1. Market Operations Engagement Group DER Sourcing - Procurement
July 26, 2016
Presentation material does not represent the views of the Joint Utilities Engagement Group as the group is still in discussion on these topics. Please do not redistribute this deck.

2. Agenda Time Topic 1:00 – 1:15 Introductions 1:15 – 1:45
Recap of 7/13 Stakeholder Session
1:45 – 2:30
Joint Utilities Presentation
2:30 – 2:45
Break
2:45 – 3:45
Q&A and Discussion
3:45 – 4:00
Summary & Next Steps

3. Engagement Group Ground Rules*
All stakeholder engagement (Advisory Group and Engagement Group) meetings, webinars and information exchange are designed solely to provide an open forum or means for the expression of various points of view in compliance with antitrust laws.
Under no circumstances shall stakeholder engagement activities be used as a means for competing companies to reach any understanding, expressed or implied, which tends to restrict competition, or in any way, to impair the ability of participating members to exercise independent business judgment regarding matters affecting competition or regulatory positions.
Proprietary information shall not be disclosed by any participant during any stakeholder engagement meeting or its subgroups. In addition, no information of a secret or proprietary nature shall be made available to stakeholder engagement members.
All proprietary information which may nonetheless be publicly disclosed by any participant during any stakeholder engagement meeting or its subgroups shall be deemed to have been disclosed on a non-confidential basis, without any restrictions on use by anyone, except that no valid copyright or patent right shall be deemed to have been waived by such disclosure.
AG & EG discussions will be open forums without attribution and no public documents by the AG or EG will be produced unless publication is agreed upon by the group.
*Ground Rules adapted from the JU Advisory Group

4. Market Ops - Near term schedule (subject to revision)
7/18
7/25
8/1
8/8
8/15
8/22
8/29
9/5
9/12
Advisory Group
August 10 NYC
September 7 NYC
Stakeholder Engagement Technical Conferences
July 27 (webinar): NWA Suitability, System Data
August 18 NYC: Granular Pricing, Customer Data, Hosting Capacity, Monitoring & Control
September 13 Albany: Cyber Security, ISO/DSP Roles, DER and Demand Forecasting, Load Flow Analysis, Probabilistic Planning
Customer Data
(Tuesday mornings)
DER Sourcing
(Tuesday afternoons)
Granular Pricing
EVSE
July 26
Albany
Aggregation of Usage Data
August 9
NYC
Additional Data Needs
July 19
(By Phone*)
Review 7/13 Stakeholder Comments
August 2
TBD
July 26
Albany
Dependencies With Other REV and Related Proceedings
August 9
NYC
Potential Refinements to NWA Procurement Approach
August 2
(By Phone*)
TBD
August 18 NYC (technical conference)
August 16
NYC
Current State; Opportunities for Utility Collaboration
September 12 Albany
Forecasting Methodologies
August 30
Albany
Principles for Utility Involvement
*Additional phone sessions will be held as needed

5. DER Sourcing Topic Description
DER Sourcing: market actions taken by the utility to increase the amount of installed DER on its system. This may be done to address specific system deficiencies (i.e. Non- Wires Alternatives), and/or to secure the environmental or other attributes of DERs. The chief mechanisms for DER Sourcing are Pricing (e.g. Net Energy Metering tariffs, TOU pricing), Programs (e.g. distribution-level Demand Response tariffs) and Procurement (e.g. bilateral contracts, RFPs/RFIs/RFOs).

6. Market Operations Charter – DER Sourcing
Purpose: Explore the Joint Utilities' approaches for facilitating market mechanisms that effectively support and encourage the adoption of Distributed Energy Resources while meeting customers’ needs and complying with the DSIP Guidance Order.
Topic & Scope: Distributed Energy Resources (DER) Sourcing
DER Sourcing
DER Sourcing - Describe and discuss dependencies with other REV and REV-related proceedings
Share existing NWA plans and challenges/lessons learned
Discuss potential refinement of the NWA Procurement approaches to improve efficiency and effectiveness and the potential for common implementation by the Joint Utilities

7. Recap of July 13, 2016 EG Session

8. Market Operations-DER Procurement SEG Recap
The Joint Utilities (JU) convened a meeting with stakeholders on the topic of DER Sourcing on July 13, 2016 at Con Edison’s NYC offices
The theme of the discussion was Existing NWA Plans and Challenges/Lessons Learned
The following slides are intended to capture the main discussion points and note where there was agreement or a difference of opinion. These slides are not intended to serve as meeting minutes
The JU would like stakeholder review and feedback on these observations, with the objective of clarifying any points or identifying anything that may have been missed.

