1. NYS Department of Public Service
Electricity Restructuring Roundtable (89) New York’s DG/CHP Experience To Date Challenges & Opportunities
Doug Lutzy
NYS Department of Public Service
June 17, 2005

2. Basics of the New York Electric System
6 Major Investor-Owned Utilities
2 Large Power Authorities
47 Small Municipalities
4 Small Rural Electric Co-ops
Diverse territory
47,000 square miles
Con Edison/NYC, 600 square miles, 3.1 million customers
Adirondack Park, 3900 sq mi, less than 100,000 customers
Load: 32,000 MW at peak -- 16,500 MW in NYC & Long Island
Extreme electric transmission congestion downstate
Generating capacity: 39,000 MW

3. DG - Rules of Grid Interconnection
New York has standard interconnection requirements
2 MW and under
Includes networks
Model contract language
Defines process/deadlines
Con Edison to use NY SIR timing requirements for units up to 5 MW
Development of rules a collaboration
Utilities implement rules
PSC enforces rules and resolves conflicts
Guidelines for connection charges vary
Small units - no fee
Larger units -- cost reimbursement
Connection is governed by utility
Safety

4. DG - Rules of Grid Interconnection
Engineering reviews of system characteristics for DG units
units under 15kVa using certified equipment get minimal review
Net Metering allowed
Residential PV up to 10 kw
Farm waste up to 400 kw
Wind – Residential up to 25 kw
Farms up to 125 kw
Final rules still pending
NY active in efforts by FERC and others to develop National Interconnection Standards

5. Standby Rates Basic provisions of Standby Rates Standby Rates Option
Monthly customer and contract demand charges reflecting costs associated with service and customers maximum annual demand for access to the delivery grid
as-used on-peak daily demand billing element reflects incremental delivery costs associated with on-peak deliveries for all interval metered customers (> 50 kW)
produces stronger price signal to run OSG/DG and displace more expensive utility on-peak deliveries
increases delivered on-peak grid commodity (energy) prices
Standby Rates Option
Hourly load-integrated market commodity prices available for all interval metered (> 50 kW) standby customers
commodity service bill directly reflects cost consequences of customer’s individual behavior (not class average)
OSG/DG have better information upon which to choose between buying energy from the grid or generating themselves

6. Standby Rates Existing Units Exempt Technologies
immediate full standby rate OR
phase-in to full standby rate (fixed 8 year period)
initial 4 years at standard rates
2nd 4 years at equal % increase
Exempt Technologies
Fuel cells, wind, solar thermal, PV, sustainably-managed biomass, geothermal, methane waste, and small (=/< 1 MW) efficient CHP
Options
immediate standard delivery rates OR
may choose immediate full standby rates
Need to commence operation between July 29, 2003 and May 31, 2006

7. CHP Incentive/Development Programs
NYSERDA Funding, primarily via SBC
Demonstration projects, studies, and technology development
Project commitments to date
84.6 MW MW operational
$43 million in funding,
$160 million committed by developers
Standby Rate CHP Exemption
=/< 1 MW, serving no more than 100% of customer’s maximum potential demand
60% overall annual efficiency
thermal loads utilize at least 20% of CHP total usable annual energy output

8. Emergency Demand Response (EDRP)
Voluntary load curtailment program activated by the NYISO during periods of potential shortfall in electricity supply.
Incentive based, no penalties.
Current registration over 1100 customers, representing nearly 600 MW of load-- about 250 MW from emergency generators.

9. Emergency Demand Response (EDRP) (cont’d)
Environmental concerns for generating units in EDRP programs.
NY DEC ‘s proposal is for exempting all existing DG resources until 2008, providing these units with a 3-yr pass on emissions limits, and setting standards for all existing engines to achieve in 2008 (i.e., 27 lb/MWh NOx limit).
New Emergency Diesel non-EDRP Generators installed after 2005 face 16 lb/ MWh NOx limit. After 2010 a 6 lb/MWh NOx limit.
New Emergency Diesel Generators opting into EDRP after 2005 face 1.6 lb/MWh NOx limit. (This provision currently under debate)
Proposed rule implementation recently delayed from 2005 to 2006.

10. Installed Capacity-Special Case Resources (ICAP-SCR)
Pays customers to provide load reduction capability during a contractual period. Program is called when system reserve shortfall expected.
Current registration over 1050 customers, representing nearly 800 MW of load-- about 27 MW from generation.