New York Revises Demand Response in Light of Coronavirus Pandemic

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In a big win for the demand response industry and its customers, the New York Public Service Commission (NY-PSC) issued an emergency order calling on the state’s utilities to revise their summer demand response programs in light of the coronavirus pandemic and New York’s stay-at-home orders.

demand response

Photo by EyeLights West/Shutterstock.com

Effective May 14, the order compels many of the state’s utilities to submit revised demand response programs and tariff structures to the commission by June 1. These tariff changes will go into effect the same day, and impact the 2020 Summer Capability Period (May-October) with the possibility of extension.

The order instructs utilities to address a number of concerns raised by stakeholders, including timely access to meter data, enrollment period extensions, minimum performance requirements, and other considerations for customers to ease access to the various demand response programs.

Utilities subject to this order include Central Hudson Electric & Gas, Consolidated Edison, NY State Electric & Gas, National Grid, Orange and Rockland Utilities, and Rochester Gas & Electric. Specifically, the order directs utilities to:

  • Extend enrollment deadline for reservation payment option to June 1, with a July 1 start date
  • Not call any required test events before July 1
  • Allow program participants to modify their committed monthly load available for demand response before June 1 (effective July 1)
  • Work expeditiously to provide utility meter data necessary for enrollments
  • Allow demand response customers with interval meters to be provisionally enrolled before communications with utility are officially established

While the commission was sympathetic to other stakeholder concerns, it did not include recommendations on rolling enrollment periods, monthly load availability changes, and additional incentive payments in the final order.

Extraordinary impact of coronavirus pandemic

By directing these temporary program changes, the NY-PSC seeks to increase flexible resources on the system due to what the commission called the “extraordinary impacts” of COVID-19 on expected demand response availability and participation. 

Many states employ different versions of demand response programs, whereby incentives are offered for larger electricity consumers to be available to reduce their energy consumption during anticipated peak periods, helping limit strain on the system and saving all grid users money. These consumers, and aggregators that bundle customers together, increasingly employ microgrids, energy storage, and other distributed energy resources as tools for demand response.

With only a fraction of commercial & industrial customers running at full capacity — or even at all — the commission expects the number of demand response participants to be low this summer, limiting the stock of available kilowatts that can be reduced during peak demand periods.

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The New York Independent System Operator has already observed daily demand declines ranging from 1-18% of what would be typical during March and April, according to stakeholder comments. The declines are caused primarily by limited commercial & industrial operations, even as residential consumption reaches some new peaks.

Low participation in demand response programs this summer would be detrimental to the rapidly growing industry. New York has been a significant market for demand response providers and aggregators, with more than 1.3 GW of load reduction capacity available summer 2018 in NY-ISO markets (30% more capacity than the recently shuttered Indian Point Unit 2 reactor, and representing 4.1% of 2018 peak summer demand).

To reach its decision, the commission held limited stakeholder meetings and accepted written comments in April from utilities and market participants, but otherwise skipped traditional rulemaking procedures citing that the “immediate adoption of this rule is necessary for the general welfare.”

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Current demand response programs inadequate

The order asserts that current demand response programs are inadequate in light of New York’s state of emergency, and could cause undue harm to the general public and the demand response industry in the state.

Stakeholders noted in comments to the commission that limited business operations also comes with reduced staffing and many more people working from home, making it difficult to reach customer decision-makers and limiting the ability of demand response participants to actually respond when called upon during a peak event. Businesses that are currently operational and well-staffed are often those deemed essential under the state’s stay-at-home orders, making it more difficult for them to participate in demand response programs while also providing essential public goods and services.

But, as the commission noted, “Despite this uncertainty, electric grid operators must continue to manage peak demands and ensure safe and reliable service at just and reasonable rates.” 

The commission said it is confident that a more balanced program will ensure demand response participants “the needed flexibility for maximum program participation while providing reliable forecasts for electric grid operators.”

The order specifically requires utilities to take stakeholder concerns and recommendations into consideration when submitting their modified demand response tariffs and program requirements.

New York City

By Alan Benge/Shutterstock.com

Opens way for greater reliability in New York

On top of concerns about general uncertainty in the marketplace, stakeholders highlighted a number of specific areas where improvements could be made this year during an April webinar hosted by the commission. Written comments were also submitted by the Advanced Energy Management Alliance (AEMA) on behalf of its members; Logical Buildings; and jointly from Energy Spectrum Inc. and the E-Cubed Company.

When reached for comment, Peter Dotson-Westphalen, senior director of market development for CPower Energy Management and chair of AEMA’s New York and New England committee said, “We are pleased with the consideration of the demand response (DR) industry’s concerns and recommendations and quick action taken by the commission to ensure the success of DR programs through the pandemic,” adding that, “the flexibility of the program changes will allow greater program participation and reliability in New York this summer.” 

While the individual utility responses to the order have yet to be seen, the commission’s directives are a clear win for the demand response industry with some market participants already celebrating the anticipated outcomes. Any loosening of program requirements and potential incentives for participation should help bolster the demand response market in the state and encourage more new customers to enroll even during these uncertain times.

Matt Roberts is the director of strategic growth & government affairs at Microgrid Knowledge.

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Comments

  1. Looking forward to seeing how the industry will adapt to these new changes, and what will be contained in utility filings that came in over the weekend! Might be some additional modifications that grow the opportunity for DR in the state.

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