Tuesday, December 12, 2017

NY Fine-tuning CES; Phasing out EE Program

By Michael Kuser

New York is fine-tuning plans for meeting its 2030 renewable energy target and closing the books on the energy efficiency programs that it has used since 2008.

The New York Public Service Commission earlier this month approved orders implementing the second phase of the state’s Clean Energy Standard (CES) and approving the conclusion of its Energy Efficiency Portfolio Standard (EEPS).

| NY DPS Webcast

The CES adopted last year by the PSC mandates that 50% of the electricity used in New York be generated by renewable energy sources by 2030. In a Nov. 16 order, the PSC largely approved its staff’s recommendations for implementing Phase 2 of the CES, which will add quarterly renewable energy credit (REC) auctions (Case 15-E-0302).

The order also continues limits on the sale or transfer of Tier 1 RECs and institutes a “divergence test” to identify and correct REC supply/demand imbalances.

The New York State Energy Research and Development Authority will continue monitoring generators’ carbon emissions, managing REC procurement and setting Renewable Energy Standard (RES) targets for load-serving entities three years in advance.

CES clean energy standard NYISO

Rhodes | NY DPS Webcast

PSC Chair John Rhodes said the new order “sets out the procedures and methods and fund management rules for NYSERDA to implement the next phase of the Clean Energy Standard, and including, importantly in my view, providing rolling future visibility for the Renewable Energy Standard targets for 2018 through 2021.”

CES clean energy standard NYISO

Burman | NY DPS Webcast

Commissioner Diane Burman abstained, saying the PSC’s instructions were “not detailed enough.”

The order “still is leaving holes for decision-making that I’d like to see a lot more finality in, including the state energy plan and other things we need to address more holistically,” she said.

Under the new rules, NYSERDA will offer for sale all the Tier 1 RECs in its account quarterly, with unsold RECs offered in the next auction. NYSERDA had two auctions in 2017, one each at the end of the first and third quarters.

The quarterly sales will allow LSEs “greater awareness of the actual load served during the preceding quarter, which may encourage LSEs to purchase NYSERDA’s RECs when offered, thereby improving NYSERDA’s cash flow and reducing NYSERDA’s working capital requirements,” the commission said.

The commission rejected a request by the state’s utilities to allow LSEs to trade NYSERDA-procured Tier 1 RECS for the 2018 compliance year, continuing the existing ban. “A near-term change in REC sales and trading under the Renewable Energy Standard program would be out of alignment with the [Value of Distributed Energy Resource Proceeding, Case 15-E-0751] order and the expected evolution of REC trading rules in future years,” the commission said. “The implementation of the quarterly REC sale process will limit the potential exposure of an LSE over- or under-procuring RECs from NYSERDA, thus eliminating the need of trading NYSERDA-purchased RECs among LSEs.”

The commission also rejected proposals by environmental groups that the 2018-2021 targets be evenly distributed to allow developers to take advantage of expiring federal tax credits. Instead, the commission continued the state’s back-loaded approach, saying it “is based on the expected three-year development and construction cycle between the receipt of a NYSERDA award for Tier 1 RECs and a facility’s ability to start producing RECs upon commercial operation. In other words, the targets reflect realistic expectations regarding availability of Tier 1 RECs as the RES program ramps up.”

The PSC disagreed with the environmental groups’ criticism that the staff proposal lacked LSE targets through 2030. “Providing a mandated trajectory out through 2030 at this time would undoubtedly require adjustments in the later years to account for changes in statewide electric load, and other factors. … Therefore, the trajectory through 2021 for the revised LSE targets provided in the Phase 2 proposal is deemed sufficient to provide enough certainty for planning purposes for LSEs, renewable developers and other market participants.”

As part of its annual compliance reporting, NYSERDA will publish its methodology for calculating the statewide fuel mix to provide “transparency in accounting for the historic renewable baseline, the mandated targets, the voluntary market and other activities for measuring progress towards the 50-by-30 goal,” the commission said.

