January 2018 Regulatory Update / Regulatory Engagement

The NYECC is represented and instrumental in Con Edison rate cases and other proceedings, including Standby Rates and other proceedings.  With so much happening on the energy regulatory front, including proposed NY City Council energy bills that will have a major impact on real estate, we have convened a Regulatory Committee, headed by Daniel Avery of BOMA, to create structure and guide the organization regarding energy issues outside the rate case, including the following:

  • Meeting with City Council Staff
  • CHP Property Tax Exemption Bill
  • Stretch Code – ensure membership representation on advisory committee
  • Local Law 1745 -- Onsite Fossil Fuel limitations
  • Meet with Assemblyman Michael Cusick (new head of Assembly’s Energy Committee)

Members of this committee include David Ahrens - Energy Spectrum, David Bomke – Fulcrum Group, Carl Hum – REBNY, JP Flaherty – Tishman Speyer and Emily Kildow of Taconic.

Con Edison Rate Updates for 2018

We are in Rate Year 2 of the Settlement of Con Edison’s electricity and gas rate cases.  Con Edison’s proposed three (3) year rate increase in combined electric and gas rates would have totaled approximately $2.71 Billion over the three year period starting on January 1, 2017 and ending on December 31, 2019.  Conversely, the total rate increase in combined electric and gas rates in the approved Joint Proposal is approximately $1.57 Billion during these three years, or roughly 42% less than the original Company filing. 

Electricity Impact  - Rate Year 2 beginning January 1, 2018: 

  • Overall Increase        3.7%
  • SC9 – Rate I and III  3.4%
  • SC9 – Rate II            1.1%

Natural Gas Impact  - Rate Year 2 beginning January 1, 2018: 

  • Overall Increase            9%
  • SC No. 2 Rate I              5.3%
  • SC No. 2 Rate II            9.5%

Interruptible Gas Impact  - Rate Year 2 beginning January 1, 2018: 

  • 3% increase – Rates set at 8.25 cents per therm for one, two and three year contracts

The 1 cent per therm reduction for usage in excess of 500,000 therms per month is retained, and customers with existing contracts are grandfathered at their existing rates until their existing contracts expire.

Con Edison Steam Rate Plan – 2018 Impact

  • Rate Year 5 for Steam begins on January 1, 2018;
  • Con Edison tariff filing on November 30, 2017. A temporary credit of $8.121M expires on December 31, 2017, which will result in a RY5 increase of approx. 1.2% on a total bill basis.

Other areas of intervention – Con Edison:

Con Edison Gas Peak Demand Reduction Collaborative

  • 16-G-0061 – The Con Edison Gas Peak Demand Reduction Collaborative Report required under the Rate Plan to be filed by 12/31/17 was filed on 12/22/17.
  • Many of the usual rate case parties, including NYECC attended the collaborative meetings held roughly once a month since July 2017.
  • The PSC tasked the collaborative with 1) examining the potential impact that delays of upstream interstate pipeline construction may have on meeting growing demand associated with oil-to-gas conversions and new business, and 2) exploring gas peak demand reduction incentives, including demand response;
  • Phase 1: Study examining feasibility of customers using solar thermal and/or geothermal technologies to reduce gas peak demand and defer infrastructure investment.
  • Phase 2: Parties to consider study results and discuss potential peak reduction incentives.
  • Peak demand for NG has grown 30% since 2011 and demand is expected to grow another 20% over the next 20 years.
  • Con Edison is considering investing at least $100M annually for clean innovative projects to avoid construction of a major new gas pipeline. Proposals to the RFP recently issued are due by 3/1/18.