9. DER Sourcing – Key Takeaways from 7/13 Session
NWA Opportunity – Traditional Solution Cost Transparency
Stakeholders requested that the utility include the cost of the “traditional solution” in the NWA opportunity solicitation:
The traditional solution cost establishes the “price to beat” for respondents
The JU commented that providing the solution cost could influence respondents’ bids, and that perhaps an auction approach would provide a more competitive outcome
Stakeholders stated that respondents would be competing with each other for the opportunity, thus competition would drive the bid to a competitive market result
The JU appreciates this suggestion and will take it under consideration

10. DER Sourcing – Key Takeaways from 7/13 Session
NWA Non-Distribution System Benefits
Some stakeholders commented that non-system benefits such as air quality, economic development and LMI should be considered in the NWA DER procurement evaluation process; if not as primary evaluation criteria, then perhaps as potential “tie-breaker” evaluation factors
The JU commented that the BCA Handbook establishes the methodology and requires respondents to submit their total costs in order to be considered
Other evaluation factors may be considered but would need to be incorporated into the BCA handbook following the applicable update/revision processes
The JU appreciates this point of view but believes this issue is outside the scope of the DER NWA Procurement engagement charter and would be addressed in other proceedings (i.e. BCA Handbook)

11. DER Sourcing – Key Takeaways from 7/13 Session
NWA Procurement Processes
Stakeholders commented that the procurement process should be as streamlined and transparent as possible. Comments included:
Recent NWA procurement RFPs contained detailed demographic information that were very helpful from a developer perspective
Solicitation, evaluation, selection and deployment process should be streamlined with the goal of being able to run multiple procurements and shorten timelines when possible
The JU should provide a single “portal” where NWA opportunities would be posted, in addition to the existing practice of using the individual utility websites
Stakeholders expressed concern that sometimes RFIs require developers to disclose too much sensitive information
Stakeholders commented that some NWA solicitations have what are perceived as unnecessarily high entry fees/deposit requirements.
The JU are not aware of any such fees, and would like further clarification from stakeholders
The JU appreciates these points of view and looks forward to additional discussion on August 9th regarding these and other stakeholder-identified opportunities for refinement of NWA Procurement approaches that may improve efficiency, effectiveness and the potential for common implementation by the JU

12. DER Sourcing – Key Takeaways from 7/13 Session
Other DER Sourcing Mechanisms
Stakeholders offered comments and suggestions related to the overall DER Sourcing process
Some Stakeholders stated that an open enrollment tariff mechanism can be used to incent DER development over a long period.
Could benefit both DER developers and the utilities by allowing the developer to deploy onto the system DER projects that might not have otherwise deployed, while allowing utility to operate the DER based on the utility need/ requirements prescribed by the tariff
Bilateral contracts could provide flexibility for developers to offer and the utility to procure non-standard products and services without having to wait for "open windows“ or provide a solution for a specific location
Stakeholders commented that the utilities might consider expanding NWA opportunities to include low-to-medium need projects and "park" these resources for later
The JU appreciates these viewpoints and will take these suggestions under consideration. The JU notes that sourcing mechanisms and processes other than NWA procurement (i.e. Programs and Pricing) are outside the scope of the DER Procurement Engagement Group Charter and are largely dependent on outcomes of other current proceedings

