‘Groundbreaking’ New Utility Models For New York

As more distributed energy technologies have been created in recent years, opportunities for electrical contractors to install and maintain the equipment have grown. However, while the trend is seen as positive for the customers and contractors, utilities are losing sales of their power.

That all could change, leading to a win-win-win, in which even the utilities may have incentives to begin to promote (or at least not stand in the way of) the growth of distributed energy.

According to an article at Utility Dive, “NY regulators propose groundbreaking new utility models under landmark REV order,” new utility models and the nation’s first distributed energy markets are quickly emerging in New York. In late July, regulators at the New York Department of Public Service issued a white paper designed to clarify what those new utility models might look like.

Part of the state’s Reforming the Energy Vision (REV) initiative, the white paper proposes comprehensive reforms to utility-ratemaking practices and revenue models that will “reverberate across the U.S. electric power industry.”

The reforms are based on the idea that New York utility-revenue models are outdated and misaligned with new technologies, clean-energy-policy goals, system needs and customer desires. REV’s premise is that the integration of distributed-energy resources (DERs) on the customer end represents a unique opportunity to reduce costs and increase system flexibility. However, there are significant disincentives for utilities to do so.

The white paper explains that utilities rely on capital expenditures to make money, and do not earn money by incurring operating expenses. However, integrating DERs may require increases in utility operating expenses and decreases in capital spending. For these reasons, the REV plan proposes comprehensive ratemaking reforms to allow utilities to earn a fair return in the new distributed-energy landscape. This is designed to incentivize utilities to facilitate innovation in the market.

One specific recommendation is that New York utilities will be tasked to make an opt-in “smart rate” available to residential customers in the near future.

In sum, New York’s REV initiative is encouraging the introduction of new DER technologies and the adoption of those technologies by interested customers. 

“The commission, utilities, and stakeholders should be in a position to respond to market developments and should not be rooted in a particular set of expectations,” the white paper states.

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