PSEG Long Island’s Utility 2.0 Plan: What you should know

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In the wake of Superstorm Sandy, over 90 percent of Long Island Power Authority’s (LIPA) customers found themselves without power, some for weeks. As a result, New York State Governor Andrew Cuomo stripped LIPA of their duties and handed the responsibilities over to Public Service Enterprise Group (PSEG), who created the subsidiary PSEG Long Island. They were given full authority to oversee the daily operational duties, budgeting, storm preparation, maintenance, infrastructure improvements, energy efficiency and renewable activity. With much of Long Island wondering how PSEG Long Island will be any different than LIPA, they created their Utility 2.0 Plan in response. What is PSEG Long Island’s Utility 2.0 plan? It’s a proposal where PSEG plans to invest up to $200 million in energy efficiency, direct load control, distributed solar photovoltaics (PV), and other programs spanning from 2015 through 2018. The investments are programmatic, focusing on improving energy efficiency and reducing energy loads. Their goal is to reduce the peak load by addressing emerging capacity and system needs across Long Island. Who will be affected by the plan? The proposed investments include a mix of PSEG’s clients, but particularly looks at the underserved customer segments, such as hospitals, low-income housing, multifamily housing and municipalities.

Who is paying for the investments? PSEG plans to invest its own capital into the program so that they can accelerate savings from energy efficiency and peak demand reductions to help avoid other, more costly investments. Consumers will not be immediately impacted, as PSEG will honor the current rate freeze by deferring recovery of their investment until 2016. Is there a driving force behind the plan? The United States utility industry has seen new, greater demands due to climate change and consumers becoming more reliant on technology for their day-to-day functions. There has been a focus on developing energy efficiency programs, which yield energy and demand savings and have the potential to permanently reduce demand. There are also demand response programs, which can produce peak or load reductions in peak demand and during emergency events. Solar PV is also becoming an increasingly prevalent source of power generation and distribution due to the lower operating costs and an increased technical efficiency. This power source has the ability to become a greater part of power supply because it is becoming increasingly more affordable through Federal and State subsidies. Lastly, Smart Grid technology has seen a rise throughout the U.S., with the nation’s utilities deploying digital technology to include near-real time monitoring and controls, and smart metering infrastructure with two-way communications.

This technology provides companies with the opportunity to obtain critical knowledge about their consumers’ energy consumption. What are the key points of the plan? While Long Island’s power grid is currently meeting consumer needs, the expectations of customers are changing. As society modernizes, the industry’s landscape changes with it, and the need for the electric grid to meet higher demand increases. In response, the plan has introduced the following measures: Programmable thermostat modernization expansion, which can provide up to 100 MW of peak demand reduction, will deploy direct load control demand response using smart thermostats. These smart thermostats will have the ability to control central air conditioners on peak demand days.

Residential home energy management through personalized bill information with an analysis of the home’s energy use, comparisons of a home’s energy use with similar neighbors, and reporting through graphics and charts to help customers find ways to lower consumption. Direct funding from PSEG Long Island to hospitals for energy conservation programs, who find it difficult to raise capital to finance the upfront cost of clean energy investments. Various programs in the Rockaways, an area devastated by Superstorm Sandy, to increase energy efficiency expansion. Geothermal heating and cooling, which offers a unique opportunity for peak load reductions because it uses natural heat to provide heating, cooling and water heating. Due to the expensive nature of these systems versus their HVAC counterparts, PSEG Long Island plans to offer funding, in conjunction with other federal funding, to alleviate the cost burden. Have there been any measures taken prior to this plan being introduced? Since 2007, LIPA has invested over $125 million on upgrades to the storm hardening and resiliency of its infrastructure, hoping to address major storms, hurricanes, flooding, high winds and ice. After the issues caused by Hurricane Irene and Superstorm Sandy, LIPA revisited their policies on storm hardening, changing their focus to prevention, survivability and recovery. After Sandy, LIPA also received a $700 million grant in support of several storm hardening projects. This grant money is going toward raising the elevation of 12 damaged substations, the installation of submersible equipment in select flood-prone areas, and an 11-year pole inspection plan.

Although this particular Utility 2.0 plan has received mixed public reaction, it has the potential to benefit the Long Island area. With regard to monitoring energy consumption, Long Island sees its consumption peak in the summer, with the cooling load being the number one driver. The various measures that will be undertaken to educate the consumer could not only save money, but could also lower greenhouse gas emissions. In addition, most on Long Island would never want to relive the chaos caused by Superstorm Sandy, and, should a storm like that ever occur again, the storm hardening measures coupled with the upgraded infrastructure could significantly soften the blow. Jim Schaefer is H2M’s Deputy Energy Market Leader. You can reach Jim at jschaefer@h2m.com.

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