Cuomo’s REV plan looks to reduce energy use

New York utility regulators are looking to build “the power grid of the future,” fundamentally changing the way electricity is distributed, sold and used in the state.

Gov. Andrew Cuomo told the state”™s Public Service Commission to focus on reducing energy usage ”“ and costs ”“ for residential, commercial and industrial customers. The PSC, through a program called Reforming Energy Vision, or REV, is looking to make regulatory changes to how energy is bought and sold, while also identifying smart-grid technologies.

Richard Kauffman, chairman of Energy and Finance for New York, said in a statement that the new approach would protect the environment, reduce the cost of electricity and create economic growth opportunities.

“New York is moving to a more market-based, decentralized approach with how it shapes energy policy,” he said. Kauffman also said the change would make the system more resilient to climate change. The grid”™s durability has been increasingly tested in recent years during peak usage periods, which are the hottest days of summer, and during and after extreme weather events that test the infrastructure.

The PSC estimates that in the next 10 years more than $30 billion will have to be spent to repair the state”™s electrical infrastructure. Reducing energy consumption could reduce that need, the major problem being that the system has to be set up to withstand the output needed for peak demand.

Part of the issue, according to the REV report, is that the appetite for energy in what has been dubbed “a digital economy” is growing increasingly insatiable and the grid needs to be constructed not to break down or create blackouts during peak usage or in the aftermath of major storms like Hurricane Sandy.

Costs continue to increase because demand continues to go up while electricity providers see their sales base remain mostly flat, according to REV. An increasing reliance on natural gas to produce the electricity also burdens the rate structure, as was this case the winter when snowstorms limited natural gas shipments from the South, causing the cost of the resource to shoot upward. The end result was sticker shock on residents”™ and businesses”™ electric bills during the colder months.

Audrey Zibelman, chairwoman of the PSC, said in a statement that the old rate structure has the result of slowing down technology development. “By fundamentally restructuring the way utilities and energy companies sell electricity, New York can maximize the utilization of resources, and reduce the need for new infrastructure through expanded demand management, energy efficiency, renewable energy, distributed generation and energy storage programs,” she said.

The governor announced a nearly $1 billion investment in the state”™s solar industry under a program called NY Sun to change the way companies are producing power. Consumers would be rewarded for using new technologies in households and businesses that reduce usage. Some of these options include cellphone apps that can remotely control lights and cooling systems and appliances outfitted with controls to reduce the amount of energy they are using.

The REV proceeding will hold a meeting in Albany May 12 and have a public symposium May 22. The PSC will eventually determine regulatory changes and ways to incentivize energy efficiency and other provider changes. Any changes are expected to be fast tracked by the end of the year.

Cuomo said it was the first change in the buying and selling of electricity in the state in a century.

“By introducing and embracing information technology and clean energy solutions, millions of New Yorkers will benefit from a 21st century power grid, enabling them to better manage and reduce their energy costs while protecting and preserving the environment,” he said.

Looming over the state process is a Federal Energy Regulatory Commission change that was set to go into effect Thursday. As planned, the FERC was to impose a “capacity zone” to encourage the creation of new power plants in the Hudson Valley region through allowing providers to charge more for power during peak activity periods.

The zoning plan looks to bypass a bottleneck above Albany, where critics of the zone say new infrastructure could be built to better siphon energy down into the lower part of the state, including New York City, during higher usage periods. That zone has been estimated to cost consumers $2800 million on electric bills this year. By the end of the year, residents of the area could see their rates increase 4 percent or by as much as 10 percent based on the zone plan.