What is REV?

Reforming the Energy Vision (REV) is New York State’s broad energy strategy spearheaded by Governor Cuomo. It is designed with the intent of assisting consumers in making more informed energy decisions, as well as allow for the development of new energy products and services and new jobs. Through its initiatives, it also aims to protect the environment. REV was first established in 2014.

The REV program consists of 7 over-arching goals:

  • Cut greenhouse gas by 80% by 2050 based on 1990 levels
  • Help clean energy grow- 50% renewable by 2030
  • Decrease in energy by 23% from 2012 levels
  • Make energy more affordable and have fuel diversity
  • Resilient energy system, improve initiatives and infrastructure
  • Create new jobs
  • Protect natural resources and provide clean transportation

Within the seven goals listed above, the state has worked to develop and begin executing a variety of initiatives.

REV initiatives chart
Source: New York State Department of Public Service

 

There are two main tracks within REV;

  • Track 1- Focus on distributed resource markets. Technical aspects and planning for converting utilities into Distribution System (DSP) Platform providers
  • Track 2- Focus on reforming utility ratemaking and revenue streams to accommodate DSP model

Each utility will need to file Distribution Service Implementation Plans (DSIPs). This will serve as the framework for how the utility will encourage distributed energy resources (DER) deployment and coordination with third-party providers on the distribution system.

REV effects on utility financials:

Traditionally, utilities depend on a growing or stable rate base for operation and financial stability. Utilities will periodically enter into a rate case with the state when it needs to increase rates to cover operational and capital project expenditures. By integrating DERs it, may require increases in utility operating expenses but decreases in capital spending, restricting the ability to petition for an increase in rates.

This causes a financial misalignment between utilities, third-party DER providers and customers. 

To align interests and incentives, regulators proposed reforms to how utilities make money. Those reforms are organized into three categories:

  • Business model reforms including the opportunity for market-based earnings (MBEs)
  • Incremental ratemaking reforms to the utility revenue model
  • Rate design reforms to reflect the needs of the evolving marketplace

Recent Orders:

On May 19,, 2016 the New York Public Service Commission (PSC) ordered to adopt a policy framework for rate-making and revenue models.

  • Utilities can now also receive earnings from alternatives such as cost-effective DER, market-facing platform activities, and transitional outcome-based performance measures
  • Outlines Earning Adjustment Mechanisms (EAMs). These EAM activities will include system efficiency, energy efficiency, interconnection, and customer engagement

On August 1, 2016 the NY PSC approved a Clean Energy Standard provision for Upstate NY nuclear energy plants. This provision would:

  • Increase renewable electricity supply to achieve the “50% renewable by 2030” goal
  • Provide up to 4.5¢/kWh in federal and state subsidies to support construction of new renewable generation
  • Provide a 1.7¢/kWh subsidy (slowly rising to 2.9¢/kWh) to upstate nuclear reactors to prevent closures
  • Put subsidies in place for the Fitzpatrick, Ginna and Nine Mile plants for 12 years, starting at up to $482 million a year initially and exceeding $800 million in the final years

REV is a significant initiative for the state of New York and therefore we expect to see additional programs released and policy charges to take effect. As a large energy user in the commercial and industrial space, it will be important for you to understand these changes and how they will impact your business operations and budget.

Want to stay up to date on REV but don’t have time to do the research?

Sign up for our exclusive REV NY email alert. By subscribing to our alert, you will receive REV program and policy updates (including supplier charge updates) as they relate to C&I business operations, energy spend and budgets.

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About the Author

Dave Leidy is an Executive Advisor at Usource. He has more than 30 years of experience in the utility industry, serving as a key account manager to commercial/industrial businesses throughout New York.

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