New York Proposes New Rates for Distributed Energy
This blog was co-authored with Miles Farmer, Clean Energy Attorney at Natural Resources Defense Council.
The New York Department of Public Service has proposed to change the way distributed energy resources (like community solar and small wind projects) are rewarded for the benefits that they provide to the electricity system. The Department released a landmark report in its “Value of Distributed Energy Resources” proceeding, recommending a methodology by which these resources can receive credits that align more closely with their true value to the electricity system. Acadia Center and NRDC have been involved in the collaborative process around the report’s creation, and here we examine what these proposed reforms hope to accomplish, give initial feedback, and look toward next steps.
This report marks the latest step in the state’s ambitious Reforming the Energy Vision (“REV”) initiative. REV aims to create a more consumer-centric, efficient, resilient, and cleaner energy system. The Department’s report focuses on reforming an electricity rate structure known as “net energy metering,” where credit for clean energy generation is set equal to the retail rate. Reforms to net energy metering have been a controversial topic across the country for the last several years. Some states have proposed successful new approaches. California, for example, is phasing in time-of-use rates for most customers that recognize when electricity generation is most valuable.
From the outset, New York’s Value of Distributed Energy Resources proceeding has sought to better align credits for community solar and other distributed generation resources with their value to the system. New York’s current net energy metering policies are simple, easy for customers to understand, and have proved to be effective incentives for investments in clean energy, so revising methods for net metering presents risks. A new ‘value-based’ crediting system is more complex by its very nature. But if done correctly, aligning credits more closely with benefits created by distributed generation has the potential to incent more efficient investments in the electric system. Acadia Center discusses value-based crediting here.
The staff report is a good start to a long-term iterative process. Throughout this process, Acadia Center and NRDC will be closely analyzing the report and offering recommendations for improvement. On first review, Acadia Center and NRDC find that the report recommends many approaches to important issues that are worthy of support:
- It protects existing projects from unexpected changes and allows mass market development of small rooftop projects to continue under traditional net energy metering, providing continuity.
- It provides credit to projects for their environmental value, with a floor at the social cost of carbon, pursuant to the New York Public Service Commission’s previous Benefit-Cost Framework Order.
- It provides for a ‘market transition credit’ that incorporates some values that cannot be accurately calculated at this time, recognizing limits in current techniques to estimate the value of benefits provided by distributed energy resources.
- It adopts monetary crediting, where each kilowatt hour generated is translated into a monetary amount based on the value it provides. This approach is more flexible and allows for smarter pricing than traditional volumetric crediting (which tracks only the amount of electricity generated and cannot accommodate details like the time at which the electricity was generated).
When creating a “value-based” crediting system like the Department’s proposal, the most difficult task is to develop a method for calculating the value of each of the benefits that distributed energy resources can provide. These benefits include energy, capacity (the availability of the system to provide electricity at times of peak demand), transmission and distribution value (because distributed energy resources like rooftop solar reduce the need for infrastructure to send electricity to customers), environmental and public health value, and other values that are more difficult to quantify. In practice, there are many ways to define and calculate the value of each of these components. However, the precise methods chosen have significant consequences for what investments will be made and how resources will be operated. Certain methods offer different tradeoffs. For example, using dynamic credit values may allow a resource to respond in real time to system needs, but they set less predictable values that might prevent investors from putting capital into beneficial resources.
The staff report effectively balances these goals in a manner that should facilitate continued growth of the solar industry in New York. It provides a good framework for further refinement, and we look forward to working with the Department and other parties to evaluate it further and carry out additional improvements.
The report also reflects the inclusive approach taken by the New York Department of Public Service. The Department facilitated a collaborative process to allow utilities, solar developers, customer representatives, environmental groups, and others to work together and provide input on a variety of issues including how the values of these different components should be calculated. Department staff has listened carefully to the concerns of all parties, including a range of detailed suggestions by Acadia Center and NRDC.
New York’s approach to valuing distributed energy resources is new and innovative, and regulators in states across the country will be examining it closely. We look forward to continuing to work collaboratively on these important issues as New York refines its proposal and builds upon it in future years.
Finding New Frontiers: Clean Energy on Aquidneck Island
This summer, an Acadia Center blog post highlighted the clean energy moment happening in Connecticut. Policymakers in that state are currently deciding what its energy future will look like for years to come, and stakeholders must take notice—but Connecticut isn’t the only state having a clean energy moment. In fact, you might say the whole region, country, even world is having a clean energy moment. At Acadia Center, we strive to capture a vision that will help more communities, of whatever size, embrace these moments, and recently in Rhode Island we found ourselves in a room with more than one hundred locals excited by that vision.
