A version of this article was originally published on March 3, 2016 on Utility Dive.

By Eleanor Stein

Change is constant for the electric utility industry and government regulators. New York State has been facing this change by “reforming the energy vision” (REV) – a far-reaching statewide energy policy initiative. As an administrative law judge for the New York Public Service Commission (PSC) from 1994-2014, and the project manager for REV in 2014-2015, I witnessed firsthand four elements contributing to its development and share them here to help others manage change. These reflections are my own, and not those of PSC or its staff.

The multifaceted conditions driving innovation in New York apply to many other states, including aging utility infrastructure, rising peak demand and flat sales growth, increasing load defection, underutilized information technology, climate-driven extreme weather events, national and state climate policies, and new consumer demands for choice and reliability from electricity providers.

Solving these medium- and long-term problems requires some drastic energy sector changes unattainable simply by incremental reform. It requires dramatic, not incremental, transformation in rather conventional industry and regulatory institutions. New York REV demonstrates successfully managing large-scale change depends upon context, commitment, collaboration, and consultation.

Context

Leaders, movements, and institutions function in the concrete conditions in which they find themselves. Long-time regulators will remember mid-1990s conflicts concerning long-distance and local telecommunications provider entry into each other’s markets. Within months, these distinctions were obliterated and conflicts became obsolete as the entire telecommunications architecture transformed. This was a context of profound technological change, but technology is not the only change agent: current conditions also drive fundamental change.

Superstorm Sandy dramatically set the REV context, causing $75 billion in damage in New York and 233 deaths, 50 in New York State. New York City’s Consolidated Edison (Con Ed) was badly hit with resulting power outages lasting nine days or longer, impacting over two million people.

Government and utility focus shifted from rebuilding in place to examining long-term climate change impact assessments in infrastructure planning and risk assessment. Coalitions of renewable and distributed generation industries, environmental organizations, academia, city government, and customer advocates joined a year-long collaborative on resiliency and adaptation, recommending future resolutions. Most of these resolutions were adopted by the PSC, shaking up long-held assumptions and setting the stage for REV.

Commitment

Large-scale electricity sector change requires commitment from key decision-makers. Unlike some other states, REV has been an executive, not a legislative program. PSC Chair Audrey Zibelman, Chair for Energy and Finance Richard Kauffman, and Governor Andrew M. Cuomo have exemplified a commitment to remaking the electricity system through ambitious thinking, continuous pilot project experimentation, and public funding for carbon reduction technologies.

The REV regulatory framework decision issued in 2015 concluded utilities should enhance long-term planning with distributed resource integration, then be rewarded for success, with incentive designs suggested in a subsequent staff white paper. REV documents recognized utility regulatory models and the grid itself must be reconfigured for full integration of renewable generation and load reduction, sending a strong signal to utilities and market players that transformation was coming.

One outcome envisioned by REV is shifting from managing load increase exclusively by constructing utility substations or increasing fossil fuel generation, to a fully integrated network of technologies to meet or reduce demand. This means deploying new distributed energy resource applications in varying combinations. So the PSC required utilities to provide early demonstration projects trying new approaches before REV was fully developed on paper.

A Con Ed pilot project in the Brooklyn-Queens area exemplifies this trend. The utility identified the need for approximately 50 megawatts of supply, and proposed a $1 billion substation to meet growing demand. As a REV project, Con Ed instead issued a request for information on obtaining power supply from distributed generation and load reduction, and is now considering dozens of responses for varied projects offering substantial cost savings and emissions reduction potential.

Staff think pieces and open experimentation are necessary but insufficient to ensure renewables, energy efficiency and demand response integration at the magnitude needed to meet REV goals. Thus the PSC also set a five-year budget for energy efficiency, adopted a benefit/cost framework incorporating a social cost of carbon, and is considering utility mandates to guarantee large-scale renewable development. Successive decisions have broadened access of communities to share in, decide about, and benefit from distributed renewable resources.

