Monday, April 23, 2018

NYPSC Extends Con Ed Demand Program

By Michael Kuser

ALBANY, N.Y. — The New York Public Service Commission last week approved an indefinite extension for Consolidated Edison’s demand management program in New York City’s Brooklyn and Queens boroughs, which aims to defer an estimated $1 billion in local infrastructure spending.

The commission’s July 13 order retains the original Brooklyn-Queens Demand Management (BQDM) program’s $200 million budget but caps expenditures on utility-side non-traditional solutions — such as storage batteries — at $50 million, including what the company has spent to date.

NYPSC Commissioners (Left to right) Burman, Rhodes, Sayre and Alesi | © RTO Insider

Con Ed has so far spent $46.56 million on the program, according to the most recent BQDM quarterly report.

The program allots Con Ed $200 million to procure market-based, distributed energy resource solutions such as energy efficiency, energy storage, distributed generation and demand response to achieve load reductions on the sub-transmission feeders supplying the company’s Brownsville No. 1 and No. 2 substations. The program aims at achieving 41 MW of customer-side DER and load reduction, as well as 11 MW of non-traditional utility-side solutions by summer 2018.

Padula | © RTO Insider

“In the absence of the BQDM program to meet the anticipated load growth in that area, Con Edison would have to construct a new distribution substation, a new switching station and substation feeders between the two,” Marco Padula, deputy director for market structure at the state’s Department of Public Service, told the commission. “This major project collectively was projected to cost approximately $1 billion.”

According to Padula, the program has provided Con Ed the flexibility to plan several infrastructure projects to be in service by summer 2019 and further delay the need for the new substation to 2026.

“Specifically, the additional solutions include the installation of capacitor banks, transformers and a 60-MW load transfer to the Glendale network,” Padula said. “With the extension, the company will have the opportunity to procure more DER that will allow it to delay the new substation and defer the need for the Glendale project and also enable possible future deferral for other traditional infrastructure projects.”

A New Normal

NYPSC demand management con ed

Rhodes | © RTO Insider

Newly appointed commission Chair John B. Rhodes lauded the successful concept design and Con Ed’s successful performance to date in meeting its implementation checkpoints on time and under budget.

“The BQDM program has also provided for important learning opportunities for other utilities, for stakeholders and for the commission, as non-wire alternatives have become part of New York state utilities’ standard business practices,” said Rhodes. “What was new has now become a normal.”

New York City supported the proposed extension in comments filed in April but wanted Con Ed to provide more detail on the cost-effectiveness of non-wire alternatives compared to traditional infrastructure investments. The city raised the possibility of doubling the utility’s incentives for some of the work performed under the program, specifically the Glendale project.

In response, the commission ordered that deferral of the Glendale project must be considered part of the BQDM program — and not as a separate non-wire alternative — that “shall not be eligible for further shareholder incentives beyond what has already been authorized.”

The commission also ordered Con Ed to continue filing quarterly reports and semi-annual cost-benefit analyses on the program, as well as an updated implementation and outreach plan reflecting the new realities inherent in the program’s extension.

nypsc demand management con ed

Burman | © RTO Insider

The New York Battery & Energy Storage Technology Consortium also filed comments in support of the program, particularly its aspect of broadening the market for DER.

New York-based consultancy Peak Power, however, opposed it, as well as Con Ed’s methodology, load forecasting and auction procurement mechanism. Con Ed replied to all the parties’ comments in May and refuted Peak Power’s criticisms.

The extension order said the commission “does not agree with Peak Power’s characterization of Con Edison’s reporting on the BQDM program as being not transparent or that this proceeding lacks a record to support the company’s proposal.”

nypsc demand management con ed

Sayre | © RTO Insider

Commissioner Diane Burman alluded to criticism of the program but said that “reliability is paramount” and that it’s important to extend the program to avoid losing “the value that we see BQDM is providing.”

“We are seeing more of these [programs] from other utilities looking for similar non-wires alternatives and we’re even starting to see some non-pipes alternatives on the gas side,” Commissioner Greg Sayre added. “We make sure that each program that’s brought to us provides the benefit to ratepayers, compared to the traditional network investment, so we end up with a benefit to ratepayers, to the company and to the environment.”

Central Hudson Recovers REV Costs

The PSC also issued an order last week approving Central Hudson Gas & Electric’s deferral accounting authority and recovery of incremental costs associated with the state’s Reforming the Energy Vision (REV), which requires the state’s utilities to generate 50% of their energy from renewable resources by 2030. The commission’s order authorizes CHG&E to recover more than $1.8 million for incremental external labor costs associated with developing its distributed system implementation plan and related grid modernization efforts.

NYPSC demand management con ed

Worden | © RTO Insider

Michael Worden, DPS director of electric, gas and water, testified that the company incurred the costs as a direct result of commission orders for utilities to integrate DER into their systems and to develop interconnection portals to help facilitate DG interconnection.

“The utilities were also directed by the commission to develop hosting capacity analyses that are intended to identify more technically feasible locations on the distribution system where distributed generation projects could interconnect,” Worden said.

He pointed out that much, if not all, of the work represented in the order would have taken place through the natural process of grid modernization occurring prior to the REV proceeding.

“All of these efforts can be correlated to the increase in distributed resources that’s not only being seen in New York state, but nationally as well,” Worden said.

Burman said she understood “the need for Central Hudson to have regulatory certainty and clarity,” but she noted “that it is potentially cloudy in what it means, what is deemed reasonable and how they will be able to have cost recovery. … I don’t want this to be seen as there’s an unending pot of money for external labor.”