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REV CONNECT Utility Profile: Central Hudson Revised November 2017

Prepared by: Navigant Consulting, Inc. 77 South Bedford Street Suite 400 Burlington, MA 01803 781.270.8300 navigant.com

REV CONNECT Utility Profile: Central Hudson

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DISCLAIMER This report was prepared by Navigant Consulting, Inc. (Navigant) for the New York State Energy Research and Development Authority. The work presented in this report represents Navigant’s professional judgment based on the information available at the time this report was prepared. Navigant is not responsible for the reader’s use of, or reliance upon, the report, nor any decisions based on the report. NAVIGANT MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESSED OR IMPLIED. Readers of the report are advised that they assume all liabilities incurred by them, or third parties, as a result of their reliance on the report, or the data, information, findings and opinions contained in the report.

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TABLE OF CONTENTS

1. Introduction to Central Hudson ............................................................................... 1

1.1 Approach to Reforming the Energy Vision (REV) ......................................................................... 1 1.1.1 REV Strategy .................................................................................................................... 1 1.1.2 REV Organization ............................................................................................................. 2

1.2 System and Territory ..................................................................................................................... 2 1.3 Resources ..................................................................................................................................... 5

1.3.1 Relevant Filings ................................................................................................................ 5 1.3.2 Available Data .................................................................................................................. 5

2. Plans and Programs .................................................................................................. 7

2.1 Distribution System Implementation Plan (DSIP) ......................................................................... 7 2.1.1 Capabilities ....................................................................................................................... 7 2.1.2 Technology Roadmap ...................................................................................................... 8

2.2 Energy Efficiency Transition Implementation Plan (ETIP) ............................................................ 9

3. Projects .................................................................................................................... 10

3.1 REV Demonstration Projects ...................................................................................................... 10 3.1.1 CenHub .......................................................................................................................... 10 3.1.2 Smart Home Rate ........................................................................................................... 11

3.2 Non-Wires Alternative (NWA) Projects ....................................................................................... 11

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1. INTRODUCTION TO CENTRAL HUDSON Central Hudson Gas & Electric Corporation (Central Hudson) is a regulated transmission and distribution (T&D) utility serving electric and natural gas customers in New York State’s Mid-Hudson River Valley. In 2000, CH Energy Group, Inc. was formed as a holding company/parent organization of Central Hudson and a family of subsidiaries known as Central Hudson Enterprises Corporation. In 2013, CH Energy Group and Central Hudson joined Fortis Inc.’s federation of utility companies. Fortis Inc. is a leader in North America’s regulated gas and electric utility industry, including operations of 10 affiliated electric and gas operations with approximately $47 billion in assets serving over 3 million customers in Canada, the United States, and the Caribbean.

1.1 Approach to Reforming the Energy Vision (REV)

1.1.1 REV Strategy

Central Hudson is approaching REV as an opportunity to implement projects designed to improve the intelligence of the system to better serve its customers. Table 1 compares the New York REV objectives to Central Hudson’s key tasks as a distributed system platform (DSP) provider.

Table 1. Alignment of REV Goals with Central Hudson’s Strategic Objectives

REV Goals Utility Strategy

Enhance information and tools to permit customers to manage their energy bills

Provide residential customers with access to an interactive customer engagement platform (CenHub) with personalized electric energy usage dashboards, the ability to download usage information, personalized energy-saving tips, targeted messaging regarding specific utility programs, and a personalized reward program.

Improve system‐wide efficiency

The Dynamic Load Management program incents customers to curtail energy usage during peak system hours.

Complete area studies employing land-based forecasting methodologies, age and condition of infrastructure, and local system knowledge and experience to develop recommendations to maintain and improve the reliability of service and support the capital budget plan.

Analyze fuel and resource diversity

Evaluate distributed energy resource (DER) applications and determine what system upgrades may be required to facilitate interconnection.

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REV Goals Utility Strategy

Improve system reliability and resilience

Perform analysis of reliability and power quality data and leverage the use of new technology to continuously improve its T&D systems, including the foundational investments of distribution automation (DA), network communications strategy, and a distribution management system (DMS), as well as significant infrastructure replacement.

Reduce carbon emissions Maintain energy efficiency portfolio to offer engaging residential and commercial customer programs aimed at decreasing energy use to reduce carbon emissions.

1.1.2 REV Organization

Employees throughout Central Hudson’s territory are responsible for successfully implementing the goals and outcomes associated with the REV initiative. These responsibilities include but are not limited to: interconnecting DER, evolution into the DSP, robust system planning and identification of non-wires alternatives (NWAs), successfully executing energy efficiency (EE) and demand response (DR) programs, communicating with customers and explaining their energy usage and available energy management tools, and developing new and innovative demonstration projects. REV was the catalyst for Central Hudson developing the Energy Transformation & Solutions Division. This division is made up of a cross-functional team of professionals with diverse backgrounds responsible for developing new and innovative EE programs, developing preliminary markets through DR and NWAs, promoting innovation through demonstration projects, and participating in revisions to regulatory policy.

