The New York Public Service Commission has ordered the state’s major natural gas utilities to file special delivery rates for nonresidential customers who operate their own gas-fired distributed generation units, a move that should result in lower costs for distributed generation operators and provide incentives for more widespread DG deployment.
The chairman of the PSC, William Flynn, said the order will help lower electricity costs, reduce emissions and improve reliability by giving small-scale generation a leg up.
“As we encourage more development of efficient small power production facilities through fairer rates, we not only open up a valuable option for customers, but we also enhance our state’s economy,” Flynn said.
Utilities will tailor new rates to customer usage profiles, and the new cost structure would be in place for three years.
The commission expressed the view that because the technology is so new and traditional utilities are so entrenched behind restrictive interconnection standards, existing gas delivery rates for DG operators are higher then they should be, thus justifying its action to make delivery more economical.
The commission plans to implement a similar system for residential DG units by Jan. 1, 2004. The American Gas Association’s director of media relations, Peggy Laramie, said it was hard to find fault with the new orders as long as the old problem of adapting interconnection rules to help nontraditional power sources connect back into the grid can be overcome.
“Everybody wins,” she said. “This is a very effective tool.”