13. DER Sourcing – Key Takeaways from 7/13 Session
NWA Procurement Contract Time Horizons
Stakeholders expressed a need for considering longer-term (i.e year) NWA contracts
Support for vendor to finance technologies (e.g. storage) that are not usually cost- competitive within the shorter time horizons currently used in utility procurements
Stakeholders stated that initial NWA needs and suitability seemed to focus more on near-term issues (i.e. short term deferral) versus longer-term solutions (i.e. anticipated growth, need to adopt DER to address longer term goals like 50/2030, replacement of existing assets v. deferral). Stakeholders expressed a concern that utilities should consider a portfolio approach of near-term and longer-term procurement contracts
Stakeholders also noted that applying commonplace risk management practices from other industries (i.e. a staggered maturity strategy) could make long-term contracts more viable from the utility's perspective
The JU appreciates stakeholder interest in longer-term NWA procurement contracts and will take these concerns under consideration. The JU also noted that some aspects of these concerns are addressed in the Distribution Planning working group

14. DER Sourcing – Key Takeaways from 7/13 Session
NWA Suitability
Several Stakeholders had questions about and expressed interest in gaining more insight into the utilities’ evolving process for identification and solicitation of NWA opportunities. Stakeholders expressed concern about:
NWA suitability criteria for cost floors, project type (i.e. load relief, reliability, resiliency, etc.), project size, applicable technology, etc. may be too prescriptive and restrict opportunities for NWA solutions. Stakeholders were interested in more visibility into the identification and decision processes associated with developing the NWA opportunity
Identifying all NWA opportunities, unconstrained by deferral size or cost assumptions, and letting the market respond with proposals that the utility can evaluate and use to build a portfolio of solutions that best meets the need
Minimum size constraints that may preclude small yet scalable NWA solutions, which could ultimately prove cost-effective to the utility and the supplier if the solution is replicable
The JU noted that some of these issues are being addressed within the Distribution System Planning working group by the NWA Suitability team. The JU have invited members from this team to make a presentation to the DER Procurement engagement group on these issues

15. Joint Utilities Presentations

16. NWA Suitability Criteria discussion

17. NWA Suitability Criteria Discussion
Topics
Contract time horizons: stakeholders expressed a need for considering longer-term (i.e year) NWA contracts
Cost floors - NWA suitability criteria for cost floors, project type, project size, applicable technology, etc. may be too prescriptive and restrict opportunities for NWA solutions
Deferral size and cost assumptions: stakeholders wanted the utilities to identify all NWA opportunities, unconstrained by deferral size or cost assumptions
Minimum size constraints: may preclude small yet scalable NWA solutions that could ultimately prove cost-effective to the utility and the supplier if the solution is replicable

18. Suitability Criteria for NWAs
Identify System Needs
Competitive Solicitation
BCA Evaluation &
Procurement
NWA Suitability
Identify system needs (load relief, reliability enhancement, asset aging, damage failure etc.) suitable for NWA solutions
Assess timing of need
Assess cost and size of project
Evolving criteria

19. Goals and Benefits of NWA Suitability Criteria
Well-structured suitability criteria will have material benefits for DERs
Ensures developers can work with customers to identify the best projects with the greatest chance for success
Provides greater clarity, certainty and long term visibility to the market
Avoids misallocation of time and resources for both developers and utilities
Line of sight toward a broader, more flexible and efficient approach
Makes NWA solicitation a more routine process that is central to planning and transitions away from ad hoc approaches
Leverages lessons learned as experience with NWAs deepens
Ensures that mechanisms are flexible and adaptive to allow criteria to evolve and incorporates new data and insights over time
Creates a regular schedule to update and improve suitability criteria over time
NWA suitability criteria will increase transparency of grid needs and planned investment to stakeholders and ensure equity in identifying opportunities for DER solutions to defer or replace traditional infrastructure investments

20. Upcoming webinar: NWA Suitability & System Data
WHEN: Wednesday, July 27th 9:00a – 11:30a EDT
WHAT: Joint Utilities of New York Stakeholder Engagement Session on NWA Suitability & System Data
HOW: Register for the webinar through our website at jointutilitiesofny.org
Agenda for July 27th
9:00 – 9:20                  Introductions & Stakeholder Engagement Process Overview*
9:20 – 9:50                  Overview of NWA Suitability
9:50 – 10:20                NWA Suitability Q/A*
10:20 – 10:50              Overview of System Data
10:50 – 11:20              System Data Q/A*
11:20 – 11:30              Wrap-up
Please address questions to Annie Howley at

