What New York Utilities Think Of Microgrids

New York’s utilities support independent ownership of microgrids under certain circumstances.
Published: Tue 21 Oct 2014

Microgrids serving individual customers may be independently owned but when it comes to microgrids serving multiple customers and operating within the surrounding electric distribution infrastructure, then these should be owned by a utility, New York’s utilities believe.

This is stated in a joint response to a Straw Proposal on microgrids, distributed energy resources and other issues towards Reforming the Energy Vision (REV) from staff of the State of New York Public Service Commission. [Engerati-Reforming New York's Energy Vision] There the utilities state that they are in the best position to own and properly operate such distribution infrastructure when it involves systems within the utility franchise area.

“Each utility employs a skilled workforce and has robust work procedures and processes in place which are critical to the safe and reliable operation of a microgrid and the surrounding distribution infrastructure. Further, utilities have emergency response plans, practices, and procedures, including drills with local authorities, to effectively operate local distribution systems that are pertinent to microgrids.

“Utilities additionally have the obligation to supply customers as providers of last resort, which necessarily has evolved, and must continue to evolve, as the regulatory framework is changed.”

Microgrids for resiliency

The utilities state that they believe microgrids can meet certain REV objectives and provide benefits for a single customer (e.g. educational institution) or a group of customers if properly planned as part of an existing electric distribution system.

Further, microgrids can be particularly appropriate to address resiliency and reliability needs to ensure continuity of service – as they are already being developed in New York. They may also be appropriate, as Central Hudson has specifically proposed, for localized areas or groups of customers with greater susceptibility to reliability issues or critical infrastructure needs seeking enhanced reliability benefits at a higher cost. [Engerati-Are Microgrids The Route To The Utility Of The Future?]

What is a microgrid?

The utilities strongly oppose the Straw Proposal definition of a microgrid. They argue that the ability to island and re-connect to the grid is a fundamental requirement of a microgrid and a proposed definitional change to remove this requirement ignores the fact that islanding is a distinguishing and principal benefit.

The utilities agree that integrating DERs into distribution system operations, with or without islanding capability, has the potential to provide system benefits within the REV framework, and should be valued appropriately across the distribution system. However, the proposed definitional change would allow microgrid developers to aggregate certain loads and DERs that are always connected to the distribution system and in so doing effectively authorize such microgrids to encroach on a utility's franchise rights and operate as a utility selectively, without the broader responsibilities, such as serving as the provider of last resort.

Who pays for microgrids?

The utilities believe that where a utility-owned microgrid provides a lower cost alternative to a traditional utility solution or where extraordinary public benefits are provided, such as continuity of public services during times of natural disaster, such microgrid costs should be recovered through rates. Microgrids that are proposed to be owned, operated, and maintained by the utility should be supported by an effective benefit-cost analysis process.

The utilities also caution that the Commission needs to address microgrid standby tariffs, demand charges and net metering before a potential tariff for microgrid delivery services – and indeed a policy on microgrids – can be forthcoming.

The utilities in the joint response were Central Hudson Gas and Electric Corporation, Consolidated Edison Company of New York (Con Edison), New York State Electric & Gas Corporation, Niagara Mohawk Power Corporation d/b/a National Grid, Orange and Rockland Utilities, and Rochester Gas and Electric Corporation.