Con Ed concludes approx. 25-50 MDt/day of gas peak demand reduction over the next 5-6 years as follows:

  • 2-3 MDt/day of Geothermal – limited feasibility for larger buildings because of the area required to install the  piping array or ground coupling;
  • 0 MDt/day of Thermal – may be feasible for domestic hot water heating, but not feasible for space heating (not competitive with gas boiler/ electric A/C, also limited roof space in NYC;
  • 10 MDt/day of Steam – in Manhattan. Fuel switching flexibility on coldest days enables steam to reduce gas peak demand for Manhattan buildings selecting steam instead of gas for new construction or conversion from oil fired boilers. There are currently no incremental incentives for such customers which would require a reduced steam bill paid for by gas customers.
  • 1-2 MDt/day of Biogas – significant challenges, a potential economic option stored as compressed of in liquified form for injection during peak days;
  • 15-40 MDt/day of Smart Solutions –  1)double incentives to customers who conserve gas from $14.5M to $29M doubling annual savings and peak demand reduction from 279,000 Dt/yr and 6,000 Dt/day to 560,000 Dt/yr and 12,000 Dt/day, 2) create new gas usage reduction programs on coldest days modeled after successful efforts in electric on peak summer demand days, 3) adopt renewable alternatives to natural gas heating such as efficient electric heating systems, 4) solicit market for cost-effective alternatives to pipeline capacity.

Value of Distributed Energy Resources (VDER)

On March 9, 2017, the PSC issued VDER Order beginning the transition of compensation of Distributed Energy Resources (DER) to reflect the actual value of those resources and enabling a distributed, transactive and integrated electric system.  The outcome of this proceeding is critical to the future of the grid and the cost going forward for both property owners and others of the many projects / new technologies that will bring the grid into the future as outlined in Reforming the Energy Vision (REV)

The NYECC is actively engaged in this proceeding.   

Vale of Distributed Energy Resources (VDER)

  • 3/9/17 PSC issues VDER Order beginning the transition of compensation of Distributed Energy Resources (DER) to reflect the actual value of those resources and enabling a distributed, transactive and integrated electric system.
  • First step, eligibility for the VDER tariffs limited to technologies and project types previously eligible for net energy metering (NEM) and projects that paired energy storage with an eligible technology.
  • After Phase One, VDER tariffs will be expanded beyond NEM-eligible DG technologies to al DER in a technologically-neutral, value focused manner as soon as practicable.
  • VDER Order directs that stand alone energy storage projects be included as expeditiously as possible.
  • Value Stack credit elements include LBMP, ICAP, E (the environmental externality based on Tier 1 RECs (Renewable Energy Credits)), LSRV, DRV, MTC. Not all project types are eligible for all of these credits.  For example, Staff is proposing that non-NEM CHP not receive E or MTC credits because it is neither Tier 1 nor NEM eligible. 
  • On 12/18/17, DPS filed a preliminary proposal on expanding the VDER tariffs to currently ineligible DERs up to 2 MW on an expedited eligibility basis (the PSC is currently considering expanding eligibility to projects larger than 5 MW). Not qualifying now on an expedited basis does not preclude eligibility at a later time.
  • CHP requires more analysis. Only eligible CHP under NEM was so-called “Residential Micro-Combined Heat and Power. Staff proposes expanding CHP eligibility to all CHP below the current 2 MW maximum project size for any customer and recommends a definition for CHP similar to the definition in Con Edison’s Standby Rate Pilot recently adopted in the Con Edison Electric Rate Case. Credit value may be adjusted if it is determined that the CHP is more environmentally damaging than system power.
  • Staff has proposed making previously NEM-eligible technologies that are exempt from participating in standby and buyback rates now be applied to non-VDER prosumers and to customers in the expanded eligibility VDER class, except that compensation for hourly injections would be based on the Value Stack rather than on existing buyback rate compensation.