21. DER Sourcing: Dependencies With Other REV and Related Elements

22. DER Sourcing: the Three P's
The Supplemental DSIP will advance DER Sourcing through enhancements to the process for utility procurement of Non-Wires Alternatives (NWAs)
Pricing
Programs
Procurement
Successor to Net Metering
Time-of-Use (TOU) rates
New Tariffs
NWAs
Distribution-level Demand Response (DR)
Energy Efficiency (EE)
Other clean energy initiatives

23. Phased Evolution of DER procurement
The utilities are in the early stages of procuring DERs to help meet system needs and serve as NWAs to traditional utility infrastructure solutions
The utilities will use current (and any upcoming) NWA solicitations to learn lessons from the market and begin gradually enhancing and standardizing the procurement process.

24. Evolution of DER Sourcing
Pricing and Program mechanisms are evolving based on forthcoming DER valuation and compensation principles from other REV activities that are outside of the DSIP process
The DSIP will therefore focus DER Sourcing efforts on advancing NWA Procurement
DER Sourcing
Value of DER & Granular Pricing
REV demo projects
BCA Handbook
Clean Energy Advisory Council
Upcoming NYISO Initiatives

25. Scope and Objectives of Related REV Elements
Value of DER
Aims to clearly articulate the full value of DER to various market participants
Two major applications:
Valuing NWAs and other alternatives to traditional utility investment
"Compensation mechanisms, which includes rate design, LMP+D payments, as the basis for the transition from NEM."
Granular Pricing
NYISO now calculates subzonal LMPs at 15 locations, on both Day-Ahead and Real-Time bases. These have been published to the NYISO website since late June
NYISO calculates these prices by simulating additional "dummy" generators at each bus
Aims to expand to 15 more locations by the end of the year
Next step is for NYISO to work out a budget and timeline for developing the remaining ~500 points with its stakeholder group
Source: Value of DER Proceeding Attachment A, 12/23/15, Case 15-E-0751

26. Scope and Objectives of Related REV Elements
Upcoming NYISO initiatives: DER Roadmap
Provides plan for integrating DERs at the wholesale level and evolving current Demand Response programs over the next 3-5 years
Key Objectives
Integrate DERs into energy markets – ability for real-time scheduling, minimizing out-of-market actions
Align with REV goals
M&V
Align payments with performance
Focus on wholesale market
Development and Input
Stakeholder discussions: Summer 2016
Initial draft published: Summer/Fall 2016
Publish DER Roadmap (living document): 2016
Follow Roadmap and Execute Projects:
Source: adapted from NYISO "DER Roadmap Kickoff" presentation, 5/24/16

27. Scope and Objectives of Related REV Elements
Benefit-Cost Analysis
Important foundation for DER valuation
Scope
Utility investments in distributed system platform capabilities
Procurements of DER through selected processes
Procurements of DER via tariffs
Energy efficiency programs
Cost effectiveness is determined by the Societal Cost Test (SCT), which quantifies the impacts of a DER or other measure on society as a whole.

28. Scope and Objectives of Related REV Elements
Clean Energy Advisory Council
Established by PSC order on January 21, Charter formally adopted at April 27, 2016 CEAC meeting
"Primary objective is to support innovation and collaboration for an effective transition from current program offerings to post-2015 clean energy activities and on-going delivery thereafter"
Focuses on EE, other DERs and NWAs
Steering Team is co-chaired by DPS and NYSERDA. Working groups include key stakeholders
Demonstration Projects
Goal is to test the potential of new business models and revenue stream opportunities for utilities and third parties
Will measure customer response to REV market pricing and programs
Examples include:
O&R: Online Marketplace
National Grid: Buffalo Niagara Medical Campus
Con Edison: Virtual Power Plant
Source: CEAC Charter, 6/9/16, Case 14-M-0094

