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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
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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
Straw Proposal, p. 24.
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
Straw Proposal, p. 54.
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
Straw Proposal, p. 53.
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
cc:
ctive Party List in C ase 14-M-0101
18
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