New York Public Service Commission “REVs” Up Utility Reform in Consolidated Edison Rate Case

New York Public Service Commission “REVs” Up Utility Reform in Consolidated Edison Rate Case

  • New York Public Service Commission adopted a three-year rate plan for Consolidated Edison, including several key Reforming the Energy Vision initiatives.
  • The Pace Energy and Climate Center and Earthjustice partnered on our fifth New York rate case and scored a number of REV wins, including on standby rate reforms, energy efficiency, and REV-aligned rate design.
  • This is the first “post-REV” rate case and is a significant milestone in New York’s path to grid modernization.

The New York Public Service Commission adopted a three-year rate plan for Consolidated Edison Company of New York on Tuesday, marking the first rate plan the Commission has approved following its landmark Order Adopting a Ratemaking and Utility Revenue Model Policy Framework (the “Track Two Order”), which laid the groundwork for many of the Reforming the Energy Vision’s key principles.

Earthjustice and the Pace Energy and Climate Center (“Pace”) partnered in the case and pushed for many of the REV-aligned reforms approved by the Commission. Several Pace staff and law student interns worked on the case along with staff attorneys from Earthjustice. Pace and Earthjustice played a key role in securing a number of wins for advancing fair rates, increasing deployment of energy efficiency, advancing climate responsibility, and growing markets for distributed energy resources (“DER”) such as energy efficiency, energy management, distributed generation, electric vehicles, and other technologies and services.

“Our partnership with Earthjustice enabled us to advance strategic objectives of just and reasonable rates for ConEd customers as well as substantial progress toward realizing the vision of the REV process for greater deployment of DER,” said Karl R. Rábago, Pace executive director and expert witness in the case.

The months-long settlement negotiations resulted in a Joint Proposal, filed on September 19, 2016, with more than 20 signatories, including Pace, the City of New York, Natural Resources Defense Council, Environmental Defense Fund, distributed generation and real estate developers, and others.

The rate case is a significant milestone in the ongoing REV process. As Commission Chair Audrey Zibelman noted prior to voting in support of the Joint Proposal, this case represents “a significant step toward modernizing the electric system and changing the utility business model.”

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 REV concepts, including much-needed standby rate reforms, developing metrics to measure AMI program performance, best practices for microgrid development, and innovative, REV-aligned cost allocation to capture the costs and benefits of Con Edison’s new role as distribution system platform provider.

Among the key REV “wins” approved by the Commission are:

  • 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: Con Edison’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 per year, equivalent to the energy needed to serve over 40,000 homes in New York State. 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 the Track Two Order for utilities to generate new revenue streams and accomplish energy policy goals. These savings are especially important in light of the recently announced agreement to close the Indian Point nuclear plant.
  • Electric Vehicles: A collaborative process will be established 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.
  • Advanced Metering Infrastructure (“AMI”) Metrics: Done right, AMI can help to grow DER and ancillary services markets, and empower customers to manage their home and business 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.
  • Rate design 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 Commission also separately approved a related Targeted Demand Management program that will incentivize the Company to pursue “non-wires alternatives” projects, like the Brooklyn-Queens Demand Management project, thanks to a split incentive between customers and shareholders. Lessons learned in this program will be vital in addressing any supply gap created by the closure of Indian Point.

This is Earthjustice and Pace’s fifth partnership on a New York rate case, following the successful completion of settlement agreements in Central Hudson and Orange & Rockland Utilities’ 2014 rate cases, and Con Edison and New York State Electric and Gas / Rochester Gas & Electric’s 2015 rate cases.

Three other New York investor-owned utilities could file rate cases in 2017: National Grid, Orange & Rockland Utilities, and Central Hudson Gas and Electric.

Pace and Earthjustice look forward to tracking those filings and continuing to push for fair rates, clean energy and climate responsibility, and REV-aligned market reforms.

Earthjustice Associate Attorney Chinyere Osuala says: “In a time when President Trump’s clean energy goals are ambiguous at best, states are taking charge. New York is proving itself to be a leader in clean energy by modernizing the electric grid. This rate plan advances that vision for New York City and Westchester residents and their families.”

Cuomo Delivers on Promise to Shut Down Indian Point, Supports New York’s Clean Energy Future

Cuomo Delivers on Promise to Shut Down Indian Point, Supports New York’s Clean Energy Future

  • The plant will close 14 years earlier than expected, without busting New York’s carbon budget.
  • The agreement between the State and Entergy includes support for displaced employees and $15 million fund for community and environmental benefit.
  • Indian Point’s closure is supported by the clean energy foundation laid by Governor Cuomo through the Reforming the Energy Vision process and other energy efficiency and renewables programs and investments.
  • The closure is aligned with New York’s Regional Greenhouse Gas Initiative commitments. Governor Cuomo proposed the nine states participating in the Regional Greenhouse Gas Initiative (RGGI) reduce their RGGI carbon cap by 30%, providing further assurance that Indian Point’s retirement won’t result in increased emissions.

In a landmark moment for clean, sustainable energy in New York, Governor Cuomo announced today that the Indian Point nuclear power plant will close by 2021, a full 14 years earlier than anticipated, without breaking New York’s carbon budget. The closure is made possible by the groundwork laid over the past several years by the Governor, Consolidated Edison, and the New York State Research and Development Authority, through programs and investments in renewables, energy efficiency, and distributed energy resources.