At Acadia Center’s latest forum, community members came together from Aquidneck Island’s three towns to celebrate achievements, explore possibilities, and identify specific opportunities for using clean energy locally. The audience heard from two state representatives, Lauren Carson and Deborah Ruggiero, and two state commissioners, Marion Gold of the Public Utilities Commission and Carol Grant of the Office of Energy Resources. Attendees had the opportunity to engage with these four women as well as with panelists from National Grid, People’s Power & Light, the City of West Warwick, and the Rhode Island Infrastructure Bank. Acadia Center’s Rhode Island Director, Abigail Anthony, also presented the basic principles of EnergyVision, with particular emphasis on Community|EnergyVision.
The event was called “Solar and Beyond” and it highlighted the community’s solar potential by featuring sponsors from solar companies, who were available to answer questions before and after the panels (a big thank you to Newport Solar, RGS, and Direct Energy Solar). Other topics that drew interest included Block Island’s new offshore wind farm, transportation’s role in the clean energy future, energy efficiency, and the possibility of going 100% renewable.
Acadia Center was privileged to have two excellent partners in this venture, the Aquidneck Island Planning Commission (AIPC) and Emerald Cities Collaborative. We are excited to continue working with these organizations to harness the momentum built at the forum and support effective policies to make the community’s vision a reality. Working with AIPC and Emerald Cities, Acadia Center is developing a forward-looking policy agenda to remove barriers to community energy and build a coalition of support from municipal leaders on Aquidneck Island. Acadia Center is promoting several key actions that Aquidneck Island leaders can take to advance community energy, including:
- Expand the use of local energy resources to avoid the construction of infrastructure projects and reduce costs. In December, the state’s Energy Efficiency & Resource Management Council will propose reforms to utility planning that are designed to proactively deploy energy efficiency and distributed energy resources, like solar, in “highly-utilized” areas of the electric grid to ensure energy reliability for all.
- Adopt Property Assessed Clean Energy (PACE) programs to provide long-term clean energy financing for businesses and residents. Aquidneck Island towns should authorize Commercial PACE, which offers financing for clean energy projects on commercial, industrial, agricultural, non-profit, and multifamily properties. Municipal leaders should also advocate for strong consumer protection elements in the roll-out of Residential PACE in Rhode Island.
- Expand access to community solar. Rhode Island laws passed in 2016 create more opportunities for residential and qualified low- and moderate-income housing developments to benefit from solar projects. However, the Community Remote Net Metering program is currently capped at 30 MW. Aquidneck Island leaders can support advocacy efforts to remove this cap and promote community solar projects.
Over the coming months, Acadia Center will work with AIPC and Emerald Cities to build a strong coalition of support for these policies and others. Together we hope to lay a foundation for community energy in Rhode Island that will reduce greenhouse gas emissions and better serve consumers. By seizing this clean energy moment, Aquidneck Island will secure an energy future that is reliable, cost effective, and community driven.
Video: Energy policy a top issue in campaign
“Obviously, we still have a ways to go,” said Jordan Stutt, policy analyst for the Acadia Center. “We’re still pretty dependent on some fossil fuels, but as we continue to invest in new energy technologies — as those costs come down, as we build out the infrastructure for distributed energy generation — I think we will be able to achieve that goal.”
Watch the news report and read the full article from WMUR here.
State gov’ts energy-reduction efforts need more money
The Acadia Center, an environmental nonprofit with an office in Hartford, recently released a report criticizing Lead by Example’s lack of progress.
“It doesn’t appear that the program is on track,” said William Dornbos, senior attorney and director of Acadia’s Connecticut office. “It’s hard to see, based on this information, how the program is going to get there.”
Acadia’s report also criticized DEEP for not releasing mandated annual reports on the program’s progress, which it said makes it difficult for the public to track results. DEEP published annual reports online earlier this month covering 2014 and 2015, following the publication of Acadia’s report.
Read the full article from the Hartford Business Journal here.
Environmental, consumer groups call on Connecticut regulators to cut UI rate
The groups making the request include such environmental groups as the Acadia Center and the Sierra Club, as well as consumer groups including AARP Connecticut and the U.S. Public Interest Research Group.
Bill Dornbos, Connecticut director and senior attorney at Acadia Center, said reducing UI’s current fixed charge for residential customers “would not only give immediate relief to Connecticut homeowners who are struggling with high energy costs, but it would also better align our electricity pricing with our energy efficiency and clean energy policies and help grow clean energy industries that can boost Connecticut’s economy.”
