New York Reforming The Energy Vision – A New Model for the Electric Business Worldwide?

By Matthew Rose, Enerdynamics Facilitator and Director at EMI Consulting

As an electric industry insider, I consistently encounter questions about New York’s Reforming the Energy Vision (REV) model. Initiated in 2014, the REV initiative solicits a range of responses: Some view it as a visionary promise, while others feel it’s a perilous and overly ambitious process, too many details of which must still be determined.

REV is an ongoing proceeding initiated by the New York Public Service Commission (PSC) designed to transform the retail electricity market in New York. REV is structured to move the electric industry away from a monopoly-regulated, cost-plus driven system to one based on the market with emphasis on customer-owned distributed energy assets. The REV initiative focuses on distributed system solutions that lead to greater resiliency and reliability while finding ways to upgrade system infrastructure. REV also empowers customers to take greater control over energy usage and find ways to engage as prosumers (energy producers).

The REV proceeding is a work in progress, which is not surprising given the complexities and scope of the state’s legacy electric utility regulatory framework. The proceeding includes hundreds of stakeholders, academics, and industry experts trying to anticipate, plan, and ultimately revise New York’s electric regulation and markets. It is acknowledged that it will take New York years to fully embed REV into policy, rules, and operations while moving from “philosophy to practice.”

To realize their expansive vision, New York regulators separated the REV docket into two tracks:

• Track One focuses on developing distributed resource markets with the utility serving as the distribution system platform (DSP) provider. As a DSP provider, the utilities serve as orchestrators of the distribution grid responsible for enabling dynamic load management. This will help reduce energy usage, balance loads, and integrate distributed energy resources without the utility assuming ownership of assets behind the customer meter. 
• Track Two focuses on aligning utility interests with policy objectives by reforming utility ratemaking practices and revenue stream strategies. The intent leads to rewarding utilities for positive market performance rather than capital investment. Specific issues include rate and tariff design, market-based earnings, alternate regulatory schemes, and performance-based regulation.

Efforts associated with both tracks are underway as decision makers debate system policies and operations.

The current focus of the REV proceeding aims at using demonstration programs to test various aspects of distributed energy resources (DER) integration, customer data sharing, and third-party partnerships. Later this year the NY utilities are required to file initial five-year plans to begin delivering distributed energy resources from third-party providers. The demonstration projects are intended as blueprints for the new utility initiatives called distributed system implementation plans, or DSIPs. The New York PSC has approved a series of demonstration projects across the state. Examples of approved projects include:

• targeting offers to customers who use non-wire alternatives to offset distribution system investment
• using community solar to help low- to moderate-income customers access clean energy while reducing outages
• offering residential customers a resiliency service bundling solar with batteries and energy storage to extend customer value
• developing alternative solutions for renewable grid interconnection

A complete listing of approved projects is available on the NY PSC website (www3.dps.ny.gov).

The REV initiative still faces many challenges and areas of contention, especially as the traditional electric market undergoes change that impacts how companies transact with customers and make money. The proceeding is beneficially forcing a discussion of the state’s electricity future while raising key questions that eventually everyone will need to answer. But if implemented as envisioned, New York’s REV model may become the model for utility and electric retail market reform across the U.S. and around the world.