New York electricity customers, especially businesses, may soon have many more options to monetize their actions taken to manage their electricity usage and/or reduce demand during times of grid stress, as New York looks to radically overhaul its existing electric industry structure to further empower customers.
New York is already a leader in offering choice to electricity customers, allowing customers to select service from energy service companies (ESCOs) in order to find lower rates, better service, and/or innovative products.
Although it's great to have a choice, customers still don't actively engage in the market as potential sellers of electricity and related ancillary services on a regular basis.
Generally, customers are still seen as "end users" of electricity, rather than potential sources of electric capacity or generation. Right now, only power plants can compete in the open market to provide needed grid services.
But New York is seeking to change that. The state's Public Service Commission has launched a proceeding known as "Reforming the Energy Vision" (REV), which proposes to design a 21st-century electricity system. This new design puts the customer at the center and draws on customers' energy management solutions -- whether it be demand response, energy efficiency, or even installation of distributed generation or back-up power -- to provide needed services to the grid.
As envisioned by the PSC, the customer will be transformed from simply an end user of electricity into both a consumer and a competitor -- an active market participant who at times will use power, but at other times will sell needed services to the grid, in competition with other customers and traditional power plants.
If implemented as envisioned, this could open a whole new revenue stream for businesses, many of whom actively manage their electricity consumption and costs now, but who have little opportunity to actually earn money from such investments beyond related bill savings.
For example, a straw proposal from Staff of the New York PSC proposes to require the New York electric utilities to immediately file tariffs to expand demand response, where customers are paid for reducing electric usage during peak times or times of other stress on the electricity grid. Essentially, customers act as "virtual power plants" by reducing their electricity consumption, so those megawatts can be used to serve other customers.
"Staff recommends statewide expansion of existing utility-offered demand response programs in the near term in order to give customers more opportunities to benefit from participation in programs that offer reservation and performance incentives for load reduction," Staff says in the straw proposal.
Staff further recommends that utilities begin purchasing power from customer-owned distributed energy resources -- resources such as solar panels installed at a customer's factory, warehouse, or store -- to meet the utilities' electricity supply needs, in addition to traditional purchases from central-station power plants.
New York envisions a more engaged electricity consumer, one who is actively buying and selling power based on their own energy management solutions and grid conditions. This would be the next step in implementing electricity markets, and transforming customers from monopoly-style ratepayers to true consumers with choices in services and markets to both buy and sell.