Renewable sources of energy are not only changing where we get our power from, but also how the fundamental economics of getting power work. This shift is creating challenges for utilities across the country, but New York is investigating using a system where utilities do a different job and it might be the next step towards making it easier to get solar panels in NY. Traditionally, the job of utilities has been to create power and then get it to customers. Customers pay the utility for the amount of electricity they use, at a rate set by the utility that is meant to cover not only the production of power but also grid maintenance and the cost of running the business side of the utility. As the use of renewable energy expands, centralized power production becomes less of a necessity and having having smaller points of energy creation scattered across an area can help the grid absorb high demands. Another industry change that is putting pressure on the traditional jobs of utilities is the deregulation of utilities in a number of states across the country. Deregulation opens the doors to smaller, publicly owned utilities to operate in a market which increases competition.
Energy and Solar Systems That Serve The Green Minded Consumer
As the economics of electricity creation and regulation change rapidly, some utilities are trying to hold on to the status quo by requiring a minimum bill or adding monthly fees for solar users.
New York state is developing a way to change the market entirely, with the hopes that it will create a new job for large utilities in the new electricity market. New York’s Governor, Andrew Cuomo asked the New York State Public Service Commission and Richard Kauffman, chairman of energy and finance committee, to shift regulation of the state’s utilities to focus on “a more distributed, consumer-focused energy system”
The public service commission responded with a plan called the Reforming the Energy Vision (REV) initiative. The REV calls for utilities to transform from their traditional role to become Distributed System Platform Providers (DSPP). The DSPPs will be essentially grid caretakers, purchasing electricity, moving it to where it’s needed and making sure that the infrastructure can continue to meet the electricity needs of the community it serves.
Remaking the Grid, Turning Solar Incentives Into Commercial Revenues
But how will utilities be paid for this new work? Instead of the current way of setting rates, an annual rate case cycle will be used. One option focuses on long-term (up to eight years) performance-based rates (sometimes called PBRs). For one example of how to create performance based rates, New York is looking across the pond to the United Kingdom. In 2010 the U.K. began using a system called RIIO (Revenue = Incentives + Innovation + Outputs) to determine rates for electricity.
Policy makers in New York should be releasing more information soon about their plans for remaking the grid, a recently delayed deadline for that information was moved to June 1st.