Reinventing the Electric Utility in New York

Energy Distribution 1

A new system for overseeing energy distribution is gaining traction in New York.  The goal of the New York Public Service Commission (PSC) through its proposal called Reforming the Energy Vision (REV), is to change the way NY’s electricity is procured, distributed and regulated to create a more efficient and powerful infrastructure.  As power outages become more frequent and severe weather increases, the need for change is evident.  The REV would complement central generation efficiently, reconfigure utility regulation, and yield resources to accommodate the rapidly increasing demand for energy.  As one of the three states that have fully self-contained electricity generation, transmission, and distribution, it is possible for New York to take part in the new and innovative way of generating, harboring, and distributing energy.

New York’s current central generation structure cannot keep up with the rate at which technology is developing and advancing. This makes its structure inadequate in the State’s efforts to keep up with an economy that is continuously technologically advancing. One of the main ways the improved structure will facilitate this notion, (while saving money and resources in the process), is by creating more efficiency with regard to peak demand. Peak demand happens when, on the hottest day of the summer for example, the use of central air systems and A/C units skyrocket.  During this time, an exponentially higher amount of electricity is needed to accommodate citizen’s efforts to keep cool. Though this accommodation is only temporary – a few days or so – consumers are spending hundreds of millions of dollars a year in order to consistently maintain the grid’s ability to handle these “rare” occasions. With the new structure, a consumer’s smart appliance will have the ability to communicate with both those of other consumers, and the utilities themselves. With this being said, a consumer’s A/C would be able to utilize this communication to dictate how much power it needs to take from utilities, as well as, signal to other appliances to use less energy. All of this while consumers that have partnered with utilities, share harvested energy from their rooftop solar panels in order to help fellow New Yorkers cope with heat wave. The energy that these consumers share will result in a lower cost for their energy consumption as a whole. This new system will provide New Yorkers the ability to be smarter about when, the amount, and how they use energy as well as the ability to create their own energy and reduce their costs all together.

Also with this new model, consumers will have greater access to energy resources as current utility providers within this infrastructure would serve a less controlling, yet still pivotal position as Distributed System Platform Providers (DSPP). In this way, they would act as the middle men between consumers and the bulk power systems, thus allowing consumers to be able to better manage the ins-and-outs of their own energy. Newly created markets, operational systems, and tariffs will both further regulate and create more opportunities and value within the utility system.

The main questions that arise within this plan are related to the different variables of energy that would be produced and the technologies needed to support them. If these new energies vary too extensively or are not completely reliable/consistent within the electrical grid, this system could produce more headaches than smiles. Consolidated Edison (ConEd) is also reported saying that location will play a substantial part in the possibility of value within this system. Within highly congested areas, DSPPs will likely expend more for distribution, storage, and demand response.

With this new way of energy distribution, companies will be encouraged to base their rates on projected activities and demand of the future rather than on the previous year’s investments – which most do now. This enables them to not only include the effects of new technologies and advancements in their rate-making for the future, but also to look ahead at these advancements and re-align the way they invest in their future and consumers.

The process of considering this new way of energy generation and distribution is under way as the PSC has already begun to map out the ways in which it can be implemented. There is still much to be done such as realignment of distribution, determining supporting technologies, and implementing incentives for current electricity providers.  However, with PSC’s plan, a new parallel between consumer preference and utility business models will emerge.  Consumers will gain more authority within their electrical utility, and a more efficient and flexible structure crafted to embrace technological advancements of the future.