The last couple of years have seen some changes for electricity consumers in the Hudson Valley — changes not necessarily kind to their pocketbooks. First there was the takeover of Central Hudson by Fortis, a Canadian-based holding company, which took away local control of gas and electric for the first time in over a century. Then there was the formation of the New Capacity Zone, in which the Federal Energy Regulatory Commission imposed higher electricity rates in the Mid-Hudson Valley to entice the building of more local fossil-fueled power plants. And to the dismay of green-energy advocates, none of these higher costs support the development of renewable power sources.
But now the system is poised for seismic change. The New York Public Service Commission (PSC), which regulates the state’s electricity industry, has announced Reforming the Energy Vision, a program aiming to give customers more choice and a greater role in managing and sourcing their electricity. It’s predicated on a new business model that would base the electric system on distributed energy resources, consisting of on-site power, micro-grids, demand response and storage from solar and other renewables. The PSC is also considering allowing municipalities to pool the electric load from residents, businesses and institutions and collectively purchase electricity, a procurement model that’s referred to as Community Choice Aggregation (CCA).
CCAs are already allowed in nine states. If the PSC allows CCAs in New York, the municipality has to approve the procurement method, frequently accomplished through a referendum. Citizens for Local Power, a group of activists based in Rosendale, have been vigorously lobbying for an Ulster County CCA, which numerous local officials support.
The PSC has been traveling around the state presenting Reforming the Energy Vision and holding public hearings to solicit public opinion on its proposals, with the current focus on one of two tracks. Track One examines the role of utilities in transitioning to a more efficient system utilizing the deployment of Distributed Energy Resources (DER). With such a platform, customers “are able to optimize their priorities with respect to reliability, cost and sustainability,” according to the PSC website. Track Two will address the regulatory changes and ratemaking issues involved in the transition to a new system.
The PSC held a hearing Feb. 5 at Kingston’s City Hall, presided over by several PSC officials, including administrative law judge Julia Bielawski and Commissioner Diane Burman. More than 100 people attended. The week before, on Jan. 28, Citizens for Local Power hosted a public meeting at City Hall featuring speaker Paul Fenn, who wrote the first CCA law, in Massachusetts, in 1997 and has been involved through his company, Local Power, in promoting CCAs in California that also are working to create local sources of renewable power.
The big question regarding Track One is whether the existing utilities should serve as the Distributed System Platform provider that would manage and coordinate the Distributed Energy Resources. That’s a mistake, according to Citizens for Local Power co-founder Jennifer Metzger. “If the utilities are both purchasing energy and managing that system, there’s a direct conflict of interest, in which the utility might privilege its own assets rather than those of other actors,” Metzger said. It’s vital that the entity governing the distribution of energy be independent, she said.
But comments made by Anthony Belsito, assistant counselor at the PSC, who presented an overview of REV just prior to the public hearing, suggested utility control is a likely scenario. When an audience member noted that efforts to conserve energy or shift to renewables are discouraged by utilities, Belsito acknowledged that “right now the utility revenues are based on how much electricity they sell, and the more they sell, the more revenue they get.”
In order to prevent more rate increases, the PSC must find another way for the utilities to generate revenues, he said. “Our vision is to present opportunities for utilities to play different roles,” one of which might be “as an organizer for a bigger market that would integrate these distributed resources.” His suggestion seemed to be that under REV, the utilities would maintain their hegemony in the distribution of power — a role speaker after speaker in the public hearing decried.
In his presentation, Belsito said one problem with the current system is over-reliance on natural gas, leading to price spikes and fluctuations. The current regulatory framework “does not encourage innovation,” he said, and “relies too heavily on traditional business models and infrastructure.” A key concern is the fourfold growth in peak demand compared with overall electricity use, which requires the state to maintain expensive back-up power plants.
Belsito acknowledged the “average electric bill is increasing and customers are worried about outages, resiliency and reliability.” Meanwhile, the cost of solar has come down and home management systems that automate energy enable people to efficient manage their electricity use — developments that could help New York to move to a more efficient, less costly distribution system.
