Consolidated Edison 2016 Rate Case Settlement Proposal Filed

October, 05, 2016
Radina Valova
Staff Attorney

The New York State Department of Public Service Staff recently filed a proposed settlement (the “Joint Proposal”) in Consolidated Edison’s 2016 rate case. The Joint Proposal represents an agreement between more than twenty parties, including the Pace Energy and Climate Center, the City of New York, Staff, non-profit organizations, and businesses, on Con Ed's rates and revenue requirements for 2017-2019.

Five of Pace’s subject-matter experts—Executive Director Karl Rábago, Deputy Director Tom Bourgeois, Senior Energy Policy Associate Dan Leonhardt, Energy and Climate Law Advisor Jordan Gerow, and Professor Michael Gerrard, Director of Columbia University’s Sabin Center for Climate Change Law—testified on a number of key REV concepts, including the importance of completing the long-awaited Climate Change Vulnerability Study, much-needed standby rate reforms, developing metrics to measure AMI program performance, best practices for microgrid development, and innovative, REV-aligned cost allocation through which costs would be more granularly allocated according to their function.

The settlement agreement includes a number of positive proposals that would move Con Ed toward the “utility of the future” model envisioned by New York’s Reforming the Energy Vision (REV) process. In the context of utility reform, where broad policy and regulatory changes must be implemented at the individual utility level, rate cases are where “the rubber meets the road.”

The Joint Proposal includes dozens of provisions for the Commission’s review. REV-related proposals include:

  • Standby Reform: An overhaul of Con Ed’s standby rates, as required under the Track Two Order, including a revamped Reliability Credit with more stringent NOx emissions standards, and a Standby Rate Pilot that includes provisions to incentivize more efficient combined heat and power (CHP) units;
  • Energy Efficiency, System Peak Efficiency, and Electric Vehicles Programs: as Pace, the Natural Resources Defense Council, Acadia Center and the Association for Energy Affordability recently noted, Con Ed’s proposed energy efficiency budgets and targets go beyond what the Company is currently required to achieve, and are projected to yield more than 300 gigawatt-hours of savings. The system efficiency program would add an additional 22 GWh of energy savings and provide 49 megawatts of system peak reduction. The energy and system peak efficiency programs also include proposed Earnings Adjustment Mechanisms—novel mechanisms established under REV’s Track Two Order for utilities to generate new revenue streams and accomplish energy policy goals;
  • Electric Vehicles: An upcoming collaborative process to consider developing new rate structures, incentives or pilot programs for electric vehicles;
  • Climate Change Vulnerability Studies: The agreement, if adopted, would authorize the Company to spend up to $4 million on completing its Climate Change Vulnerability Study by 2019;
  • AMI Metrics: When done right, AMI can help to grow DER and ancillary services markets and empower customers to manage their home energy use. The Commission approved Con Ed’s AMI Business Plan earlier this year, and as the Company moves forward, its AMI program will be subject to ongoing measurement and assessment to ensure that the program is on the right track.
  • REV Reforms: The proposed agreement inches Con Ed toward a more granular cost functionalization and allocation model, which is critical to helping the Company move from the one-way energy delivery and cost recovery of the past and toward its new role as distributed system platform provider.

The Joint Proposal will become final only after it has been approved by the New York Public Service Commission. As a next step, the parties will submit written statements and/or testimony regarding the proposed settlement, after which the Commission will host hearings, currently scheduled to commence on November 2. Pace will continue to engage in the rate case and looks forward to the Commission’s final Order and our continued work on pushing New York’s utilities toward the grid of the future.