

potential work activities including the technical platform design stakeholder process, market

design stakeholder process, DSIP methodology stakeholder process, DSIP plan, uniform DSP plan,

and market oversight and auditing.

V. MARKET POWER AND UTILITY ENGAGEMENT IN DISTRIBUTED ENERGY RESOURCES

Various parties offer a wide range of comments regarding utility ownership of DER and

some address market power concerns. Many parties did not comment at all on this section.

Independent Power Producers of New York ( IPPNY ), NRG Energy, Inc., and several ESCOs

refer to the Commissions' Vertical Market Power Policy Statement and suggest that it may be

applied to REV, which the Joint Utilities continue to oppose.

4

Viewed as a whole, the comments reflect recognition of the key role utilities can play to

promote the goals of REV and offer broad-based support for utility ownership of DER.

5 Regulated

utilities will continue to collaborate with stakeholders and Staff, and will remain subject to the

Commission's regulation going forward. There will be ample opportunity to address any actual

observed market power concerns in the future. Any market power concerns that may emerge must

examine all entities, including unregulated parties, and any mitigation measures, monitoring, and

enforcement mechanisms must also apply to all market participants.

In these Reply Comments, the Joint Utilities reiterate three key points made in their initial

comments in support of utility ownership of DER and the ultimate creation of a DER market.

First, in contrast to unregulated participants in this proceeding, the utilities have the

obligation to serve the interests of all customers. The utilities are already regulated by the

23

See e .g .

the Straw Proposal, p. 24, n. 22; CLP Comm ents, p. 7; CEA Comm ents, p. 20; and Direct Energy

Comments, p. 17.

24

CPA, CLP, IPPNY, IGS Energy, MI, NEMA, NRG, Nucor Steel, and SolarCity Corporation

( SolarCity ) are the primary commenters raising market power concerns.

25

See e .g .

Comm ents of Bloom E nergy, p. 5; BNMC C omm ents, p. 4; Comm ents of Exelon Corporation

( Exelon Comm ents ), p. 16; and PSEG LI Com ments, pp. 9, 10.

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Commission and are committed to advancing REV objectives, focusing on the long-term impacts to

all customers while producing near-term progress. The utilities are uniquely and ideally positioned

to move REV forward through the development of DER projects that benefit mass market

customers. The objections of generators and ESCOs are both unjustified and premature.

Second, customers should be able to choose their DER provider and should be provided the

ability to meet all their energy needs through their utility should they choose to do so. A utility DER

program provides the opportunity to deliver broad customer engagement across all market sectors,

including customers with limiting circumstances (such as physical space, property ownership, or

finances) that may make them less attractive to other DER providers, or for customers who simply

want their utility to manage these resources for them. The importance of allowing customers to

have the ability to choose their utility as their DER provider, to expanding customer access to DER,

and increasing customer engagement should not be underestimated.

6

In providing DER services

(primarily focused on energy efficiency programs to-date), utilities routinely seek to procure from

and/or partner with third parties, promoting competition among vendors, growing value chains, and

expanding overall market opportunity. There are many ways to animate markets and promote

innovation, including regulated utility investment in DER services for the benefit of individual

customers and the electric system to which they are connected.

Third, as the Straw Proposal recognizes at footnote 39, and as previously noted in these

comments, market power concerns are not limited to utilities. In a mature market where DER

pricing is differentiated at the level of individual distribution circuits, a third-party provider

controlling a significant portion of load on a given circuit could have the ability to manipulate power

flows in order to create favorable pricing opportunities. Until such time as there is a functioning

market at the distribution level, the concentration of generation, energy storage, and/or load control

by any entity does not merit a burdensome regulatory solution.

Comments from parties related to regulatory oversight are relevant to this discussion. Nucor

Steel and other parties suggest that Commission oversight of DER providers is unnecessary.

7

Contrary to this view, the Joint Utilities believe it is important that the Commission clarify the extent

to which oversight of DER providers should occur. It is important that the Commission address all

26 Com ments of ENE and Vermont Energy Investment Corporation p. 2.

27

See es. Nucor Steel Comm ents p. 5.

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relevant safety, reliability, customer and data protections, and performance matters related to DER

providers.

For example, existing regulatory mechanisms with a successful record for oversight of

ESCOs providing retail service in New York can be modified to address oversight of DER

providers. Customization of the retail access mechanisms would necessarily entail balancing the

priorities of rigorous customer protections and creating a regulatory and market environment that

encourages third parties to offer innovative products and services. DER oversight mechanisms

must be designed to evolve as experience is gained and programs mature.

