main office other locations 540 broadway 38 high rock avenue, #2c767 third avenue, btwn 48 th &...

Main Office Other Locations

540 Broadway 38 High Rock Avenue, #2C 767 Third Avenue, btwn 48th & 49th 601 Pennsylvania Avenue HQ Hartford, 100 Pearl Street, 14th FlAlbany, NY 12207 Saratoga Springs, NY 12866 New York, NY 10017 Washington, DC 20004 Hartford, CT 06103p: 518-426-4600 p: 518-886-8472 p: 212-418-0500 p: 202-638-6949 p: 860-676-7740f: 518-426-0376 f: 518-306-6506 f: 212-421-0922 f: 202-638-6951 f: 860-676-7704

COUCH WHITE, LLP

counselors and attorneys at law

On-Site Generation for Hospitals – Opportunities and Challenges

Presented ByRobert M. Loughney

Couch White, LLPMay 20, 2014

Presentation to the Greater New York Hospital Association



COUCH WHITE, LLP


• Programs offered by the New York Independent System Operator (“NYISO”)

• Potential impact of NYS Department of Environmental Conservation (“DEC”) rule change

• Consolidated Edison of New York (“Con Edison”) program opportunities

• Pending NYS Public Service Commission (“PSC”) proceeding

2

Overview



COUCH WHITE, LLP


• NYISO is a Federal Energy Regulatory Commission (“FERC”) approved independent system operator

• NYISO operates New York’s bulk electric transmission system

• NYISO also administers the wholesale electricity markets in New York

• The wholesale electricity markets include several demand response programs open to participation by end-use electric customers in New York

3

Background



COUCH WHITE, LLP


NYISO Demand Response Programs

• Special Case Resource Program (“SCR”)• Emergency Demand Response Program

(“EDRP”)• Demand-Side Ancillary Services Program

(“DSASP”)• Day-Ahead Demand Response Program

(“DADRP”)

4

NYISO Demand Response Programs



COUCH WHITE, LLP


• SCR allows end-use customers to participate in the capacity markets administered by the NYISO

• The capacity markets operate based on a capability year (May 1 through April 30 of the following year)– Summer Capability Period: May 1 through October 31– Winter Capability Period: November 1 through April 30

• SCR participants are called upon by the NYISO to provide load reductions during reserve shortages and system emergency conditions

• SCR is the largest demand response program administered by the NYISO

5

SCR Overview



COUCH WHITE, LLP


• Participants must have revenue quality interval metering installed at their facility

• Individual participants must be capable of reducing at least 100 kW upon request by the NYISO– Can aggregate facilities to achieve minimum size requirement– Baseload portion of onsite generation excluded from

participation; NYISO is examining whether baseload generation should be in markets

– Incremental onsite generation can participate but only up to the facility load level

• SCR participants are required to participate in mandatory one-hour tests during each capability period

6

SCR Participation Requirements



COUCH WHITE, LLP


• SCR participants must participate in every SCR event called by the NYISO for at least 4 consecutive hours of each event– The NYISO can call SCR events on a zone-by-

zone basis• SCR participants receive at least 21 hours

advance notice of a potential SCR event or test• SCR participants receive at least 2 hours

advance notice of an actual SCR event or test

7

SCR Participation Requirements



COUCH WHITE, LLP


• SCR participants eligible to receive both capacity payments ($/kW) and energy payments ($/kWh)

• Capacity payments are based on the amount of load curtailment committed to the program

• Energy payments are paid only for the actual load reduction provided during SCR event or test hours– Participants are paid the greater of applicable real-time NYISO

location-based market prices or strike price declared by resource– Strike price is capped at $500 per MWH

8

SCR Payments



COUCH WHITE, LLP


• Participants subject to penalties for failure to provide committed load reduction during all tests and events– No cap on the number of events– Mandatory performance during each event capped at 4

hours• Potential for financial penalties

– 1.5 times the applicable spot market auction price for each month for any shortfall

• De-rating penalty for future participation

9

SCR Penalties



COUCH WHITE, LLP


• EDRP is a voluntary demand response program • EDRP participants are called upon by the NYISO to

provide load reductions during reserve shortages and system emergency conditions

• EDRP activated simultaneously with SCR events• Simultaneous participation in EDRP and SCR is not

allowed• Minimal participation in EDRP

– Less than 100 MW enrolled

10

EDRP Overview



COUCH WHITE, LLP


• Participants must have revenue quality interval metering installed at their facility

• Individual participants must be capable of reducing at least 100 kW upon request by the NYISO– Can aggregate facilities to achieve minimum size requirement– Baseload portion of onsite generation excluded from participation– Incremental onsite generation can participate but only up to the

facility load level• EDRP participants receive at least 21 hours advance notice of

a potential EDRP event• EDRP participants receive at least 2 hours advance notice of

an actual EDRP event

11

EDRP Participation Requirements



COUCH WHITE, LLP


• EDRP participants only paid energy payments ($/kWh) for actual load reductions during EDRP events– Participants paid the applicable RTM LBMP

• Unlike SCR, EDRP does not include capacity payments– If no EDRP events called, no payments received

12

EDRP Payments



COUCH WHITE, LLP


• Participation in EDRP events is voluntary• No penalties for non-performance

– Only “penalty” is foregoing payment

13

EDRP Penalties



COUCH WHITE, LLP


DADRP Overview

DEC Part 201 Rule• Applies to owners and operators of air

contamination sources• Owners or operators of emission sources must

either register with DEC, or apply for a permit, before construction or operation of the facility

