Universal Deployment of Smart Meters May Be Unnecessary in New York to Support REV Mandates

New York REVby K.T. Weaver, SkyVision Solutions 

Introduction

In June we reported that Smart Meters May Not Be Part of New York’s Electric Grid Vision and that:

“The groups that are party to New York’s Reforming the Energy Vision (REV) program are still deciding whether to adopt AMI as a part of the state’s distributed grid, with opposition spurred mainly by concerns about the costs.”

In August, a Working Group* of New York’s REV proceeding completed its final report.  This report provides additional clarity on whether smart meters are considered an essential technology platform for New York’s future energy vision.  In general, the broad-based deployment of smart meters is not considered necessary as part of existing REV mandates.

* The full name of the Working Group is the Market Design and Platform Technology Working Group (MDPT).

With slight differences, the information contained in the latest Working Group report for New York is consistent with the recent comments filed by Eversource Energy in New Hampshire that Smart Meters Are Not Necessary to Modernize the Electric Grid.  In the case of Eversource Energy, it sees smart meters as generally necessary for those desiring time-varying rates.  In the case of New York, the Working Group places the highest priority on those customers actively participating in generating or storing electricity for use on the grid.

Background and Order from the New York Public Service Commission (PSC) [Reference 1]

In February of this year, the New York PSC issued an Order adopting a regulatory policy framework for REV.

Before we have an in-depth discussion of the MDPT Working Group final report, let us first review the ground rules set-up for the Working Group by the New York PSC.  Some of this information may seem a bit technical, but it is necessary to understand the New York REV objectives and the terminology that is used as part of that discussion.

Below are selected quotations from the PSC Order.

Terminology

Distributed Energy Resources (DER):  “Throughout this order, ‘DER’ is used to describe a wide variety of distributed energy resources, including end-use energy efficiency, demand response, distributed storage, and distributed generation.  DER will principally be located on customer premises, but may also be located on distribution system facilities.”

Distributed System Platform (DSP):  “The DSP is an intelligent network platform that will provide safe, reliable and efficient electric services by integrating diverse resources to meet customers’ and society’s evolving needs.  The DSP fosters broad market activity that monetizes system and social values, by enabling active customer and third party engagement that is aligned with the wholesale market and bulk power system.”

General Background

“Reforming the Energy Vision (REV) aims to reorient both the electric industry and the ratemaking paradigm toward a consumer-centered approach that harnesses technology and markets.  Distributed energy resources (DER) will be integrated into the planning and operation of electric distribution systems, to achieve optimal system efficiencies, secure universal, affordable service, and enable the development of a resilient, climate-friendly energy system.”

“The implementation of REV in general, and DSP capabilities in particular, will allow the industry to progress from the traditional approach of centralized command and control to a distributed, intelligent system. …  This will likely include communication backbones, communication nodes, distributed energy resource management systems, and advanced metering.  Without predetermining any particular result, we generally endorse the list of functionalities developed by the Working Group as a foundation for further development.”

Smart Meters versus a Shift towards Advanced Metering Functionality (AMF)

“While the issue of advanced metering [smart metering] deployment is not new to us, we now consider the issue in the context of REV policy objectives and in recognition that circumstances are evolving with regard to costs, capabilities, and most importantly potential benefits of advanced metering infrastructure (AMI). …  Whether or to what extent AMI is needed to achieve those benefits, and at what cost, must be determined in the context of the desired functionality.”

“In evaluating AMI, we are primarily concerned with the functionality needs of REV, and the most efficient way of meeting them.  Several parties identified AMF (advanced metering functionality) as an alternative way to analyze the issue, and we concurIt is possible that the desired functionalities can be met more effectively or less expensively than by universal adoption of AMI.”

“It is clear that some form of advanced metering will be needed to implement REV. …  At a minimum, each utility DSIP [Distributed System Implementation Plan] will need to include a plan for dealing with advanced metering needs; however, plans that involve third party investment may be preferred over sweeping ratepayer funded investments.  AMI/AMF is an implementation issue, and we will consider AMI/AMF proposals with factual records developed on a case-by-case basis, taking into account, among other factors, functionality, claimed costs and benefits, the potential for market animation by the provision of an open platform, the opportunity to mitigate costs to the utility by its ability to collect fees, and the recommendations of the Market Design Platform Technology group.”

Further, our public statement hearings showed that some customers are skeptical of the need for AMI, and some are concerned about potential health effectsCustomer optionality is preferred where possible in a REV approach.  The installation and use of AMI may be an example where customers could choose to pay for an alternative method of serving the function, or could choose to forego the benefits of participation.  The MDPT group’s work plan will provide for a detailed description of advanced metering functionality features necessary for enabling DSP markets.”