1.2 System and Territory

Central Hudson’s service territory extends from the suburbs of metropolitan New York City north to the Capital District at Albany (see Figure 1). Residential customers and commercial customers each account for approximately 40% of its energy sales.

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Figure 1. Central Hudson’s Service Territory

Source: New York State Energy Research and Development Authority

Table 2. Central Hudson Customer Base: 2015

Customer Type Customers Energy (MWh)

Residential 255,778 2,081,066

Commercial 41,205 1,948,026

Industrial 1,042 1,012,689

Total 298,024 5,041,781 Source: US Energy Information Administration (EIA)-861

Central Hudson is experiencing persistent declines in systemwide energy use, with relatively few areas of the system experiencing growth. Energy use is forecasted to decrease, with 2021 energy use expected to be lower than the 2015 value by 16%. Peak demand (excluding DER) will stay constant—around 1,090 MW—from 2015 to 2021. However, peak demand including DER will continue to decrease.

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Figure 2. Central Hudson Energy and Peak Demand Forecast: 2015-2021

Source: Central Hudson

Central Hudson’s system is well maintained and reliable even though over 60% of its 115 kV and 69 kV transmission assets are over 50 years old. Additionally, the system is operated on a decentralized basis. Each of the company’s five operating districts has operational responsibilities for each of its respective geographic service areas. The system includes some intelligent devices and operates predominantly in an autonomous mode. In this mode devices either make decisions per automated controls and local inter-device communications, or they communicate information in only one direction. Currently installed DER includes EE and solar PV; virtually no other DER has applied for interconnection. As the amount of DER on the grid increases, the system will run into operating issues because the grid will not be able to integrate much higher levels of DER without significant system upgrades. The growing application of smart distribution devices with communication capabilities and the move toward centralized distribution operations incorporating a DMS will increase Central Hudson’s ability to both operate and model the distribution system, thereby expanding its ability to accept higher levels of DER without significant system upgrades. Central Hudson’s system has:

• 300,000 electric customers

• 79,000 natural gas customers

• 7,200 pole miles of overhead electric distribution lines

• 1,500 trench miles of underground electric distribution lines

960

980

1,000

1,020

1,040

1,060

1,080

1,100

-

1,000

2,000

3,000

4,000

5,000

6,000

2015 2016 2017 2018 2019 2020 2021

Peak

Dem

and

(MW

)

Ener

gy (G

Wh)

Year

Energy (GWh) Peak Demand (MW) Peak Demand With DER (MW)

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1.3 Resources

1.3.1 Relevant Filings

Table 3 includes an abbreviated list of the relevant filings from Central Hudson. To access each filing, visit the NYS Department of Public Service (DPS) web page (www.dps.ny.gov) and view filed documents in the Case Number provided.

Table 3. Central Hudson’s Relevant Filings

Document Name Date of Filing Availability

2016 Distribution System Implementation Plan (DSIP) 06/30/2016 DSIP Master Report [PDF] and DSIP

Appendices [PDF] in Case # 14-M-0101

Supplemental DSIP 11/01/2016 Joint Utilities Supplemental DSIP [PDF] in Case # 14-M-0101

2017-2020 Energy Efficiency Transition Implementation Plan (ETIP)

06/01/2017 2017-2020 ETIP [PDF] and Budget [PDF] in Case # 15-M-0252

CenHub Demo Implementation Plan 12/10/2015 Implementation Plan [PDF] and Quarterly

Reports in Case # 14-M-0101

Smart Home Rate Demo Project Proposal 02/01/2017

Demo Project Proposal [PDF] in Case # 14-M-0101

Order Approving Rate Plan * Rate Case in Progress

06/17/2015 07/28/2017

Case # 14-E-0318 Case # 17-E-0459

1.3.2 Available Data

Table 4 presents the Central Hudson system data available to stakeholders. For further detail on available data, see the Central Hudson Distributed Generation web portal or the Joint Utilities of NY Utility-Specific System Data web page.