29. Evolution of DER Sourcing
Dependencies
Current
Near and medium-term
Long term
Fully integrated DER Sourcing
Transactive marketplace?
LMP+D+E
Market-based Solutions
DER Portfolio Optimization
Value of DER
Granular Pricing
BCA Handbook
REV demo projects
NYISO initiatives
Pricing
Pricing
Programs
Procurement
Programs
Clean Energy Standard (CES)
CEAC
BCA Handbook
Distribution-level DR and EE
NWA Procurement

30. DER Sourcing: Long Term
Programs
Operational
Distribution
Portfolio
DER Sourcing will ultimately become fully integrated with the Distribution Planning (upstream) and Operations (downstream) areas

31. Q&A - Discussion

32. Summary and Next Steps

33. Thank you for joining us!
Please contact or
visit our website for more information

34. Appendix

35. Advisory Group Members
Contact
Organization
Title
NY DPS
Tammy Mitchell
Dept. of Public Service
Chief, Electric Distribution Systems
DER Provider
Carlos Gonzalez
SolarCity
Director, Grid Engineering Solutions
Pete Fuller
NRG
VP, Market & Regulatory Affairs
Bill Acker
NY-BEST
Executive Director
Greg Geller
EnerNoc
Director, Regulatory & Government Affairs
Large Customer
Mike Mager
Couch White, LLP
Partner
Anthony Fiore
City of NY
Director, Office of Energy
Small Customers & Consumer Groups
Erin Hogan
Dept. of State Utility Intervention Unit (UIU)
Senior Project Manager at NYSERDA
State/Public power
Maryam Sharif
NYPA
Program Manager, Clean Energy Technology
Environmental
Miles Farmer
NRDC
Legal Fellow
Rory Christian
EDF
Director, NY Clean Energy
Marketers
Chris Kallaher
Direct Energy
Director, Government & Regulatory Affairs
Wholesale market
Mike DeSocio
NYISO
Senior Manager, Market Design at NYISO
NYSERDA
John Saintcross
Assistant Director, Smart Grid Research
IPPNY
Chris Wentlent
Exelon
VP, Energy Policy
Joint Utilities
Tom Mimnagh
ConEdison
Department Manager
Damian Sciano
Director, Distributed Resource Integration
John Leana
National Grid
Director, Strategy
Lori Cole
AVANGRID
Manager, Regulatory & Tariffs
John Borchert
Central Hudson
Senior Director of Energy Policy and Transmission Development
Facilitator
Paul De Martini
ICF International
AG Facilitator

36. Engagement Process Overview
Stakeholder Engagement Schedule
Jan 2016
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
2017
DSIP Final Guidance
Initial DSIP Filings
Supplemental DSIP Filing
Advisory Group Mtgs
Initial DSIP
Stakeholder Engagement*
Supplemental DSIP
Engagement Groups
Distribution Planning**
Grid Operations
Market Operations
Stakeholder
Technical Confs***
*Initial DSIP engagements dates based on individual JU workshop schedule during this period. **ITWG beginning in March, EG begins in May.
*** Stakeholder technical conferences to engage a wider set of participants to inform technical discussions and share Engagement Group results, as needed and in consultation with the Advisory Group
Source: Plan for stakeholder engagement process as reflected in May 5th DSIP filing

37. Supplemental DSIP Topics—Based on Final Order
Engagement Groups
Distribution System
Planning
Grid Operations
Market Operations
Interconnection
Hosting
Capacity
System Data
Monitoring &
Control
Granular
Pricing
Customer Data
Demand
Forecasting
NWA
Suitability
Cyber
Security
ISO/DSP Roles, Responsibilities, Interaction
DER Sourcing
- Procurement
Electric Vehicle Supply Equipment
Topics
DER Forecasting
Load Flow
Analysis
Probabilistic
Planning
Interconnection Technical Working Group
Currently scheduled Engagement Group topics
Currently scheduled Advisory Group topics