It may be appropriate and efficient to implement enforcement mechanisms that will provide

assurance of resource availability and adequacy, and a high standard of performance by all entities

offering products and services to the market. As the deployment of DER technologies accelerates,

reliable and sustained performance by DER providers will be critical to the ability of utilities and

their customers to rely on DER to provide a safe and reliable electric system.

VI. INTERCONNECTION PROCEDURES

The Joint Utilities note that a number of commenters support increasing the New York

State Standardized Interconnection Requirements ( SIR ) from Distributed Generation ( DG )

installations of 2 megawatts ( MW ) or less in capacity to those 5 MW or less in capacity while other

commenters support an increase to an unspecified higher MW level.

Z

As noted in the Joint Utilities'

initial comments, we are willing to discuss the possible expansion of the SIR to DG installations

greater than 2 MW in capacity, inclusive of combined heat and power technologies,' provided that

timelines for accomplishing interconnection milestones correspond to the complexity of the

generation facility and its location on the distribution system. PSEG Long Island LLC ( PSEG LI )

cautions that such an increase in capacity eligibility will require a thorough evaluation to ensure the

proper protections are considered for both the DG developer and the distribution system with

28

See e .g .

Comments of The Nature Conservancy ( TNC Comments ) p. 8; NFGDC Comments, p. 25;

Comments of Interstate Renewable Energy Council, Inc., pp. 12, 13; and Comments of Solar Energy

Industries Association ( SETA C omm ents ), p. 13. The Advanced Energy Economy Institute ( AEE I )

supports revisiting the 2 M W capacity limit but does not advocate for a specific higher capacity limit and

notes that neither California nor Massachusetts has an upper size limit. Comments of AEEI ( AEEI

Comm ents ), p. 35.

29

How ever, the Joint Utilities do not support the inclusion of CH P as an eligible net m etering technology.

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respect to personnel and equipment.

3 0

These comments echo the concerns of the Joint Utilities

that safety and reliability are fundamental requirements of the interconnection process employed.

Other parties generally support the Straw Proposal's recommendations for reducing the time

and cost of interconnecting DG to utility systems while increasing the transparency of the

interconnection process.' As noted in the Joint Utilities' initial comments, we are ready to work

with the DER community to improve the interconnection process for both applicants and the

utilities through standardization where appropriate without compromising safety and reliability.

The Joint Utilities support the concept of a periodic, comprehensive SIR review process as

recommended in the Straw Proposal. As noted by a number of commenters, it will be necessary for

interconnection policies and procedures to evolve to consider emerging technologies which today

may not fit within the current SIR.

3

The Joint Utilities assert that any SIR review process should

focus first on technical requirements with timeline considerations dictated by the technical

requirements. uch a review process should be collaborative and encourage stakeholder

participation. This collaborative review process is essential before Staff recommends or the

Commission adopts changes to the SIR.

VII. CLEAN ENERGY PROGRAMS

The utilities' positions on matters relating to renewable resources and the Main Tier of the

Renewable Portfolio Standard ( RPS ) Program will be presented in detail in their October 27, 2014

responses to the recent State Administrative Procedures Act ( SAPA ) notice on Main Tier

Resources Procurement. The remainder of this section will focus on energy efficiency, load

management, and NYSERDA's CEF Proposal.

The Joint Utilities and many responding parties recognize the importance of coordinating

multiple State regulatory and policy objectives, including the continued importance of clean energy

market development in the eventual wide-scale deployment of DERs in the post-REV market.

Addressing the role of utilities in bringing DER solutions to the market, and maintaining continuity

with existing programs, is critical. The Joint Utilities maintain that they are best suited to leverage

30

PSEG LI Comments p. 16.

31

See e .g. MI Comments, p. 29; and Comments of New York Battery and Energy Storage Technology

Consortium Inc. p. 13.

32

See e.g.

Comm ents of Energy Technology Savings LLC p. 8; PSEG L I Comments p. 15; Comm ents of

the Alliance for Solar Choice p. 19; NR G Comments pp. 17 18; and SEIA Comments p. 13.

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their existing customer relationships to advance energy efficiency and the DER marketplace through

programs in their Energy Efficiency Transition Implementation Plan ( ETIP ) proposals. A

primary interest of many responding parties, and a principal point of attention for the Joint Utilities,

is the uncertain planning horizon for programs being funded through the current System Benefits

Charge ( SBC ), Energy Efficiency Portfolio Standard ( EEPS ), and RPS collections.

The Straw Proposal suggests that utilities consider a transition from the current funding

paradigms to a REV-defined clean energy market through the development and filing of ETIPs.