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Table 4. System Data Available to Stakeholders

Data Availability

Customers Load Forecast Distributed Generation web portal (www.cenhud.com/dg)

Load Data Distributed Generation web portal (www.cenhud.com/dg)

Total Sales US EIA 861 – Power Sales, Revenue and Energy Efficiency data files

Demographics US EIA 861 – Power Sales, Revenue and Energy Efficiency data files

DER

Penetration Rates 2016 DSIP [PDF]: Distribution System Planning

Stage 2 Hosting Capacity map

Solar PV Hosting Capacity map: Central Hudson GIS website

Beneficial Locations Distributed Generation web portal (www.cenhud.com/dg)

NWA Opportunities Non-Wires Alternative Opportunities web page

Standardized Interconnection Requirements (SIR) Pre-Application

Request through Central Hudson’s Interconnection Application web page

Queued DG and Installed DG Monthly SIR Inventory Report available on the NYS DPS – SIR Inventory Information web page

Infrastructure

Capital Investment Plan 2017 Capital Investment Plan can be found in their 5 year T&D Capital Expenditure Report [PDF] under Case # 14-E-0318

Reliability Statistics 2016 Annual Reliability Report [PDF] under Case # 17-E-0164

Substations 2016 DSIP: Summary of Current Distribution Planning Criteria

Voltage 2016 DSIP: Distribution Automation Plan/Status

Poles and Manholes 2016 DSIP: Electric Substation & Distribution

Circuit Capacity and Design Criteria 2016 DSIP: Summary of Current Distribution Planning Criteria

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2. PLANS AND PROGRAMS

2.1 Distribution System Implementation Plan (DSIP)

Central Hudson’s DSIP:

• Provides information on developments per REV and those that Central Hudson is undertaking independently to improve business operations

• Describes its vision for a smarter and more functional electric distribution system

• Emphasizes its focus on achieving REV in a cost-effective manner for all customers, with full transparency of costs on supply and delivery

• Outlines its formation of a team of internal experts and its work with the Joint Utilities

2.1.1 Capabilities

To achieve its vision of a smarter and more functional electric distribution system, Central Hudson will build several new capabilities within each of the three core DSP pillars, as outlined in Table 5.

Table 5. Focus Areas for DSP Development

Focus Area Outline Key Points

Distribution System Planning

• System wide forecasting

• Location-specific forecasting

• DER forecasts • Interconnection process

upgrades • Higher DER penetration

• Current planning processes include an integrated system plan and capital investment forecast

• Solar PV incorporated into the energy forecast for distribution planning in specific areas of the system, a net load rather than a decoupled load and generation forecast is utilized

• EE included in the energy forecast • In 2011, Central Hudson transitioned toward

modeling that uses 8760 data • Existing maps show beneficial locations for NWAs

and DER

Distribution Grid Operations

• Changes to existing policy and processes

• Improved visibility and communication

• Advanced metering functionality (AMF)

• Currently limited visibility regarding status of resources

• Limitations on how much DER can be connected given system constraints

• No AMF on broad scale—it is offered on an opt-in basis

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Focus Area Outline Key Points

Retail Market Facilitation

• System data acquisition and sharing

• Customer data and engagement

• Advanced cybersecurity and privacy

• New costs and cost recovery models

• Options available now include managing accounts, choosing suppliers, choosing green power (distributed generation interconnect), opting for time-of-use (TOU) rates, making EE upgrades, and choosing paperless billing

• Recently launched target DR programs: Peak Perks and Dynamic Load Management

2.1.2 Technology Roadmap

Central Hudson’s DSIP outlines three key areas of technology investments that will help the company achieve its smarter and more functional electric distribution system; these include:

• DA: Automated devices, distribution infrastructure (poles and wires)

• DMS: The “brains” of the centralized software

• Network communications strategy: The two‐way communication system between the DA devices and the DMS

Table 6 lists some of the near-term initiatives of the DSIP and highlights the challenges Central Hudson is facing in developing its longer-term goals.

Table 6. Near-Term DSIP Initiatives and Long-Term Challenges

Functional Category

Near-Term Focus (2017-2018)

Challenges to Address in Long-Term

Distribution System Planning

• Use a more probabilistic approach to integrate customer-owned assets and alternatives to traditional investments

• Pursue NWA solicitations if certain conditions are met

• As part of the smart grid strategy, undertaking a detailed inventory of primary distribution conductor data, phasing, and transformer information that will be completed in 2017

• Lack of visibility into the distribution system

• Large number of DER applications in the interconnection queue

• Limit of DER development on the system due to constraints or interconnection costs

• System indicator map available online shows locations that may result in higher interconnection costs due to queue size and system constraints

Distribution Grid Operations

• Currently developing smart grid strategy to include three elements: DA, DMS, and network communication strategy

• Plans in place to centralize operations

• Centralized communications through a single strategy

• Peak day system model with asset gaps

• No remote control of distribution devices

• No remote monitoring and control of PV

• Decentralized communications with many platforms

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Functional Category

Near-Term Focus (2017-2018)

Challenges to Address in Long-Term

Retail Market Facilitation

• Take steps to provide data to customers and DER providers

• Integrate customer‐owned DER • Data is available upon request and,

depending on interest, Central Hudson may consider developing a portal

• Real-time system model with detailed asset information

• Two‐way communication with control via operations center

• Led communications via vendor partnership

• Outside of NWAs, low or undefined values for beneficial attributes provided by DER