Recommendation: Decisive and consistent commitment to meeting challenges, coupled with political will to follow through, breaks the stranglehold of conventional wisdom and regulatory traditions. But commitment is not static or rigid, and must be coupled with flexibility in adapting regulation based on demonstrated results, stakeholder response, public concerns, and economic pressures.

Collaboration

Chair Zibelman’s visionary regulatory leadership drove the creation of a core REV team for policy discussion and implementation. As REV-related proceedings and projects began proliferating, it became apparent REV would affect almost all agency work, from renewable generation siting to rate cases to cost calculations, and coordination was no longer the work of one individual but a collaborative responsibility.

The PSC’s collaborative approach has facilitated large-scale change management. Internal collaboration was intentionally interdisciplinary, with an ambition to engage newer, young staff along with top organizational leaders. The PSC also reached beyond the agency itself by embracing outside strategic partners in analytical work, outreach efforts, and agency training.

Stakeholder and expert collaboration provide enormous value and expand regulatory capacity to manage large-scale change. For example, a collaborative working group was formed to tackle the huge task of assessing the market design and platform technology options needed for REV to take shape. This dedicated volunteer group facilitated by staff, the Rocky Mountain Institute, and NYS Smart Grid Consortium, met briefly but intensively and provided industry, national lab, and academic expertise expanding agency staff understanding.

Recommendation: Agency collaboration harnesses creative thinking and encourages new ideas, while mobilizing internal support for new policies. External collaboration– if consistent with transparency and confidentiality requirements – expands regulatory capacity to encompass the larger world of experience and ideas.

Consultation

New York regulators have bolstered collaboration by consulting with experts and stakeholders within and outside the state to learn best practices, incorporate public interest, and build public support.

To integrate best practices, the PSC tapped the rich vein of available academic, industry, and advocate literature on carbon regulation and costs, performance-based regulation, and comparable models from other jurisdictions. Consultation with U.S. Department of Energy’s national laboratories, regulators, industry, and environmental and energy regulatory representatives from other countries (including the UK and Germany) added further dimensionality to Commission thinking.

The PSC also reached out to traditional and non-traditional stakeholders for consultation and maintained an open door for input and discussion with industry, including utilities and distributed resource providers. However, outside consultations included less traditional stakeholders: low-income consumer advocates and environmentalists, trade union spokespeople, community organizations, environmental justice representatives, and local governments.

In an extraordinary commitment to public engagement on policy questions, agency teams travelled the state from 2015-2016 to discuss REV in a dozen cities (most of them at least twice), covering low-income customer concerns as well as regulatory decision-making on costs and incentives. Such public participation helped the PSC discover and respond to widespread interest throughout New York in harnessing renewable distributed generation and energy efficiency.

These consultations profoundly informed Commission decision-making. The 2014 public statement hearings my team organized in eight cities featured calls for increased renewables and energy efficiency spending, and a plan to develop large-scale renewables. In response, the Commission immediately instituted a new track based on this public input, and planned more community outreach in 2015.

Consultation also took the form of in-reach: workshops, trainings, videos, and conversations open to all PSC staff to solidify the REV direction and urgency of change while integrating new concepts into the thinking of those carrying out the policies in practice.

Recommendation: Outreach to experts, public interest groups, and communities were essential to building support for large-scale change – but it was a two-way learning process. By reaching out to public and private stakeholders as well as electricity consumers, regulators identified electricity system priorities, creating confidence large-scale change creates new value for customers.

Conclusion

Large-scale changes are hard to imagine, especially the move away from fossil fuels. But a low-carbon, more distributed, modernized system of electric generation and distribution is within our grasp. Models in other states and countries provide ideas, we can tap the available wealth of expertise via consultation, and we can mobilize necessary commitments and creativity through collaborative efforts to change.

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Eleanor Stein teaches law of climate change; she is a former administrative law judge and REV Project Manager for the New York Public Service Commission and an expert for America’s Power Plan.