• The registration certificate and permit are valid for a period of 10 years

14

DEC Rules Affecting On-Site Generation



COUCH WHITE, LLP


DADRP Overview

DEC Part 201 Rule• Renewal applications for air facility

registrations must be submitted to DEC at least 60 days before the current registration expires while permit renewals must be submitted to DEC 180 days prior to expiration of the existing permit

15




COUCH WHITE, LLP


DADRP OverviewDEC Part 222 Rule - Pending• Will apply to owners and operators of distributed generation

(“DG”) sources in NYC with a minimum output of 150 kW• Emergency power generating stationary internal combustion

engines (“Emergency Power Sources”) are defined as a stationary engine that operates: (i) only when the usual supply of power is unavailable; and (ii) no more than 500 hours per year, are covered by Part 222– The 500 hour limit includes actual operation during

emergencies plus maintenance and testing hours

16




COUCH WHITE, LLP


DADRP Overview

DEC Part 222 Rule - Pending• Stationary internal combustion engines used to peak

shave or otherwise reduce cost or ensure reliability at a facility are considered Economic Dispatch Sources, and are not Emergency Power Sources

• Economic Dispatch Sources must obtain a registration certificate or permit under DEC Part 201– Emergency generators participating in NYISO or

Con Edison programs will have to register as Economic Dispatch Sources

17




COUCH WHITE, LLP


DADRP Overview

DEC Part 201 Permit Levels• Minor Facility Registration

– Limited to facilities with potential to emit (“PTE”) no more than 12.5 tons of NOx/year

– Easiest to obtain; no permit required• State Facility Permit

– Facilities with PTE 12.5-25 tons of NOx/year– Must meet requirements of Subpart 201-5

• Title V Facility Permit– Facilities with PTE greater than 25 tons of NOx/year– Most burdensome level; Title V permit required under Subpart

201-6

18




COUCH WHITE, LLP


DADRP Overview

DEC Part 222 Rule - Pending• Prior to November 1, 2014 (subject to change), owners

or operators of a DG source must notify DEC in writing about whether it will:– Operate as an Emergency Power Source;– Operate as an Economic Dispatch Source; or– Permanently shut down

• Failure to notify DEC as set forth above means that the DG source will be classified as an Economic Dispatch Source

19




COUCH WHITE, LLP


DADRP Overview

DEC Part 222 Rule - Pending• By May 1, 2015 (subject to change), all Economic

Dispatch Sources must comply with specific NOx emission limits

• Economic Dispatch Sources that cannot meet the NOx emission limits can: (i) petition DEC for a waiver based on demonstration that it is economically or technically infeasible for the source to meet the NOx limits; or (ii) file a notice of intent to permanently shut down

20




COUCH WHITE, LLP


DADRP OverviewRider S – Commercial System Relief Program - Customers enrolled in this program provide load relief for Con Edison during peak times and are rewarded with financial incentives.

• The participating organization (either an aggregator or the direct customer) is responsible for determining that the operation of the generating equipment under this Rider conforms with any governmental limitations on operation.

• Location restrictions on DG participation exist near certain existing peaking generators, as shown on the Company’s website.

• Participation by diesel-fired generators will be permitted only if the engine for the equipment is model year 2000 or newer, and will be limited to 20 percent of the total kW enrolled under Rider S.

• Copies of NY DEC permits must be provided.

21

Con Edison Programs



COUCH WHITE, LLP


DADRP OverviewRider U – Distributed Load Relief Program

Customers enrolled in this program reduce their usage to provide load relief in their communities to help maintain system reliability and in return, receive incentives for participation. Summary of DG-Related Rules• The participating organization (either an aggregator or the direct

customer) is responsible for determining that the operation of the generating equipment under this Rider conforms with any governmental limitations on operation.

• Enrollment requires reporting of nameplate information (unit’s serial number, nameplate rating, manufacturer, and date of manufacture).

22

Con Edison Programs



COUCH WHITE, LLP


DADRP Overview

PSC Proceeding 14-M-0101 – Reforming the Energy Vision (“REV”)

• Instituted April 25, 2014• Stated Objective – transform New York’s electric

industry to create market-based, sustainable products and a consumer-oriented industry– Enhance customer participation in energy-related

markets by enhancing demand response, on-site generation and energy efficiency opportunities

23

PSC Actions



COUCH WHITE, LLP


DADRP OverviewThe REV Proceeding

• Basic Proposition – to achieve more demand response and distributed generation, barriers such as onerous utility tariffs and penalties have to be removed

• Assessment – although the proceeding is in its nascent stage, the PSC is determined to encourage the growth of DERs, which means that distributed operation, including microgrids that include hospitals as critical care providers, should flourish

• Stay Tuned – REV should result in more opportunities to reduce costs by earning revenues from energy infrastructure projects

24

PSC Actions



COUCH WHITE, LLP


• Revenue producing programs are available for on-site generation, but eligibility criteria must be examined

• Environmental regulations impact eligibility criteria, particularly for emergency generators– The regulations are not consistent and are subject to

change• On-site generation is in favor because of favorable

resiliency and efficiency impacts– NYISO examining whether base-load on-site generation

should be allowed into markets– PSC REV proceeding looking to remove barriers

25

Summary



COUCH WHITE, LLP


DADRP Overview

Robert M. LoughneyCouch White, LLP767 Third Avenue

New York, NY 10017518-320-3404

[email protected]

26

Questions?

main office other locations 540 broadway 38 high rock avenue, #2c767 third avenue, btwn 48 th &...

Documents

high rock avenue

pennsylvania avenuehq

new york3backgroundmain

pearl street

saratoga springs

llp counselors

law programs

law scr