VDER Value Stack Working Group: 

DRV/LSRV (Demand Reduction Value/ Location Specific Relief Value) Track: Improve the price signals for avoided T&D Infrastructure

–      Through DERs, evaluation timeline, interaction with NWA

–      DERs value in reducing existing T&D systems, increasing hosting capacity, and reducing interconnection costs, including assessing any effect on O&M costs and extended equipment life

–      Assess resiliency benefits by DER combinations, including whether to capture those benefits through an improved DRV and LSRV or through a separate value stream

–      Assess potential contributions of DERS to preventing or reducing outages and supporting grid recovery and providing shelter and basic energy services during system outages

2018 Schedule

1/26/18 Mtg. – Discuss process to determine whether:

  • to continue and improve DRV and LSRV with more granular marginal cost of service studies
  • to only have a DRV payment with payment for greater value areas through specific utility programs or NWA procurement
  • to implement some other mechanism to capture these values
  • there should be further meetings on particular topics
  • there should be several rounds of papers culminating in a Staff Whitepaper, or a formal evidentiary hearing

2/8/18 Mtg. – Party proposals for more granular marginal COS studies for use in Benefit Cost Analysis, Energy Efficiency, and demand Response Program design, followed by data requests on the proposals

4/6/18 Mtg. or Filing

–      Presentations and Experts re direction and process on whether to continue DRV/LSRV or recognize greater marginal values through utility programs/NWAs discussed on 1/24/18, and party response to MCOS presentations on 2/8/18

–      Option for parties to initiate formal ALJ process on the record to address any missing info, confidentiality, and key evidentiary issues. Resolution of issues of fact by the ALJs would inform the VDR proceeding

–      If Whitepaper process chosen, then remaining schedule is as follows:

•       5/7/18  Written responses to Presentations and Experts

•       6/8/18  Staff issues Straw Proposal

•       6/22/18 Party written responses to Straw proposal

•       7/27/18 Staff files White Paper which is noticed for public comment

Environmental Track: Benefits by Reducing Environmental Externalities including Public Health & Safety and Environmental Justice Benefits (July – Dec. 2018)

  • Review policy of using the greater of the Renewable Energy Credit (REC) or the Social Cost of Carbon (SCC) as the compensation calculation mechanism for environmental/externalities value, and consider alternatives
  • Evaluate time-differentiated and location-differentiated carbon pricing focusing on a potential policy supportive of a Clean Peak
  • Evaluate potential for DERs to reduce emissions

2/9/18 Mtg. – Environmental Justice presentation and preliminary scoping for environmental track

7/9/18 Mtg. – Finalize scoping of topic area and discuss need for data, studies, consultants

8/16/18 Mtg. – Party proposals for improvement of environmental value, followed by data requests on the proposals

9/4/18 Mtg. - Option for parties to initiate formal ALJ process on the record to address any missing info, confidentiality, and key evidentiary issues. Resolution of issues of fact by the ALJs would inform the VDR proceeding

•       If Whitepaper process chosen, then remaining schedule is as follows:

10/2/18  Written responses to Presentations and Experts

11/2/18  Staff issues Straw Proposal

11/16/18 Party written responses to Straw proposal

12/14/18 Staff files White Paper which is noticed for public comment

VDER Rate Design Working Group and 2018 Schedule

Dec. 2018 Deadline for Staff Rpt. On Mass Mkt. NEM successor tariff to take effect in 2020

–      Customer Bill Impact Analysis Model Development

1/24/18 Mtg. – Discuss Staff’s finalized scope of customer bill impact analysis

Feb. – Apr. 2018 – JUs develop modeling components with input from Staff

Apr. – May 2018 – Review of modeling approach and inputs. JUs refine models based on feedback

–      Foundational Inputs to Staff Rate Design Recommendations (Jan. – Mar. 2018)

•       New rate design options must consider component elements (egs. fixed charges, time-varying rates) as part of a coherent package rather than as stand alone issues

•       Build a common fact base by reviewing rate design elements, including rationales, options, benefits, challenges of: time varying energy and capacity rates, demand charges, fixed charges, non-bypassable charges, locational rates, standby rate design

•       1/24/18 Mtg. – Discuss initial scoping of rate design elements and solicit input on need for specific data, studies and consultants

•       2/8/18 Mtg. - Party proposals for approaches on rate design elements, followed by data requests on the proposals

•       3/6/18 Mtg. - Presentations and Experts re best practices and innovative rate design, Option for parties to initiate formal ALJ process on the record to address any missing info, confidentiality, and key evidentiary issues. Resolution of issues of fact by the ALJs would inform the VDR proceeding

•       3/20/18 -  If no ALJ process, written responses to Presentations and Experts due

–      Rate Design Proposals (for Mass Mkt. NEM Successor Tariff) from Working Group Members or Coalitions (May – Sept. 2018)

•       5/14/18 Party Rate Design Proposals

•       5/23/18 Presentations on rate design proposals, opportunity for data requests, option for parties to initiate formal ALJ process on the record to address any missing info, confidentiality, and key evidentiary issues. Resolution of issues of fact by the ALJs would inform the VDR proceeding

•       May – June 2018 – If no ALJ process, rate design converted to proposed rates for each utility and provided to Staff and WG

•       June – July 2018 – Proposals evaluated through the customer bill impact analysis models and provided to Staff and WG

•       9/4/18 – Presentation of Bill Impact Analysis, opportunity for data requests after that.

–      Dec. 2018 Report Development

•       11/2/18 Staff presents draft report to WG

•       11/16/18 Written comments on draft report due

•       12/21/18 Staff files its Report

•       Existing Standby Rates and Buyback Rates (Jan. – Mar. 2018)

–      1/24/18 Mtg. – Staff presents draft whitepaper on these rates

–      2/21/18 – Written comments due on recommendations

4/2/18 – Staff submits Whitepaper to Secretary

Con Edison Electric Outcome Based EAM Colaborative – Emissions Issue

•       Following the consensus report filed by the Collaborative participants in August regarding the outcome-based EAMs at minimum, target and maximum levels, the collaborative has resumed in the hope of realizing an emissions component for rate year 3 or perhaps rate year 2.

•       The goal is to reach consensus on a metric approach by March 2018.

•       NYS’s Energy Plan calls for ambitious goals that include a 40% reduction (from 1990 levels) in GHG emissions by 2030 and a decrease in total carbon emissions by 80% by 2050.

•       Attain gains towards goals in buildings through fuel switching and heat pump technology.

•       Attain gains towards goals in autos through so called “light duty’ electric vehicles with zero emissions (which may include MTA buses).

•       There are unresolved issues regarding the approaches to measurement of emissions as well as overlap with the existing DER utilization metric for which there already is an existing EAM.

Other Areas of Interest – Con Edison:

Con Edison’s Electric Vehicle Quick Charging Stations Program

•       On 12/28/17, Con Edison proposed a 7 year program to incent the construction of publicly accessible EV quick charging stations in its service territory such as at supermarkets, malls and retail outlets, train stations, hotels, restaurants, parking garages and parking lots.

•       Under its Business Incentive Rate (BIR) to provide delivery rate reductions for EV quick charging stations.

•       Attract new business customers and mitigate the high cost of EV charging station operation in current immature market.

•       Transfer 30 MW BIR (of 155 MW allocation) from the Rate Plan’s New and Vacant Program  (currently undersubscribed) to new EV quick charging stations program, enough for example for approx. 300 EV charging stations with aggregate charging capacity of 100 kW.

•       Minimum aggregate charging capacity of 100 kW and maximum aggregate demand of 2,000 kW to receive BIR delivery rate reductions under SC 9 Rates I and III of 39% and under SC 9 Rate II of 34%.

Areas of Intervention – NYC

Int. 1745 – This is a major area of focus for the NYECC Regulatory Committee.  This bill would set strict emissions limits from fossil fuel combustion by square foot for existing buildings and sets up a working group to set total buildings energy use limits. There was initial talk of hearing and passing this bill by the end of 2017, but reactions to the bill from intervenors was enough to move the timeline back. They do plan to hear this bill early next year and try to move it forward by year’s end.