The New York Public Service Commission (“PSC”) is wasting no time when it comes to determining the method for valuing and compensating Distributed Energy Resources (“DERs”). Less than one month after the PSC released its groundbreaking Staff Report and Recommendations in the Value of Distributed Energy Resources Proceeding, Staff has begun its work on Phase Two. On November 18, 2016, PSC Staff issued a Notice Soliciting Comments on Scope and Process for Phase Two of Value of Distributed Energy Resources (“Phase Two Notice”). That Notice invites recommendations and suggestions on scope, timeline and procedure for the ongoing development of the methodology for valuing and compensating DERs.

While Phase One is intended to take a significant first step toward more precise valuation of DERs, Phase Two seeks to leverage the expanded set of tools and data produced through parallel efforts in the broader Reforming the Energy Vision (“REV”) proceedings. For example, one major component of the value stack that will be addressed in Phase Two is the value of DERs to the local distribution grid for purposes of deferring infrastructure upgrades. The PSC is expected to analyze distribution-level data in other REV proceedings to formulate a method for valuing this unique attribute of DERs.

Staff has recommended that the PSC should adopt an interim Phase One methodology before December 31, 2016, which will serve as a bridge until a more detailed Phase Two methodology is implemented in December 2018. In this Notice, the PSC specifically requests comments on the following Phase Two topic areas:

  1. Improvements and modifications to the value stack, including components related to the bulk system, distribution system and societal values;
  2. Rate design considerations and implications of Value of DER (“VDER”) compensation;
  3. Application of the VDER to projects and technologies not eligible for Phase One ((e.g., Net Energy Metering (“NEM”) projects larger than 2 MW, Combined Heat and Power projects larger than 10 kW, non-NEM eligible technologies, non-generation DERs, and stand-alone energy storage technologies));
  4. Transitioning of mass-market projects beginning January 2020;
  5. Benefit/cost analyses; and
  6. Overlap and interaction with other Reforming the Energy Vision (“REV”) proceedings, such as the Distributed System Implementation Plans and Benefit Cost Analysis Handbooks.

The Phase Two Notice broadly requests comments and recommendations on which topics and issues should be addressed during the first quarter of 2017, and what format of process would be most effective and efficient for addressing those topics and issues in subsequent phases of this proceeding. Comments are due by December 23, 2016, and Staff anticipates the next meeting in this proceeding will be held in January 2017.