The Joint Utilities express support for the ETIP concept as it appeared in the Straw Proposal, and

NYSERDA in its comments suggests close coordination between the development of the CEF and

the utility ETIPs. However, the Joint Utilities note that NYSERDA's CEF Proposal seems at odds

with the Straw Proposal because it attempts to cast NYSERDA in a lead role for both maintaining

long-term relationships with customers and implementing energy efficiency programs. Specifically,

whereas NYSERDA seems to base its CEF Proposal and comments to the Straw Proposal on the

assumption that utilities will be limited to DER projects where targeted T&D system deferrals are

warranted,33 the Straw Proposal clearly states that each utility's current efficiency targets today will be

their floor in the future.34

The current overlap and market segmentation that exists between NYSERDA and utility-

administered programs remain undesirable outcomes from the original EEPS proceeding. As a

result, the Joint Utilities assert that achieving future clean energy goals while implementing targeted

DER projects is best facilitated by the utilities taking on the role for administering distribution-level

energy efficiency, demand reduction, and demand response programs within their respective service

territories. While the Joint Utilities will file comments on NYSERDA's CEF Proposal,

5 the Joint

33

NYSE RDA , CEF Proposal, pp. 38-40.

34


35

See e .g. the following SAPA Notice IDs:

i.

No. PSC-41-14-00010-P ( Reallocation of EEPS and SBC Funds );

ii.

No. PSC-41-14-00011-P ( Establishment of Annual Collections Caps and Collection and Spending

Mechanisms as Described in the Clean Energy Fund Proposal );

iii. No. PSC-41-14-00012-P ( Funding and Managem ent of the NY-Sun Program as Described in the

Clean Energy Fund Proposal );

iv.

No. PSC-41-14-00013-P ( Funding and Collections for the New York Green Bank as Described in

the Clean Energy Fund Proposal );

v. No. PSC-41-14-00014-P ( Funding and Management of a Market Development Program as

Described in the Clean Energy Fund P roposal ); and

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Utilities urge the Commission to recognize that the utilities are best suited to manage the customer

relationship and help facilitate a solution that effectively meets customer requirements. This primary

facilitation role will help to develop the market and allow for the adoption of DERs through a

utility-managed and/or third-party solution. The role of NYSERDA should be on upstream

research, development, and demonstration, and technology and market development activities.

The joint Utilities suggest that the current lack of certainty as to how these important

programs will function in relation to each other has given rise to other comments seeking

clarification of future roles and missions. The UIU, for example, seeks clarification for whether -

coordination of missions is intended to take place among the REV proceeding, the CEF, and the

Green Bank. Similarly, the American Council for an Energy Efficient Economy ( ACEEE )

suggests that NYSERDA and the utilities should have mutual sharing of efficiency goals in

individual utility service territories. These two comments reflect uncertainty regarding the future

roles of NYSERDA and the utilities, and the need for ongoing surcharges to support overlapping

programs. Like the UIU, the Joint Utilities support clear and definitive roles and timelines to ensure

that the State's energy programs are uninterrupted while undergoing this fundamental market

transition to a REV-defined future. However, and as stated previously in comments to Staffs EEPS

Restructuring Proposal, the Joint Utilities disagree with ACEEE's suggestion, as we cannot accept

responsibility for attaining program goals or policy objectives that are not under the utility's direct

control. In fact, the Joint Utilities are concerned that existing energy efficiency targets may not be

attainable if NYSERDA continues to share responsibility for energy efficiency targets with utilities.

The New York Power Authority ( NYPA ) suggests that the Joint Utilities should

coordinate with NYPA as distribution utilities begin to designate previously proposed T&D projects

that could be deferred in favor of DER as the Joint Utilities develop their ETIPS. Participation of

NYPA customers in utility programs will be critical to achieving state policy objectives and utility

infrastructure goals. As a point of clarification, the joint Utilities are currently planning to address

deferral of T&D infrastructure elsewhere, and not all utilities plan to advance these proposals

through the ETIPs filed by March 2015. However, the Joint Utilities strongly support coordination

with NYPA in achieving system-specific goals, and emphasize the importance of NYPA customers'

ability to participate in all ETIP and REV-defined programs. The Joint Utilities also support

vi. No. PSC-41-14-00015-P ( Funding and Management of a Technology and Business Innovation

Program as Described in the Clean Energy Fund Proposal ).

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working with NYPA in future ETIP filings to ensure that its customers have the ability to participate

in future programs.

Multiple Intervenors ( MI ) assert that energy efficiency programs should focus on reducing

peak dernand.