CES clean energy standard NYISO

Palmero | NY DPS Webcast

NYSERDA will report on the program’s finances, including REC sales, alternative compliance payments, program expenses and surpluses or shortfalls, annually. If any cumulative surplus is more than 25% of the contractual Tier 1 REC payment obligation to generators for the current year, NYSERDA must propose a use for the excess portion that is in the ratepayers’ interest.

“We don’t expect there to be a lot of [alternative compliance payments], at least in the near term, because we’re trying to match the amount of RECs that will be available to the LSE obligation, but if there is a fund sitting there, NYSERDA will propose what they will do with the excess,” said Christina Palmero, deputy director of the state Department of Public Service’s Office of Clean Energy.

NYSERDA also was directed to develop criteria for combining aggregated and co-located facilities into a single Tier 1 bid for 2019. “Allowing aggregated and co-located facilities to bid as single facility for Tier 1 solicitations appears to be a prudent addition to the rules,” the commission said.

Concluding the Energy Efficiency Portfolio Standard

In a separate order, the PSC also voted to conclude the EEPS program and award 11 investor-owned utilities $56.5 million in shareholder incentives for meeting the electric savings targets and $12.4 million for meeting gas targets (Case 07-M-0548).

CES clean energy standard NYISO

| NY DPS

CES clean energy standard NYISO

Sayre | NY DPS Webcast

“EEPS was a good program and a successful program and we’ve learned from it,” Commissioner Gregg Sayre said. “I believe our replacement programs are better.” The commission’s Reforming the Energy Vision order of 2016 requires each utility to submit an annual Distributed System Implementation Plan and Energy Efficiency Transition Implementation Plan showing how they propose to meet the energy efficiency budgets and targets set by the PSC.

The program paid most utilities $38.85/MWh for reduced consumption. Consolidated Edison was paid $100,000/MW, capped at $5 million (50 MW) annually. All but Orange and Rockland Utilities (98%) exceeded their electric targets for the program.

Burman dissented, saying the commission had to learn from EEPS “the need to be more prudent and measured in making our demands, the need to be more realistic and thoughtful ahead of time about how quickly goals can be accomplished, and the need to truly understand what the financial implications may be to run the programs, and to prepare in case programs are more in demand than anticipated.” [Editor’s Note: An earlier version of this article failed to note that Burman had voted no and improperly prefaced her quote by saying “the commission had learned” from EEPS.]

The order directs utilities to file an EEPS financial reconciliation report no later than June 30, 2018, documenting program expenditures, unspent funds and accrued interest.

RG&E, NYSEG Face Penalties over Wind Storm Response

The commission also completed its investigation into the March 8 wind storm that left 123,000 Rochester Gas and Electric customers and 48,000 New York State Electric and Gas customers without power, finding the companies are liable for millions in penalties for violating their emergency response plans (Case 17-E-0594).

wind storm damage | Avangrid

The commission said both companies failed to fully secure downed wires reported by municipal officials within the required 36-hour period; to keep the public informed about restoration times; and to coordinate communications with customers on life-support equipment.

In addition, the commission said RG&E: began its damage assessment too late; failed to create a list of critical facilities such as fire and police stations to be prioritized in restoration efforts; did not update its automated voice messaging services to reflect storm conditions; and did not staff its call center adequately.

The commission directed the companies to respond within 30 days to show why penalties should not be initiated and show how they will improve their response.

The commission said National Grid was not subject to penalties because it restored more than 90% of its 113,000 outages within 36 hours.

Other Rulings

The PSC also approved:

  • ORU’s plan to spend $98.5 million to install smart meters for all its electric and gas customers. The new meters are expected to produce a net benefit of nearly $16 million. The utility will replace approximately 230,000 electric and 135,000 gas meters (Case 17-M-0178).
  • NYSEG’s and RG&E’s plans to offer light-emitting diodes (LED) street lighting to municipal customers. Replacing all of the utilities’ combined 93,000 old-style street lights could save municipalities as much as $5.8 million a year based on reduced costs of $63 per light. Street lights may account for up to 40% of total electricity use for a local government, but prior rules required municipalities to take ownership of the lights to switch to LED. The order allows municipalities to switch to the cheaper LEDs while NYSEG and RG&E retain the responsibility for maintaining them (Cases 16-E-0710, 16-E-0711).
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