The New York Public Service Commission ("PSC")
approved a landmark order in its Reforming the Energy Vision
("REV") proceeding, adopting a new paradigm replacing net
metering for clean distributed energy resources ("DER")
with a new method of compensation known as a "Value
Stack." The Value Stack will be implemented through the
development of Value of Distributed Energy Resources
("VDER") tariffs in each utility service territory in New
Up until now, net energy metering ("NEM") enabled DER
to sell excess power back to a utility for a set price based upon
the price at which the utility would sell power to the account
holder. As an example, if a commercial customer has solar on its
premises, the credit the customer would receive for net metered
electricity would equal the price the customer pays if it takes
power from its utility. The PSC found that NEM fails to accurately
reflect the value that the DER provides to the utility system, and
it expects VDER to improve the method of compensation by taking
into account locational, environmental and temporal values of a
VDER Phase One will establish two tariffs to be adopted by each
utility pending further refinement of the Value Stack concept. One
tariff will be the Phase One NEM, which will apply to rooftop solar
and other residential and small commercial clean energy projects
(but not energy storage unless combined with solar). The second
tariff will establish a new Value Stack, which will be applicable
to community DER and commercial and industrial projects. New
tariffs took effect on April 1, 2017.
The Value Stack will include: 1) energy value, based on day
ahead hourly LBMPs (location-based marginal pricing), including
losses; 2) capacity value, based on retail capacity rates for
intermittent resources, and capacity tag for dispatchable
technologies, based on performance during the peak hour in the
previous year; 3) environmental value, based on the higher of the
latest Clean Energy Standard Tier 1 renewable energy certificate
procurement price of the federal government's social cost of
carbon; and 4) demand reduction value and locational system relief
value, based on utility marginal cost of service studies and
performance during 10 peak hours.
Existing projects that are presently net metered will be
grandfathered and will be entitled to continue receiving
compensation based on net metering for 20 years before
transitioning to the new compensation method. New DER projects
interconnected between now and January 2020 to serve residential
and small commercial customers will also be permitted to be
compensated with net metering credits for 20 years as Phase One net
energy metering. All DER projects installed prior to the effective
date for Phase One net energy metering will have the option to
transition to the new system, even if they are eligible to continue
New York utilities will have 45 days from the date of the order
to propose detailed schedules and work plans for developing
granular locational pricing reflecting the elements of the Value
Stack and must file a proposed implementation plan by May 1, 2017.
During Phase One, the PSC staff, utilities and stakeholders will
meet to finalize recommendations to the PSC about how to refine the
new Value Stack concept. The Value of DER order, along with other
orders issued recently in the REV proceeding, is continuing New
York's movement towards incorporating distributed resources
into the utility grid in a cost-effective manner that can enhance
the reliability and resiliency of the grid at a cost that is fair
to all participants.
Disclaimer:This Alert has been
prepared and published for informational purposes only and is not
offered, nor should be construed, as legal advice. For more
information, please see the firm's
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