6

In response, the Joint Utilities clarify that future utility REV-defined efforts will not

only address system peak concerns, but should also address local (network) peak, energy reduction

needs, or some combination thereof.

The Straw Proposal recommends that each ETIP should include a portfolio of energy

efficiency programs with an associated annual energy savings goal that is no less than currently

assigned through EEPS.

7 The comments of ACEEE, The Nature Conservancy, and the New

York State Department of Environmental Conservation ( DEC ) support achieving increased

energy savings and, thus, more emission and MW reductions.

8

The Joint Utilities maintain that

additional goals beyond existing energy (megawatt-hour ( MWh )) targets under EEPS will require

additional funding for two reasons. First, current EEPS budgets do not reflect increased costs (e.g.,

labor, materials) since the inception of EEPS in 2008. Second, budgets do not recognize the

increased costs to achieve the additional MWh savings as program implementation requires deeper

market penetration than energy savings achieved when EEPS was first launched.

NYSERDA recommends the adoption of a fuel-neutral approach and that programs should

be designed to realize and credit emission reduction efforts that result in reduced on-site (non-

electric) fuel consumption. The joint Utilities recommend that this topic be addressed in Track 2

due to its potential rate implications.

Walmart comments that the SBC surcharge system should be modified immediately to allow

large customers to opt out of surcharge programs and collections.

9

MI's position is similar, in that

it advocates for energy efficiency that is self-sustaining without customer-funded subsidies:to The

Commission's current position with regard to surcharge collection applies to all customer sizes. To

the extent that surcharge exemptions are considered, the Commission will need to consider whether

customers seeking such exemptions benefit from these programs, the State's ability to fund ongoing

36

MI Com ments, p. 5.

37


38

Comments of ACEEE ( ACEEE Comments ), pp. 1, 2; INC Comments, p. 6; and Comments of the

NYS Dep artment of Environmental Conservation ( DE C Comm ents ), p. 7.

39

Comments of Wal-Mart Stores, Inc. and Sam's East, Inc. ( Walmart ), pp. 6, 7.

MI Com ments, p. 10.

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clean energy programs, and, in particular, the bill impacts these exemptions would have on

residential and small commercial customers.

VIII. IMPLEMENTATION OF REV

The Joint Utilities view the implementation of REV as a multi-year, phased, and iterative

process that will evolve as experience is gained with new resources, technology integration, and

customer preferences and demand. This is consistent with the Straw Proposal's statement that

REV will require years of iterative planning and increasingly granular design determinations. The

Joint Utilities agree with commenters that suggest the three stakeholder processes (i.e., Market

Design, Technical Platform Design, and Benefit/Cost Analysis) will need to be closely coordinated.

However, the Joint Utilities do not support an approach that would merge the stakeholder processes

into a single stakeholder process.

2

Distinct areas of focus will require the expertise of various

subject matter experts.

Several commenters

4 3

emphasize the importance of clear goals, outcomes, timelines,

deliverables, processes, and governance structures to the success of the various stakeholder

processes. The Joint Utilities agree, and believe that stakeholder process charters and work scopes

should include these elements to be developed and coordinated up front. To ensure work efforts

stay on track and achieve near-term progress, the Joint Utilities recommend that work plans be

divided into three- to six-month phases with clear deliverables at the end of each phase.

The New York State Smart Grid Consortium (the Consortium ) agrees with Staff that

several distinct areas related to REV implementation will need to be considered through stakeholder

processes. A key element of REV implementation will be the identification of standards and

protocols that will allow various DER devices to communicate, respond to operational signals, and

seamlessly integrate to manage electricity flows on the distribution system. The Joint Utilities

recognize the Consortium can add value to the identification of these standards and protocols and,

as such, recommend that the Consortium, in conjunction with the distribution utilities, initiate and

lead a stakeholder process to develop the DSP technical architecture, including standards and

protocols, necessary to achieve the Commission's REV goals. The Joint Utilities also recognize the

41

S e e e . g .

CLP Comments p. 8; and PSEG L I Comments pp. 20 21.

42

See e.g.

Direct Energy Comments p. 28; and NYIS O C omments p. 6.

3

See e.g.

City of NY Comments p. 8; UIU C omments p. 24; AE EI Comments pp. 23 40.

