United States: New York Seeks Value For Distributed Energy And Reevaluates Net Metering

On December 23rd, 2015, The New York State Public Service Commission (NYPSC) issued a Notice under which it is soliciting comments concerning the value that Distributed Energy Resources (DERs) contribute to the distribution grid system. It is also soliciting feedback on a successor methodology to its current Net Energy Metering (NEM) policy that will help drive development in the interim. Both of these issues are being tackled by the NYPSC as part of New York's broader Reforming the Energy Vision (REV) initiative.

New York needs critical energy infrastructure to the tune of billions of dollars at the same time that utility revenues are falling. Additionally, more distributed generation (DG) is coming online, including DG resources that net meter to the grid, and therefore potentially shift the pro rata costs of grid maintenance onto non-DG owners. In response, the NYPSC opened the REV docket in an attempt to reconcile these trends as well as prepare for a more resilient and energy efficient future.

It is hoped that the policies and rules promulgated under REV will facilitate the adoption of greater on-site and near-site energy resources and efficiency approaches, known under REV as Distributed Energy Resources (DERs). Under this new framework, DER owners will be able to sell their generation to utilities as well as directly to commercial and retail customers. Due to the complexities inherent in such a model, the Commission has worked with incumbent utilities who will help achieve ambitious DER goals by operating as Distributed System Platforms (DSPs), which will coordinate grid-wide DER activities as a market administrator, not unlike a distribution level independent system operator.

However, a complication has arisen under this new paradigm: What is the value of these DERs to the system? Assessing the value of DERs is a key component in constructing an efficient market as transactions will consist of interactions among customers and service providers, and also between utilities and DER providers. It is also true that in the absence of clarity regarding the value of DERs it will be difficult to attract private capital to projects under development. Because of these complications, and the need to both resolve uncertainty and ensure that the burdens of systemic grid maintenance and upgrades are not being bypassed by DER and grid-exiting customers, a mechanism is required to establish accurate pricing.

It was made clear in the NYPSC Staff's Track Two White Paper that the system value of DERs will be divided into two components: 1) the energy value and 2) all other values associated with distribution-level resources. The energy value in New York is established by power markets and is called the location-based marginal pricing (LMP), a methodology where the price of energy at each location in the New York State Transmission System is equivalent to the cost to supply incremental load at that location. The full value of a particular DER can be expressed as the LMP plus the distribution delivery value (the value of D); together known as "LMP+D." In the NEM Interim Ceilings Order, the Commission further elaborated that "[the] 'value of D' can include load reduction, frequency regulation, reactive power, line loss avoidance, resilience and locational values as well as values not directly related to delivery service such as installed capacity and emission avoidance." The Notice indicates that the NYPSC is seeking to establish a new methodology and process for determining the full value of DERs prior to December 31, 2016.

Determining the value of DERs to the grid system implicates possible changes to the future of net energy metering (NEM), which in the Empire State is a statute-based incentive that allows small generators of electricity to sell their excess generation into the grid subject to an overall cap. If a new value is being placed on all DERs, and DER outputs can be purchased by the utility and non-utility actors in real-time, the question of how the current NEM regime can co-exist within the REV marketplace is begged. Despite this gray space, Staff saw no reason to adjust NEM for the mass-market per the Track Two White Paper, and stated that a bill-crediting mechanism used in NEM should continue to be considered as part of a successor to NEM. It also stated that changes to NEM should be focused on larger projects with substantial net export of electricity.

The Commission decided in the subsequent Net Metering Ceilings Order that "until these valuation efforts [the value of D] are completed, and incorporated in tariffs that recognize the full benefit of DER, net metering must continue, to avoid the disruption of DG development efforts that would contravene the State's energy policies." Despite an overall lack of change, the cap on NEM under the Ceilings Order is now allowed to float to avoid "repeated disputes over the proper level of the ceiling . . . and shall be allowed to float in the interim until the calculation and application of 'the value of D' and other issues affecting valuation of DER is decided." In addition, and in recognition of the various paths NEM policy could take going forward, the current solicitation also seeks comment on how the Commission should consider the transition "from NEM," and indicates that they favor a scenario where "a single comprehensive process should be embarked upon to adequately address the range and complexity of the questions raised [in this matter]."

The "value of D" may be the necessary component to determine how DERs, specifically on-site generation and microgrids, contribute to the efficiency and resiliency of the grid. Although New York is starting the process of targeting the valuation metric, and many DER providers and NEM advocates may disagree with the method, for the purpose of project financing the "value of D" may lend the clarity needed toensure the stability of the REV-driven marketplace. To take part in the discussion over NEM and the value of DER to the distribution system, potentially interested parties are able to respond and comment to the Notice until April 18, 2016.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions