- With electricity demand increasing for the first time in a generation, the New York Public Service Commission issued an order that takes technical and procedural steps to facilitate long term planning for customer needs.
- The order establishes forward-thinking practices for how utilities should plan grid investments — while leaving important questions unresolved.
The electric system is facing a profound shift in the ways customers use electricity. Electric loads are increasing for the first time in a generation, driven by data centers, EVs, heat pumps and industrial electrification. Utilities and regulators must handle increased loads in a way that also delivers benefits – like lower energy costs and greater use of affordable, reliable clean energy – to consumers.
Yesterday, the New York Public Service Commission issued an Order that takes an important step toward solving this problem. The Order establishes a Proactive Planning Framework that attempts to modernize how utilities plan their systems in anticipation of changing customer needs. This is a big swing – and, in some important ways, it connects.
New York’s new grid planning framework looks to meet growing energy demand Share on X
Technical Directives
On the technical side, the Order requires utilities to explain, within 60 days, how they will adopt updated planning practices. These updated practices – several of which EDF recommended – include:
- Develop granular bottom-up load forecasts that identify electric load “hot spots” where demand is likely to increase the most;
- Employ long-term forecasting to help “right-size” investments and minimize inefficient, incremental projects;
- Adopt a transparent, uniform set of distribution planning assumptions to the maximum extent possible; and
Each of these practices will help utilities target their investments more efficiently, while simultaneously making the grid more ready to accommodate electrifying end-uses and DERs. And by directing utilities to implement these forward-thinking practices as a group, the Order should yield a welcome degree of standardization to what is often a patchwork of idiosyncratic utility protocols.
Procedural Directives
No matter how you slice it, utilities will need to build a lot of grid infrastructure to handle growing electric loads. (No, this does not mean electric rates need to go up – for example, electric loads quadrupled from 1960 to 2000, even as inflation-adjusted prices fell by more than 20 percent.) Moreover, making investments proactively will often save money for ratepayers compared to a wait-and-see approach. The Commission is therefore tasked with enabling utilities to make necessary investments sooner, while still ensuring transparency and effective regulatory oversight.
Here, the Order is a mixed bag. On the upside, the Order reiterates utilities’ obligation to engage with communities by adopting EDF’s recommendation that utilities must clearly explain how they will solicit – and incorporate – community feedback as part of project design and implementation.
On the downside, the Order largely grants the utilities’ request for a new process to get expedited PSC “authorization” of urgent projects that meet certain criteria. EDF argued against this process as it lacks the procedural safeguards of existing PSC mechanisms and risks creating a backdoor for utilities to skirt public participation.
EDF instead recommended that utilities incorporate proactive planning day-to-day work, so that the Commission and stakeholders can handle resulting projects alongside all other utility funding needs as part of routine rate cases.
Fortunately, the Commission appears to agree with this as a longer-term objective. The Order observes, “The Commission’s expectation is that these separate efforts will ultimately merge into a single enhanced planning process that is consistent across all utilities and handled inside rate cases” – though it does not set a timeline for when this should be accomplished.
The Order leaves other questions unanswered as well. It does not address whether “authorized” projects are subject to review in a later rate case. (They probably aren’t.) It punts on how utilities should allocate and recover “authorized” project costs, opting instead to address those issues on a case-by-case basis. It also misses the opportunity to clearly state that utilities should treat compliance with state requirements, such as the CLCPA, as their planning baseline. Utilities’ future project proposals, and the Commission’s response to them, will shed more light on whether utilities will be allowed to “plan to fail” these requirements.
The unsurprising upshot is that there’s more work to do. The Order takes meaningful steps forward and promises more progress to come; it’s now incumbent on advocates to ensure that utilities and the Commission follow through. EDF looks forward to reviewing the utilities’ upcoming filings in this case, and to working with our partners, to ensure that utilities drive toward a grid that meets the moment by improving energy affordability and supporting our clean energy future.
