PSC-45-07-00006-P Monetary Incentives by the National Resources Defense Council
11/7/07 N.Y. St. Reg. PSC-45-07-00006-P
NEW YORK STATE REGISTER
VOLUME XXIX, ISSUE 45
November 07, 2007
RULE MAKING ACTIVITIES
PUBLIC SERVICE COMMISSION
PROPOSED RULE MAKING
NO HEARING(S) SCHEDULED
I.D No. PSC-45-07-00006-P
Monetary Incentives by the National Resources Defense Council
PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following proposed rule:
Proposed action:
The Public Service Commission has instituted a proceeding, in Case 07-M-0548, to explore and develop the means by which the State's electric energy consumption can be decreased by 15 percent from expected levels by the year 2015, and will include development of an electric and natural gas energy efficiency portfolio standard. In this proceeding, the commission is considering a proposal dated Oct. 12, 2007 by the National Resources Defense Council (NRDC) that the commission establish monetary incentives (consisting of both rewards and penalties) to encourage investor-owned utilities to implement and conduct energy efficiency programs.
Statutory authority:
Public Service Law, sections 2, 5 and 66
Subject:
The commission is considering a proposal by NRDC that the commission establish monetary incentives to encourage investor-owned utilities to implement and conduct energy efficiency programs.
Purpose:
To consider whether the commission should establish incentives to help achieve energy efficiency goals.
Substance of proposed rule:
The Public Service Commission has instituted a proceeding, in Case 07-M-0548, to explore and develop the means by which the State's electric energy consumption can be decreased by 15% from expected levels by the year 2015, and will include development of an electric and natural gas Energy Efficiency Portfolio Standard. In comments in the proceeding dated October 12, 2007, the National Resources Defense Council (NRDC) stated:
The award of incentives should be based largely on actual verified performance of achieving efficiency results and should be scaled, with higher incentives for higher achievement. The target award level should be based on aggressive but achievable goals, with the opportunity to earn greater incentives for exemplary performance beyond these base goals. The largest portion of incentives should be based on achieving actual benefits, ideally based on total resource net benefits, but could be based on therm, kWh and peak kW savings as well, or a combination of the three. For each company, the goals should be set so as to achieve the 15 by 15 target within their service territories.
Incentives can be annual or multi-year. Finally, all incentive earnings should be subject to stringent independent verification of achievements (savings), and not pre-specified based on simply completing certain milestones. A good example of an appropriate performance incentive structure for utilities was included in the California PUC's August 9, 2007 Proposed Decision in Rulemaking 06-04-010, which the PUC approved on 9/20/07. Building on this model, we propose that a threshold be set at 85 percent of the base energy savings goal. At this threshold, a utility company would start earning an incentive of 9 percent of the net benefits. The incentive should be stepped up to 12 percent if the company's DSM performance level achieves 100 percent or more of the goals. This structure is important because if it is clear prior to the end of the period that a utility will not reach the target, it should still have an incentive for pursuing as much efficiency as possible.
Utilities should also be penalized for poor performance on their savings goals. Penalties should be assessed if the company's performance falls to or below 65 percent of the base goal, at which point penalties should be assessed per kWh or therm for each unit below the goal. Such a penalty would ensure that the company will have a consistent incentive to improve performance.
The Commission may approve, reject, or modify, in whole or in part, NRDC's proposal that the Commission establish monetary incentives to encourage investor-owned utilities to implement and conduct energy efficiency programs, and it may also consider other related matters.
Text of proposed rule and any required statements and analyses may be obtained by filing a Document Request Form (F-96) located on our website http://www.dps.state.ny.us/f96dir.htm. For questions, contact:
Central Operations, Public Service Commission, Bldg. 3, Empire State Plaza, Albany, NY 12223-1350, (518) 474-2500
Data, views or arguments may be submitted to:
Jaclyn A. Brilling, Secretary, Public Service Commission, Bldg. 3, Empire State Plaza, Albany, NY 12223-1350, (518) 474-6530
Public comment will be received until:
45 days after publication of this notice.
Regulatory Impact Statement, Regulatory Flexibility Analysis, Rural Area Flexibility Analysis and Job Impact Statement
Statements and analyses are not submitted with this notice because the proposed rule is within the definition contained in section 102(2)(a)(ii) of the State Administrative Procedure Act.