2.2 Energy Efficiency Transition Implementation Plan (ETIP)

Central Hudson’s electric energy efficiency portfolio for the 2017 - 2020 cycle continues to offer residential and commercial customers established programs while incorporating new concepts, additional measures, and more choices for customers. Central Hudson has expanded the number of EE programs it offers over the past several years. Central Hudson’s Targeted Demand Management and Dynamic Load Management programs also will incent peak demand reductions that benefit the distribution system. Central Hudson’s areas of focus in its recent ETIP filing include the following:

• Residential programs: Syncing lighting initiatives with the CenHub store, one of its demo projects, and other vendors to offer rebates on LED bulbs at the point of sale. In parallel, Central Hudson is developing and testing behavioral initiatives including targeted and seasonal messaging.

• Commercial programs: In 2017, Central Hudson will introduce and test a new performance based model for commercial lighting, which aims to utilize the actual savings from the installation to pay for the project. This test will also focus on advanced evaluation, measurement and verification (EM&V) techniques.

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3. PROJECTS

3.1 REV Demonstration Projects

3.1.1 CenHub

Central Hudson’s CenHub was designed to address barriers to consumer engagement. Within the CenHub demo, Central Hudson is implementing the following:

• An online customer engagement portal and marketplace, offering personalized energy usage data and savings tips and the ability to purchase products and services through the CenHub Store, with rebates automatically applied at checkout

• Company website is integrated with the customer engagement portal for a consistent web presence and accessible customer data

• New programs integrated into the CenHub website, including advanced data services such as the Peak Perks (DR) program and the energy and gas usage display (Insights+) programs

o Advanced data services will include smart meters with interval usage and new rate offerings

The demo is being implemented in partnership with Simple Energy and Itron (formerly Comverge) and is being deployed in stages. The customer engagement portal, marketplace, and integrated website were deployed in the first two phases in 2016. Phase 3 launched in Q2 2017 to offer all residential customers the Insights+ advanced data subscription service, which enables time-based electric usage dashboards. Central Hudson is working with Simple Energy on creating new customer experiences for the upcoming Time of Use (TOU) and Smart Home Rate.

Table 7. CenHub Specifics

Utility Market Partner Customer

Provides

• Existing customer relationships, customer data, and communications channels (web, email)

• White-labeled customer engagement and energy marketplace portals to support customer engagement

• Access to their energy usage information

• Payments for services acquired through the marketplace

Receives

• Shared revenue with third-party partners

• Expanded customer products and services

• Shared revenue with the utility

• Revenue from services provided

• Customized energy-saving information and product recommendations

• Improved energy usage information, tools, and products to help manage energy costs

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Unique Value Proposition

• Strategic alignment with Central Hudson’s Digital-Interactive Strategy Initiatives and focus on improving the digital experience for customers

• Decreased customer acquisition costs

• Increased access to customer data

• Integrated information and product and service offerings customized to support improved energy/cost management

3.1.2 Smart Home Rate

Central Hudson has proposed a Smart Home Rate structure in which residential customers within a specific geographic area will have the opportunity to enroll in a new TOU electric rate, and receive technology from Central Hudson to automatically reduce usage during peak pricing periods. An implementation plan is under development.

3.2 Non-Wires Alternative (NWA) Projects

Central Hudson is actively pursuing DER alternatives to traditional utility projects, known as non-wires alternatives (NWAs). Through NWA projects, Central Hudson can defer or eliminate the need for T&D infrastructure upgrades, meeting the dynamic needs of the electric system while reducing future rate pressure. Information regarding Central Hudson’s suitability criteria, NWA opportunities, and the planning and procurement processes is available through Central Hudson’s Non-Wires Alternative Opportunities web page at www.cenhud.com/workingwithus/non-wires-alternative-opportunities. As part of its initial DSIP and system review, Central Hudson identified three areas that would be candidates for NWAs: one transmission system, one substation, and one distribution system. All three are being addressed through the CenHub Peak Perks program.

• The Targeted DR program is available to approximately 61,000 commercial and residential customers located in three regions with an identified distribution or transmission need

• Load relief in the residential and small commercial sectors will be acquired through controllable central air conditioning thermostats and direct control switches for central air conditioning and pool pumps

• Load relief in the large commercial and industrial sectors will be achieved with site-specific reduction procedures through customer curtailment agreements

• The target load reduction for the entire program is 16 MW by 2019, as detailed in Table 8

Table 8. Targeted DR Program Deferral Needs

Location Primary Deferred Infrastructure Capacity Need

Philips Road Substation 5.0 MW

Northwest Corridor 115 kV Transmission 10.0 MW

Merritt Park Distribution 1.0 MW Central Hudson issued a solicitation and is evaluating solutions for a forth NWA project, the Coldenham project, for which 1 MW of load relief is needed by 2019 to defer a distribution feeder upgrade.