IEEE Power & Energy Magazine - May/June 2016 - 23

The comprehensive outcomes envisioned by REV must
include new earnings opportunities for utilities at each point
where they can produce increased value to end-use customers and DER providers. In its REV "Track Two" white paper
("Ratemaking and Utility Business Models" 28 July 2015), the
staff of the Public Service Department recommended "a combination of financial incentives that consist of new market-based
earnings opportunities, practical adjustments to conventional
rate-making methods, and concrete targets with new positiveonly, symmetrical, and bidirectional earnings impacts. This
combination allows early gains around overall cost reduction as
well as continued assurance that public policy goals are met."
These new earnings combinations are critical to allowing
utilities to partner with third parties. A core objective of REV
is to adapt the traditional regulatory model to one where utility interests are aligned consumer interests. To do that, utilities
should have the opportunity to share in the savings associated
with greater levels of system efficiency and be encouraged to
innovate around and find ways to partner with third parties
that are developing services and products that bring value to
individual consumers and the system as a whole.
New earnings can come in several forms. In addition to
their conventional functions, utilities in the role of platform
providers will be able to earn revenues from various valueadded services provided to market participants, for example, microgrid engineering. As a network provider, utilities
should enable interoperability and open sourcing as much as
feasible throughout the system to gain the greatest value for
customers without compromising the security, safety, and
reliability of the overall network.
The DSIP process now under consideration will provide
a transparent guide to potential market participants and will
be the principal vehicle by which the commission will oversee utilities' implementation of REV goals. DSIPs filed in
2016 will be informed by a guidance document adopted by
the commission. In 2015 the Platform Technology Working
Group, composed of New York utilities, DER companies,
and national experts, outlined the planning and operational
requirements for building DSP capabilities and DER markets. Among the recommendations for planning functions
were the following:
✔ scenario-based, probabilistic planning models
✔ interconnection studies integrating hosting capacity
and locational value of DER

may/june 2016

✔ increased integration of transmission and distribution

planning
✔ geospatial models of connectivity and system characteristics.
The working group also addressed the increased complexity in utility system operations that will follow from
multidirectional power flow, as well as the opportunities to
improve controls of voltage, power quality, and reliability
that are offered by the availability of DERs. The DSP distribution grid operator will need to have the ability to monitor
and measure key aspects of system operation, including
✔ voltage, current, and status of grid infrastructure including primary feeders, laterals, and transformers on
a near real-time basis
✔ net load at the customer premise or device level on a
near real-time basis, where appropriate based on locations where DER penetration is higher
✔ DER status including voltage, current, and generation on
a near real-time basis for DERs of a capacity higher than
some nominal amount or that are in locations where likely to impact distribution grid performance criteria
✔ real and reactive power flows at the point of common
coupling for customer- or utility-sited microgrids at a
near real-time basis.
Enhanced coordination and control functionality will
center on several key responsibilities:
✔ administering optimal power flow management
✔ facilitating integration of grid operational needs and
capabilities into market operations
✔ ensuring coordination between transmission and distribution system operations
✔ maintaining the physical and cybersecurity of the grid.

New Revenues for New Innovative Services
The intent of REV is to harness markets to achieve innovative and cost-effective solutions, with utilities facilitating
those markets both in their system planning and in day-to-day
operations. Financial incentives and economic signals must be
in alignment with this goal. Today, however, utility earnings
are largely a function of increasing investment and controlling
short-term expenses. Yet, in the face of the accelerating technology and current market trends, utilities do not have a sufficient incentive to use third-party capital to provide service
to customers, particularly when this reliance has the effect of

ieee power & energy magazine

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Table of Contents for the Digital Edition of IEEE Power & Energy Magazine - May/June 2016

IEEE Power & Energy Magazine - May/June 2016 - Cover1
IEEE Power & Energy Magazine - May/June 2016 - Cover2
IEEE Power & Energy Magazine - May/June 2016 - 1
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IEEE Power & Energy Magazine - May/June 2016 - Cover3
IEEE Power & Energy Magazine - May/June 2016 - Cover4
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