Monday, June 2, 2014

REVing up: a consumer-centric approach to energy – Part 1

By Patty Durand, Executive Director, SGCC

I’d like to share my thoughts on what I think is going to be the biggest energy-related story this year: 

New York State is embarking on a process to create a consumer-centric approach to energy provisioning that will include consumer participation in the market and encourage load management opportunities such as demand response and distributed generation.

The plan would bring massive, systemic efficiencies to the market, including the reduction or elimination of capital-inefficient, stand-by generation that costs the state’s residents $450 million annually to meet peak demand on only a few days each year.

This effort appears to be the first state-level approach to energy that goes well beyond smart grid to not only engage and empower consumers, but make them a significant market force. The plan is based on a docket titled “Reforming the Energy Vision,” or REV, released in April and written by its public service commission staff, led by chair Audrey Zibelman, founder and former CEO of Viridity Energy, Inc. (The link on Zibelman’s name takes you to a YouTube video of her talk, “The Utility Industry of the Future,” at New York University in March.)

Here’s a bit of history to place the REV effort in context.

In the wake of the devastation caused by Hurricane Sandy in 2012, New York’s Gov. Cuomo appointed Zibelman to the NY Public Service Commission in June 2013 and she was named to chair the commission in September 2013. In April 2014, the PSC staff released the REV report, which sets out both policy goals regarding the retail energy market, distribution networks and consumers and a process to achieve those goals.

The response has been overwhelmingly positive, as the NYPSC appears poised to break the regulatory logjam on policies that would keep pace with technology innovation and consumer needs.

The REV report describes the State’s desire to create a platform that will serve as a place for market based, sustainable products and services that drive increasingly efficient, clean, reliable, and consumer-oriented energy industry in which energy efficiency and other distributed resources will serve as a primary tool for meeting demand.

The REV report also outlines their plans that markets and tariffs will empower customers to reduce and optimize their energy usage and electric bills, and that will stimulate innovation and new products. These are truly exciting goals because the process is intended to result in increased customer opportunities to engage in the electricity industry.

This is additionally exciting to me because while there have been individual utilities and vendors that show leadership in addressing the need for greater consumer products & services in energy, state-level policies have been slow to react.

So let’s delve into the REV report to see how the plan addresses consumers:

1.       In the section on customer participation, the report recognizes that “a strategy for engaging customers should have three main components: products, information, and enabling technology.” The report adds: “If these elements are developed properly, many customers will choose to take an active role in managing their own energy use.”

2.       The report notes that customer segmentation should be employed to offer a diverse products and services attractive to different types of customers. “In order to animate markets, the factors that motivate customers in different segments must be identified,” the report notes.

3.       “Confusion and a lack of information regarding the factors that impact a customer’s overall energy options are commonly reported as barriers for increased demand side management,” the report finds. “Many customers do not understand the various elements of their bill, which leads to confusion and frustration regarding how and to what extent they can control their costs by managing consumption.”

4.       Thus, consumer awareness, access to data and options for products and services will lead to greater participation in demand response programs as well as utilization of distributed generation, according to the REV report.

Clearly, Zibelman’s NYPSC and its new direction align well with the SGCC’s efforts and our research. And that brings us full-circle to events subsequent to the REV report’s release.

The NYPSC’s REV process calls for public discussion of issues raised in its report and less than 30 days after its release, the NYPSC and the Albany Law School co-sponsored a May 22 symposium on “An Energy Agenda for the Future,” which held three panels to provide context for the NYPSC effort as well as to begin the process of finding answers to barriers to progress. Those panels were titled “The Global and National Picture,” “System Challenges & Customer Opportunities” and “Visions and Models for the 21st Century.”

I participated in the panel on “System Challenges & Customer Opportunities” and presented SGCC research on a number of topics. The good news is that the audience was excited to see our research and learn more. I’ll detail my experience in my next blog. Please return to read that blog, as it places SGCC and its work squarely in the NYPSC’s spotlight and, thus, at the forefront of positive change.  

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