New York rejects NYSEG, RG&E approach to peak shaving program as too severe
- New York regulators have rejected a proposal by New York State Electric & Gas (NYSEG) and Rochester Gas and Electric (RG&E) to modify how they would measure performance during some demand response events, concluding it could reduce participation in the utilities' Commercial System Relief Program (CSRP) — a peak-shaving demand response initiative.
- The Public Service Commission (PSC) this month issued an order addressing a slate of proposed changes to dynamic load management programs offered by investor-owned utilities to improve operations and cost-effectiveness.
- NYSEG and RG&E had proposed to base demand response (DR) performance evaluations on the minimum kilowatt load relief supplied during multi-hour events, rather than the average. The Advanced Energy Management Alliance (AEMA) warned the changes could remove incentives for customers to reduce demand in later hours of an event, if they could not in the first.
The commission rejected NYSEG and RG&E's proposed changes to DR performance measurement, but acknowledged there is an issue: utilities can best integrate load relief into their planning processes when it is "stable and predictable."
NYSEG and RG&E, both owned by Avangrid, wanted to discourage participants in a demand response event from underperforming during certain hours and attempting to overperform in others.
"Participants being awarded at the same rate for a stable amount of load relief as a fluctuating one is not optimal," the PSC noted in its order. But while regulators said they recognize the potential issues, "this behavior is not widespread, and NYSEG and RG&E's proposed solution is more severe than the issue warrants at the current time."
Instead, the commission directed NYSEG and RG&E to study and report on the extent of the potential problem, utilizing anonymous data to include participant kW enrollments, hourly load relief amounts during events and performance factors.
NRG Energy had warned the commission against the changes, saying they could "deter customers" who would see the minimum-kilowatt evaluation as "too punitive" and would reduce participation.
Similarly, AEMA said the utilities proposal represented "a fundamental misunderstanding of how aggregators and customers approach DR." If a customer cannot perform during some or all of a demand response event, "it is not because of an intentional calculation" but rather "because the conditions at the customer's business do not allow for curtailment during that hour," AEMA told regulators.
"However, if a customer underperforms in the first hour of an event, NYSEG's and RG&E's proposal would remove any incentive for the customer to perform in the final three hours of the event, even if they can perform at 100% in those hours and reduce peak demand," AEMA said.
The PSC's order tackled other issues as well, including directing utilities to continue to offer dynamic load management programs "where current and anticipated market conditions suggest that such programs may be cost-effective."
The commission adopted a proposal by Orange & Rockland to eliminate a performance factor true-up provision, "such that it is only applicable to new participants for both the CSRP and DLRP. National Grid's proposal to set DLRP pricing incentives to $0.00 within its Kenmore area, in order to "act as a placeholder preserving the program for future use," was also adopted by the commission.
The commission also rejected Central Hudson's proposal to eliminate its CSRP, and instead required the utility to continue offering the program "with an abbreviated Capability Period and reduced incentive payment levels."
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