“This is exactly how you realize a transition to clean and sustainable energy—firm commitments built on years of groundwork along with strong support from the utility sector and well-aligned policy leaders,” said Karl R. Rábago, Pace Energy and Climate Center’s Executive Director.

Under the agreement reached between the State and Indian Point’s owner and operator, Entergy, Unit Reactor 2 will shut down as early as April 2020, and Unit Reactor 3 by April 2021. The deal includes vital support for local communities and the environment: as part of the package, Entergy will help displaced employees relocate to other opportunities within the company’s system, while the state, through NYSERDA, will provide workers with training in renewable technologies. Entergy will also contribute $15 million toward community benefits and the environmental health of the surrounding area.

The Governor has fought for years to close Indian Point in light of numerous safety and environmental concerns and the plant’s proximity to New York City. But the plant’s closure wasn’t contemplated in a vacuum. As part of New York’s Reforming the Energy Vision proceeding and the State Energy Plan, Governor Cuomo has made it a priority to increase New York’s energy efficiency and renewables supply, decrease carbon emissions, and remove barriers to distributed energy resources (DERs). Under the Governor’s leadership, the state’s Clean Energy Standard mandates that New York source 50% of its energy from renewables by 2030. The Governor has also been a strong proponent of providing support to communities and workers impacted by the closures of dirty, aging power plants that are replaced by clean generation.

Indian Point’s closure is also aligned with New York’s carbon policy. Governor Cuomo’s concurrent announcement today committing to strengthening the Regional Greenhouse Gas Initiative’s role in reducing carbon emissions from the power sector is a vital component of the Indian Point closure plan. The Governor’s proposal calls on the nine RGGI states to reduce the cap by an additional 30% below 2020 levels by 2030—from 78.2 million tons of CO2 in 2020 to 54.6 million tons in 2030. This equates to an approximately three percent annual cap decrease between 2020 and 2030. While analysis supported by Pace has shown that the least cost pathway to the Northeast states’ climate goals requires a five percent annual cap decline, the Governor’s commitment still represents an ambitious power sector carbon pollution reduction trajectory.

A meaningful and strong RGGI cap such as the one proposed by Governor Cuomo will be a vital component of the Governor’s promise that the closure of Indian Point will not cause a net increase in emissions. It will serve as an important backstop to carbon reduction initiatives as New York radically reshapes how electricity is produced and consumed within the state.

With the plant’s closure, New York will reap benefits beyond carbon reduction, including the growth of jobs in the renewable energy sector and a more resilient electric grid. While the energy transition details still have to be worked out, energy efficiency and demand response programs, local distributed energy resources, and large-scale renewables can step in to make the grid less vulnerable than it would be if it were to continue to draw power from the aging and unsafe Indian Point generating units. New York already has 700MW of transmission upgrades and energy efficiency ready to go, and Con Edison has been preparing for Indian Point’s closure for several years through ramped-up energy efficiency programs and innovative “non-wires alternatives” initiatives like the Brooklyn-Queens Demand Management project, which can all contribute to meeting the Governor’s 2021 timeline.

“While nuclear power can offer New York a clean-air alternative as we move toward a major expansion of renewable power, the trade-offs and the dangers posed by the reactors at Indian Point are not worth these risks,” Rábago said. “We believe the deadline of this plant’s closure will motivate utilities and clean energy providers to organize themselves around the transition to distributed generation and renewables, which can only be good for New Yorkers. I thank Governor Cuomo for putting an end to Indian Point’s operations and ensuring a healthier New York community. This news, combined with the Governor’s call to reduce the RGGI cap 30% by 2030, will result in a more rapid acceleration to an economy powered by clean, renewable energy.”

Indian Point’s closure represents a delivery on Governor Cuomo’s commitment to move New York toward a more sustainable and resilient energy future.

New York Closes the Regulatory Gap on Small Distributed Generators

New York Closes the Regulatory Gap on Small Distributed Generators

New York State recently adopted long-awaited air pollution regulations aimed at small distributed generators. The emissions rules, found in Part 222 of Title 6 of the New York Code of Rules and Regulations (commonly known as “Part 222”), will help to reduce the negative health impacts of nitrous oxide (NOx) and particulate matter (PM) emissions, and will cover small generators that were previously unregulated thanks to a “regulatory gap” in the existing air pollution rules.

Pace participated throughout the regulatory process and filed comments on the proposed rules with our partners in the Clean Energy Organizations Collaborative. Part 222 was championed by Governor Cuomo and represents an important step forward in New York’s effort to mitigate the harmful effects of air pollution.
Generators with a maximum mechanical output rating of 200 horsepower or greater in the New York City Metropolitan Area (NYMA), and 400 horsepower or greater in the rest of the state are covered by the new rules. The more stringent application in NYMA reflects downstate New York’s greater population density, where more people are at risk of asthma and other health conditions caused, or exacerbated, by air pollution, and where low-income residents already face some of the state’s worst air quality.
Part 222 is especially timely in light of New York’s Reforming the Energy Vision proceeding, which is expected to encourage customers to manage their energy usage through a variety of “distributed energy resources,” including the types of diesel-fired generators covered by the rules.
The rules enter into effect in 2017.