PSC looking to update regulation of New York energy markets

 

In an order that uses the word “paradigm” in the very first paragraph, New York utility regulators are trying to figure out if they’re taking the right approach to new technology for delivering gas and electricity.

If nothing else, the Public Service Commission’s April 25 order and an attached report by the Commission’s staff¬†shows the state at least recognizes issues faced by consumers:

  • Volatile natural gas prices whacked small businesses and residential utility customers during this year’s unusually cold winter.
  • Deregulation “has led to increased dependency on natural gas” despite its volatile price. Because natural gas is the cheapest fuel for making electricity, the report says, generating plants favor it over other technology, including those more environmentally friendly.
  • Utilities’ biggest customers have lowered their costs under deregulation — but “small-usage customers have not experienced the same value.” That comes across as a wordy way of saying deregulation has not lowered consumer prices.
  • New York is more dependent on electricity than ever, but its infrastructure is aging and needs $30 billion in new investment over the next decade.

Those are the current problems. In coming years, the, uh, “paradigm” by which residential customers use electricity could change a lot.

  • Homeowners might use solar panels to help power their air conditioners on sunny, hot days — and maybe send the excess power into the electric grid.
  • Time-of-use plans could compel people to charge their electric cars overnight, when rates are cheapest. They might also charge home electric storage systems overnight — giant batteries that would let them store electricity until they need it.
  • Automated devices could also help people manage their energy use — say, by adjusting thermostats as the time-of-use price of electricity rises or falls.

People who run big buildings employ elaborate strategies to manage their energy use. Most residential utility customers do not. But the costs of energy-efficient technology are declining, the commission says, so it’ll make more sense for people to use such technology at home.

The commission is trying to figure out how to encourage new thinking about energy use, and what it’ll mean to utilities like Con Edison. The commission envisions that it’ll be up to Con Ed, National Grid and other wire-and-transmission utilities to figure out how the new technology will work. It plans to study the problem over the next year or so.

Critics of this plan say the commission is white-washing the fact that deregulation has raised prices for residential consumers [see the bottom part of this Albany Times Union story].

Here’s Gov. Cuomo’s news release announcing the PSC’s initiative.

Update, May 5: Here’s an interesting New York Times story on how some people view the state’s initiative.

About Bill Sanderson

I'm a New York-based journalist, and a former reporter at the Concord Monitor in New Hampshire, the Bergen Record in New Jersey, and the New York Post. My work has appeared in The Wall Street Journal, MarketWatch.com and Politico New York. Twitter: @wpsanderson.
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