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importance of engaging other entities with a nation-wide perspective, such as the Electric Power

Research Institute ( EPRI ) or a national standards organization like the National Institute of

Standards and Technology ( NIST ). Before such standards and protocols can be identified,

however, certain aspects of the basic business architecture and functional relationships between the

DSP, customers, and other DER market participants must be better understood through a separate

technology and market stakeholder process as noted in the Straw Proposal:

The Joint Utilities support the Consortium beginning research to identify applicable existing

standards and protocols and where they may already be in use by utility systems in New York. The

Joint Utilities believe substantial progress toward identifying standards and protocols can be made in

the initial eight-month work schedule envisioned by the Consortium, but subsequent phases may be

needed to refine and further develop this work as experience is gained through demonstration

projects. A clear charter and work scope should be developed in preparation for the stakeholder

processes. The Joint Utilities have continued to advance technology information gathering, using

the Staff's technology platform tool in preparation for future stakeholder processes.

Many parties express agreement with the Joint Utilities' concern that parallel but

uncoordinated development of Track 1 and Track 2 policy questions could result in considerable

delays in necessary policy determinations, diminishing the opportunity to achieve the Commission's

REV objectives in a timely manner. These parties

5

note that many Track 2 policy issues must be

resolved before core elements of REV implementation can begin in earnest. As MI notes, the

resolution of selected Track One and Track Two issues is iterative in nature care should be

exercised not to get too far ahead in the implementation of Track One before critical Track Two

issues have been decided. Indeed, the resolution of selected Track Two issues may inform, and

influence, the appropriate resolution of Track One issues and their optimal implementation. 4

6

The Joint Utilities do not agree with parties4

7

who recommend that final orders on Track 1

and Track 2 should be subject to the completion of the technical mapping process. Policy clarity in

44

The Joint Utilities will work with Staff to support these efforts through the envisioned market design and

technology platform design processes. The results will be used to support efforts with respect to

standards and p rotocols.

45

See e.g

CLP Comments p. 2; UIU Comments pp. 2 5; MI Comments pp. 30-31 CEA Comments p.

37; and PSEG LI Comments p. 22.

46

MI Comments p. 34.

47

See

EEI Comments p. 23.

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many areas is needed to advance the Straw Proposal's near-term actions, and should not be delayed

by any stakeholder processes that could take significant time to complete. The technical mapping

process in particular should continue and inform utility investment decisions and the formation of

utility DSP plans as REV is implemented.

Convergence of the two tracks will enable the Commission to resolve cost recovery

uncertainty pertaining to incremental REV expenses and investments, including payment for

products and services from DER providers (to the extent that these payments exceed avoided costs),

and the incorporation of externalities into these and other spending decisions. This uncertainty in

cost recovery and a BCA framework affects the utilities' ability to invest in near-term no-regrets

initiatives and demonstration projects. Many parties have expressed support for these programs to

test customer acceptance and gauge the strengths of utilities and third parties. Utilities can make

material investments in and fully deploy demonstration projects or other REV features once

appropriate cost recovery mechanisms and BCA framework have been established.

The Joint Utilities disagree with cornmenters

4 9

that recommend a separate stakeholder

process to address performance requirements for DER and DER providers. These issues should be

considered by the Technical Platform Design and Market Design stakeholder processes.

Finally, the Joint Utilities agree with commenters that recommend the development of a

DSIP should follow the Technical Platform Design and Market Design stakeholder processes as key

decisions in the formation of the DSIP will depend on the outcome of those processes.

CONCLUSION

The Joint Utilities appreciate the opportunity to provide these Reply Comments, and look

forward to continuing collaboration with Staff, the Commission, and stakeholders on this important

reform.

48

See e.g.

CEA Comments, pp. 31, 32; ChargePoint Comments, pp. 4, 5; CPA Comments, p. 8; Direct

Energy Comments, pp. 6, 23, 24; Infinite Energy Comments, p. 9; Simple Energy Comments, p. 13;

Agreen Energy & Vanguard Comments, p. 11; AEEI Comments, p. 6; Exelon Comments, p. 28; and

NRG Comments p. 17.

See e .g. PSEG LI Comments p. 21; and SolarCity Comments pp. 2 3.

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aul L. Gioia

Date: October 24, 2014

Albany, New York

WHITEMAN OSTERMAN HANNA LLP

Attorney for C ral Hudson Gas and Electric Corporation

Consolidated Edison Company of New York, Inc., New York State

Electric Gas Corporation, Niagara Moh awk Power Corporation

d

91 a N ational Grid, Orange and Rockland Utilities, Inc., and

Rochester Gas and Electric Corporation

One Commerce Plaza

Albany, New York 12260

t) 1.518.487.7624

e) [email protected]

cc:

ctive Party List in C ase 14-M-0101

18

REV comments

Documents

Transcript of REV comments