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Over 130 years after Edison’s incandescent light bulb, the way New York state gets its energy is fundamentally changing. And much of that change is centered around reforming the way the electric utilities—like Con Ed and LIPA—do business here.
On Thursday, December 11, the New York Public Service Commission is expected to issue an important initial decision in an ongoing effort to modernize New York’s electric grid and save consumers money by increasing the penetration of system-wide energy efficiency and clean distributed generation on the grid. This effort—called the Reforming the Energy Vision (REV) proceeding— is one of a few pending efforts that will have profound implications for the grid, electricity customers and for clean and renewable power, including energy efficiency, demand response, solar and wind.
Traditionally, utilities have depended on monopoly profits that arise primarily from investments in big, traditional infrastructure investments in poles and wires and ever increasing electricity sales. The cost of this business as usual—to both our climate, the air we breathe and our pocket books—has been intolerably skyrocketing. In fact, America’s current utility infrastructure is aging, polluting and in need of $2 trillion in order to replace it if we continue on this path. An estimated $30 billion in utility capital investment would be needed over the next 10 years in New York alone.
There is a better way. Energy efficiency and clean energy sources like solar and wind, owned by customers, utilities and third parties, are fast becoming a cost-effective reality. Clean and renewable energy can optimize the grid which saves customers money. A move to clean power can also reduce carbon pollution from fossil fuels, while creating a more flexible system that increases community resilience to extreme weather.
We expect this preliminary REV decision to be a first step on a long road towards just that—allowing increased reliance on clean, renewable energy and energy efficiency, and less reliance on the dirty, costly and aging power sources of the past. Under this vision, utilities should be compensated for how well they facilitate the deployment of energy efficiency and renewable power in order to achieve key outcomes, like carbon reductions and improved customer satisfaction. Luckily New York’s has already adopted so-called “decoupling” regulations that break the link between electricity sales and profits. Much more, however, can and should be done to fundamentally reform the current utility business model in order to incentivize clean power. Doing so can add value to the grid in several ways. For example, REV should include incentives for utilities to employ new methods to overcome traditional barriers to energy efficiency in the buildings sector, and explore new approaches to installing renewable energy in buildings where customers cannot physically do it themselves.
These are bold efforts to scale up clean energy in New York. The success of REV, however, will require the inclusion of clear and firm commitments to renewable energy and energy efficiency, while also ensuring that all New Yorkers—including those on low incomes—can participate. In order to do so, we will be watching to see what this and future REV orders look like. Among other things, the commission should:
- Affirm New York’s commitment to clean and renewable power by codifying goals tocut carbon emissions by 50 percent by 2030 and 80 percent by 2050 and ramping up utility energy efficiency obligations to a 2% annual savings level;
- Optimize coordination between wholesale and retail energy markets to facilitate clean and renewable power and energy efficiency by creating market rules that facilitate a “level playing field” for non-utility actors to engage in a clean energy economy;
- Plan for the near-term transition of the on-road vehicle fleet and other transportation systems from fossil fuels to low-carbon electricity, including electric vehicles;
- Commence statewide pilot projects to boost energy efficiency in affordable multifamily housing, which can have the added benefit of lowering electricity bills and increasing positive health outcomes for low-income New Yorkers;
- Ensure that environmental justice communities are prioritized for clean energy and are relieved from the cumulative impacts from pollution. These communities have historically shouldered a disproportionate share of the health-harming fossil fuel-related pollution that utilities have depended on and are often low-income communities of color; and
- Require utilities to effectively engage customers and communities in the REV vision and process.
The changes New York is undertaking have the potential to create immense value for both utility customers and the environment by boosting its commitment to clean and renewable energy. The impact, however, will depend on the details of what the state releases. As jurisdictions across the nation grapple with reducing consumer bills and deploying clean energy solutions, all eyes are on New York as it moves forward with its ambitious energy reform agenda.
This preliminary order should be the first of many decisions over the coming months that can establish New York as a trailblazer in establishing a cleaner and more nimble 21st century grid.
Looking forward, 2015 will bring further important clean energy developments in New York State, including, we hope and expect, the long-awaited release of the New York State Energy Plan early next year, and other critical decisions on clean energy in the Clean Energy Fund proceeding at the Commission. Much hangs in the balance.