Dive Brief:

• Central Hudson Gas & Electric included investments distributed energy resources in its most recent rate case, saying it was consistent with New York's Reforming the Energy Vision agenda, but RTO Insider reports critics believe the proposal violates state rules for distributed energy resource (DER) ownership.
• The New York Public Service Commission in February issued rules for implementing REV concepts, but also barred utilities from owning distributed generation facilities except under certain scenarios where there is a failure of the competitive market to deploy them.
• Central Hudson proposed to use ratepayer funds to construct $10 million community solar project as a demonstration project, but independent power generators say it should be done with a private investor instead.

Dive Insight:

New York's REV initiative intentd to reimagine the utility's role ton the distribution grid, and utilities are beginning to submit proposals for microgrid projects, transmission upgrades and battery storage. But Central Hudson's proposed community solar facility, which would make the clean energy available to customers in 100-kWh portions, could violate state rules on utility's owning distributed generation, critics say.

In February the PSC issued a regulatory framework for modernizing the grid, noting as it did that "the electric industry is in a period of momentous change. The innovative potential of the digital economy has not yet been accommodated within the electric distribution system."

But with that, the commission also acknowledged that it recognized "the potential for market power represented by the utility function as [distrbuted service provider]."

The regulators barred regulated utilities from owning DERs except under certain circumstances. Among the exemptions regulators put in place — including resources on utility-owned property attached to storage, and the ability to own DERs when the competitive market does not develop them — the commission also exempted "demonstration projects."

The commission said it recognized that "demonstration partnerships with utilities and third parties can accelerate market understanding and the development of sustainable business models. In limited circumstances, utility investment and ownership of assets to support such demonstrations is warranted."

But Central Hudson's proposal, according to the Independent Power Producers of New York, "violates the commission’s core principle that demonstration projects be developed with private investor capital rather than on the backs of captive ratepayers."

While the rate case and demonstration projects are in separate dockets, RTO Insider notes that Central Hudson may play a part in shaping implementation of the new rules simply by being the first to bring a REV-focused rate case before the commission.

PSC staff will review the proposal before commissioners take up discussion on whether to approve it.