Utility of the Future
In December 2013, the New York State Public Service Commission announced that it would transform its regulation of the distribution system. This effort would drive change through five core policy objectives. They are:
- Empowering Customers
- Leveraging Customer Contributions
- System–wide Efficiency
- Fuel and Resource Diversity
- System Reliability and Resiliency
Significant investment is needed to meet these new policy objectives, to provide customers with the level of service they desire, and to compensate them for the service they may provide to the system. This includes investments in generation, transmission, distribution, demand-side resources, information technology, and communication infrastructure. Some of these provisions will enable and integrate customer- and third-party investment in distributed energy resources. These objectives actively promote the use of energy efficiency and renewable generation to further reduce customer greenhouse gas emissions.
Energy produced by customer-sited renewables, such as solar panels, offsets non-renewable energy consumption, resulting in overall energy savings. Although distribution costs and the total bill may increase over time, the objective is to minimize these increases to the extent possible while providing value-added services.
Con Edison established a Utility of the Future team to manage these efforts. This team will analyze the way customers use new technology and its impact on the electric distribution system. Many customers seek to control their energy costs by installing technologies that can temporarily or permanently reduce their energy use. These technologies include customer-sited supply (including solar and conventional generation), energy efficiency, and advanced demand response systems. The team will develop a strategy to accommodate new and shifting uses of the electric system, and will work collaboratively with regulators to find cost-effective solutions that appeal to customers.
The team will also provide input regarding regulatory structures for the industry. For utilities to thrive in the future, we must recover costs through regulated rates, and have the appropriate incentive mechanisms to encourage desired outcomes. The new industry model will need to encourage collaboration and innovation by utilities and third parties in developing new products and services. It is the nature of innovation to have successes and failures. Ultimately, we look to encourage a framework where innovation and partnerships can flourish and experimentation can occur without penalty.