The MDPT Working Group Final Report, Customers, and Smart Meters [Reference 2]

Provided below are selected quotations from the MDPT Working Group final report that pertain to customer participation in REV and a discussion of advanced metering (or smart meters).

“Customers are extremely diverse in terms of their electricity market knowledge and their ability and desire to stay at the cutting edge of technological adoption curve.  As a small, but increasing, section of these participants may move from being passive consumers to active ‘prosumers,’ the future marketplace needs to be able to accommodate all customers despite their inherent diversity.

Not all of these customers will be able or interested to fully participate or benefit from programs that are centered around and enabled by technologies such as smart thermostats, energy management systems, distributed storage (DS) and generation.  Therefore, regulators may consider a toolkit of resources, which may include incentives, adjusting the pace of deployment, and preserving customer choice to cater to needs of the early adopters, while also ensuring that the ‘late adopters’ are not penalized in the REV future.”

“Investment options to enable new functions and capabilities for grid modernization inevitably involve trade-offs between cost and the degree of operational benefit of those options.  Initial costs associated with the range of platform technology options that could enable DSP functionalities must be evaluated in light of their operational benefits, total system costs, and the costs borne by customers and different customer segments.  While more sophisticated and exacting technology solutions may yield robust operational benefits and optimize performance, these options may prove unwarranted from an initial and total cost perspective.”

[T]he highest priority need for advanced metering deployment … is where there is a DER provider or customer actively participating in DSP markets.”

“Any other broad-based advanced metering deployment beyond the scope of the recommendations included in this report will necessitate a business case analysis by the utility and subsequent Commission review and approval.”

Certain small DERs, such as residential rooftop PV systems, may not require advanced metering capability.”

Universal deployment of advanced metering may be unnecessary to support the REV mandates covered under the [PSC] Order.  However, DERs participating in REV markets may require advanced metering capabilities to do so, and advanced meters could be installed by either utilities or third parties to support such direct participation.”

“As noted above, a utility wishing to deploy advanced metering across broad sections of their service territory should develop a business case that is not wholly dependent on the [PSC] Order requirement, including details regarding operational benefits and full supporting cost-benefit analysis.”

“The Working Group did not reach consensus regarding the level of deployment of advanced meters.  The underlying expectation is to start with just those places where DERs are being located.”

“Also, it may not be necessary to deploy a utility-owned communications network to enable the functionalities associated with advanced metering.  Using a cellular network and/or a customer’s Wi-Fi network coupled with their broadband internet connection may be able to augment the communications needs of advanced metering as required to support DER deployment.”

Discussion

SkyVision Solutions generally commends the systematic nature of the review that is being conducted for the future energy vision for New York and that mention has been made of consumer concerns over smart meters.  That is more than has transpired for most other jurisdictions where utilities (in collusion with public utility commissions) otherwise deploy smart meters for everyone at considerable cost and where they later try to figure out what to do with them once they are all deployed.

Furthermore, there appears to be recognition by most parties for the New York review that “universal” or “broad-based” deployment of smart meters offers no net benefit in relation to the significant upfront costs required to deploy them.  In short, why mandate smart meters for everyone when not everyone could benefit from such installations and that some customers do not want them?

In addition, there was mention made that “advanced metering functionality” is a more appropriate manner in which to analyze the issue of modernizing the electric grid and where functionalities might be accomplished by means other than through smart meters.

Despite the above positive comments, there is still not sufficient recognition of the significant risks imposed by smart meters upon consumers and society, but at least the more gradual or targeted deployment approach being pursued by the state of New York allows additional time for fully realizing these risks and hopefully minimizing their impact.  In addition, the state of New York should continue to put the interests of the consumer and consumer choice above the corporate sales pitches on how universal deployment of smart meters would somehow be worth the investment.

New York also has the benefit of reviewing the evidence pouring in from other jurisdictions such as Victoria, Australia, and Ontario, Canada where central planners mandated the deployment of smart meters to all consumers and where it has now been declared an unmitigated financial disaster by independent sources.  Let others learn the lessons of history.

References

[1] State of New York Public Service Commission, Case 14-M-0101 – Proceeding on Motion of the Commission in Regard to Reforming the Energy Vision, Order Adopting Regulatory Policy Framework and Implementation Plan, February 26, 2015; available at: https://skyvisionsolutions.files.wordpress.com/2015/10/ny-psc-order-on-policy-framework-feb_26_2015.pdf

[2] “Report of the Market Design and Platform Technology Working Group,” August 17, 2015, available at: https://newyorkrevworkinggroups.com/wp-content/uploads/MDPT-Report_150817_Final.pdf

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About SkyVision Solutions

Raising public awareness and finding solutions for smart grid issues related to invasions of privacy, data security, cyber threats, health and societal impacts, as well as hazards related to radiofrequency (RF) radiation emissions from all wireless devices, including smart meters.
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