Fixed-rate charges became a hot topic among Connecticut lawmakers in 2014 when Connecticut Light & Power, now known as Eversource Energy, sought to raise its monthly rate. PURA ultimately allowed an increase in the fixed charge for Eversource’s residential customers to $19.25 per month, currently the highest residential fixed charge for any investor-owned electric utility in New England.
State lawmakers responded by passing a new consumer protection law, enacted in 2015, that requires PURA to apply a new standard to fixed charges. Dornbos said passage of the law “made it clear that they (lawmakers) wanted to see fixed charges capped and reduced.”
“They clearly did not want the status quo to continue,” he said.
Connecticut’s Office of Consumer Counsel has offered expert testimony concluding that UI’s residential fixed charge should be reduced to between $6 and $8 per month to comply with the new law’s requirements, Dornbos said,
“I think the public is going to be very disappointed if that is not the outcome,” he said.
Read the full article from the New Haven Register here.
Mass. Regulators Reject DER Surcharge in Rate Case
Several intervenors contended that the proposal ran contrary to Massachusetts’ efforts to have its rate design more accurately reflect market conditions.
“Reforms to electricity rate design must strike a careful balance between economic efficiency, equity for all customers, protection of low-income ratepayers and access to community distributed generation,” Mark LeBel, staff attorney at Acadia Center, said in a statement.
Read the full article from RTO Insider here.
In a rapidly changing world, what do we mean by RGGI leadership?
Never before has the urgency of climate action been so apparent, demonstrated by record high temperatures and unprecedented drought. Yet, as the impacts of climate change become more painfully obvious, jurisdictions from small towns to the world’s largest countries are working towards solutions. Since the Regional Greenhouse Gas Initiative (RGGI) began in the Northeast, the Governors of the participating states have led by embracing, implementing, and improving a first-in-the-nation carbon reduction program. It is now up to a new group of Governors to determine whether RGGI remains a model for ambitious action on climate.
What does RGGI leadership mean?
Looking out for our climate, our health, our economy
Thanks to RGGI’s track record, the participating states can lead on climate without setting back their economies. As detailed in our recent report, since RGGI began CO2 emissions have fallen sharply (faster than the rest of the country), electricity prices have decreased (while the rest of the country has seen an increase), and the economy has grown (outpacing the rest of the country).
By setting ambitious cap levels for the future, the RGGI states can continue to achieve the best outcomes for our climate, our health, and our economy. Specifically, the RGGI states should establish post-2020 cap levels designed to meet existing climate targets, which cluster around 40% reductions by 2030. Analysis from Synapse Energy Economics has shown that implementing a RGGI cap with a 5% annual decline from 2020 through 2030 would be the lowest-cost pathway to achieving climate requirements. According to that study, such a cap would also yield over $25 billion in total savings for the region while creating 58,000 new jobs each year in the participating states.
A forward-going 5% annual reduction would be more gradual than what the RGGI states have achieved to date, but it would still put us on a path to achieving our science-based goals. And as we cope with the fact that global CO2 concentrations have now eclipsed 400 parts per million, it’s become more important than ever that our leaders address scientific imperatives on climate change with comparably ambitious policy.
The forefront of climate policy
When a bi-partisan group of Governors of the RGGI states first came together to place a limit on CO2 emissions, they staked their claim as national leaders on climate. In the absence of federal climate policy, they were the first states to act on reducing CO2 emissions from the power sector. When they decided to auction allowances rather than give them away for free—as was common practice under previous emissions trading programs—they directed billions of dollars to consumers instead of polluters. This decision is largely responsible for RGGI’s success as a program that reduces harmful emissions and serves as an engine of local and regional economic growth.
While the leadership role of the RGGI states to-date is indisputable, the bar for climate leadership has been raised. Since the RGGI program began, the region, the country, and the world have taken great strides to address carbon emissions. In recent months the U.S. and China, the planet’s largest emitters of CO2, have ratified the Paris Climate Agreement. In the last week, India and the European Union have followed suit, bringing the tally of signatories beyond the threshold of 55 countries and 55% of global GHG emissions necessary to make the agreement binding. Also this week, Canada—America’s largest trading partner—announced nationwide carbon pricing. Provinces can implement their own cap-and-trade programs (as Quebec, Ontario, and Manitoba have done), their own carbon tax (like British Columbia), or they can accept the federal carbon tax, beginning at $10/ton in 2018 and rising to $50/ton by 2022.
