Change is in the Wind: New York Leads the Way

By Ritchie Lafaille, Office Fellow

The lower costs and increased acceptance of distributed generation, storage, and energy efficiency are changing the hundred-year-old relationship between utilities and their customers. Throughout the last century, utilities generated and distributed power to their customers. The utility was granted a franchise area and an authorized return on any investments in exchange for the obligation to provide power to each customer within the franchise area.

Rapid changes in technology are turning that arrangement on its head. Customers now have the ability to generate and store their own power, often at a lower cost than purchasing power from the utility. Customers are also becoming more efficient in their use of power and may actually sell excess power back to the utility. This has led utility regulators to question whether the regulations of the last hundred years are still appropriate, or whether a new approach is required that allows utilities to generate revenues and profits from services other than traditional investments in generation, transmission, and distribution facilities. The New York Public Service Commission’s Reforming the Energy Vision proceeding is showing how it can be done.