by Bob Shively, Enerdynamics President and Lead Instructor

“Many of the current disrupters have the potential to fundamentally change the distribution system: smart grid sensors coupled to new data-crunching resources, distributed generation, distributed storage, automated demand response, smart appliances, electric vehicles, and more.”[1]

As technologies associated with electric distribution and customer energy usage rapidly evolve, electric utilities and their regulators are working diligently to redefine the future of the electric distribution utility.

One possibility is to try to evolve existing models through the use of incentive regulation and integrated resource planning traditionally used for generation and transmission planning. States such as California and Hawaii are moving down this road through recent regulatory initiatives.

But others believe that in a marketplace characterized by competition and innovation, depending on regulatory proceedings and utility-planning processes will stifle growth. Two other models have evolved in an attempt to create an environment where competitive forces can drive change. These models are called the Distribution System Platform Provider or DSPP and the Distribution System Operator or DSO. This article focuses on the DSPP model, but next week we’ll examine the particulars of the DSO model.

The DSPP is being developed in New York’s Reforming the Energy Vision proceeding designed to radically restructure the role of the electric utility and the way that regulation is implemented[2]. Under New York’s vision, the regulated electric distribution company would:

• coordinate customer distributed resource activities to optimize use of energy efficiency, demand response, distributed generation, and microgrids
• provide a platform for third-party providers to offer services to customers

The DSPP would own and operate all distribution utility assets and the New York Public Service Commission would oversee the utility through outcome-based incentive regulation. Here’s a visual of what that might look like:

Read more about how New York is forging a path for the DSPP model in Utility Dive’s article “Is New York the future of the utility industry?“

Next week we’ll look at the more radical Distribution System Operator or DSO model and who is advocating it.

Footnotes:

[1] Energy Experts Unplugged…Volume 6 available at http://americaspowerplan.com/energy-experts-unplugged-volume-6/

[2] See http://www3.dps.ny.gov/W/PSCWeb.nsf/All/26BE8A93967E604785257CC40066B91A?OpenDocument