The RGGI states are no longer going it alone on climate, but they can still be leaders. Committing to a strong future for the program will provide a valuable guidepost as the rest of the country prepares to comply with the Clean Power Plan, and as the rest of the world considers how to reduce emissions without sacrificing growth. Momentum is building, support is growing, and the market is transforming – will the RGGI states continue to lead the way?
Massachusetts’ New Rate Case Ruling Is Good News for Distributed Energy
But pro-solar groups including the Acadia Center, Vote Solar and the Energy Freedom Coalition of America (EFCA) protested that National Grid had failed to provide data or evidence to back up this assertion. DPU’s ruling sided with these protests, finding that National Grid “has not quantified the amount of costs attributable specifically to DG customers and has not quantified the distribution system benefits associated with DG customers in its service territory.”
But opponents like the nonprofit Acadia Center said that singling out those types of projects would “arbitrarily discourage key types of distributed generation, including community shared solar and projects that benefit affordable housing projects and low-income ratepayers.” In other words, it would hinder customers who can’t put solar on their own rooftops.
Beyond that, the fees are “not based on an analysis of the costs and benefits of distributed generation to the electric system or even based on estimated costs to the distribution system,” the group wrote. Distributed energy backers have noted that these projects can actually help reduce system costs, by providing more energy closer to the point of consumption and reducing load on the grid.
Read the full article from Greentech Media here.
My Turn: Concord needs to show a little Yankee ingenuity
The magazine goes on to state that by 2040 renewable energies will produce almost half of all electricity worldwide. Further, as pointed out by the Acadia Center, $400 million was saved through the cancellation of proposed transmission line work as a result of sustained investment in energy efficiency in Massachusetts and Connecticut.
Read the full article from the Concord Monitor here.
On Energy Efficiency Day, Acadia Center Celebrates New England’s Success
BOSTON – On this day, the first nationwide Energy Efficiency Day, Acadia Center commends New England its recent recognition for a long history of accomplishments in energy efficiency. New England states are among the most highly ranked in the American Council for an Energy-Efficient Economy’s (ACEEE) 2016 State Energy Efficiency Scorecard released last week, and recent action at the policy level promises to increase the region’s contribution to national energy efficiency savings.
“New England has become a leader in energy efficiency by implementing strong policies that work for consumers and strengthen the economy while helping to meet climate goals,” said Jamie Howland, Director of the Energy Efficiency and Demand Side Initiative at Acadia Center. “Through energy efficiency, we can lower utility bills, improve public health, reduce pollution, and create jobs; Acadia Center is excited to see the states recognizing and embracing these opportunities.”
In the ACEEE rankings, Massachusetts took first place for the sixth year in a row, tying this year with California. Massachusetts has proven its continued commitment to energy efficiency under its Green Communities Act of 2008 by saving a large and growing percentage of energy every year through efficiency measures, and delivering over $14.8 billion in economic benefits and energy savings for ratepayers over the last six years.
Rhode Island took first place in the scorecard’s utility policy and programs category, ranking fourth overall. The state’s Least Cost Procurement law is primarily responsible for its continued leadership on energy efficiency. First implemented 9 years ago and extended for another 5 years last summer, the policy states that distribution companies cannot acquire new electric or natural gas supply until “all-cost effective” energy efficiency measures have been exhausted. As a result, since 2008, Rhode Island has invested over $558 million in energy efficiency and consumers have realized $2 billion in economic benefits.
Vermont also ranked highly on the scorecard at third, and Connecticut and New York tied for fifth. Maine tied for 11th, gaining further distinction as the “most improved” state.
Though New Hampshire ranked 21st on the ACEEE scorecard, the state has made a significant commitment to increase energy efficiency through recent policy action. In August, the state instituted its first energy efficiency targets, approving a settlement between the Public Utilities Commission and other stakeholders to create the Energy Efficiency Resource Standard (EERS). Until now, New Hampshire has been the only state in the region without statewide targets. With the EERS, it takes a historic step towards reducing energy costs for its citizens.
Acadia Center pioneered the energy efficiency stakeholder council model to assist with the development, implementation, and review of energy efficiency programs at the state level. Staff members currently hold appointed seats on energy efficiency advisory councils in Massachusetts, Connecticut, and Rhode Island. Acadia Center looks forward to continued work with businesses, utilities, regulators and others to make sure that programs meet their goals and reach all customers.
Acadia Center is a non-profit, research and advocacy organization committed to advancing the clean energy future. Acadia Center is at the forefront of efforts to build clean, low-carbon and consumer-friendly economies. Acadia Center provides accurate and reliable information, and offers a real-world and comprehensive approach to problem solving through innovation and collaboration.