Since the New York State Public Service Commission (“Commission”) first authorized the Community Distributed Generation (CDG) program in 2015, CDG Sponsors—the entities that organize, own and/or operate CDG projects—have faced an uphill battle in explaining the program, marketing it to customers and streamlining the energy billing process. The confusion arises first and foremost because CDG customers currently receive only bill credits, not renewable electricity or the environmental attributes of that electricity. This is further complicated by the fact that credits are typically denominated on the bill in kilowatt hours and are allocated in a cumbersome manner, whereby the utility first applies credits to a customer’s utility bill, but then the customer separately pays for a portion of those credits at a discounted rate (the “CDG Savings Rate”) to a third party – the CDG Sponsor – through a second bill. In addition to creating market confusion, this two-step process imposes unnecessary customer management and billing costs.

On December 12, 2019, the Commission took an initial step in streamlining the CDG billing process by giving CDG Sponsors the option to utilize consolidated billing, under which CDG customers would receive one bill from the utility that would include the monthly CDG subscription charge and the bill credit. Case 19-M-0463, In the Matter of Consolidated Billing for Distributed Energy Resources, Order Regarding Consolidated Billing for Community Distributed Generation (the “CDG Consolidated Billing Order”). This form of consolidated billing is similar to that which has been used for a number of years for the provision of electric and gas supply by Energy Service Companies (ESCOs).

The CDG Consolidated Billing Order directs the utilities to implement a “net crediting model” of consolidated billing and provides implementation instructions and timelines. Pursuant to this model, a CDG Sponsor would enroll a CDG project in net crediting and designate the CDG Savings Rate for that project. To ensure customers receive a net benefit, the Commission has established a minimum CDG Savings Rate of 5 percent and requires that the CDG Savings Rate be applied equally among all customers of a particular project. Utilities may consider allowing a CDG Sponsor to carve out one large, anchor customer from a net crediting arrangement to the extent that large customer contracts require more complex arrangements than mass market subscription agreements.

Once net crediting is implemented, it will be available—as an option, not a requirement—to all CDG projects, both existing and new. The Commission envisions that contractual relationships between utilities and CDG Sponsors will be necessary to govern the terms of participation in the program and process CDG Sponsor payments. In that regard, the Commission directs the utilities to file a proposed Sponsor Net Crediting Agreement by March 1, 2020, and encourages a collaborative process with interested stakeholders to finalize the details of that agreement by June 1, 2020.

The CDG Consolidated Billing Order also emphasizes that customers should be able to see both the total value of the credits generated by their subscription and the fee associated with their subscription on their consolidated bill. The Commission explains that various working groups will explore the feasibility of allowing a CDG Sponsor to use a bill message space currently reserved for ESCOs to display those details.

The CDG Consolidated Billing Order promotes clarity and simplicity with respect to customer bills, and advances opportunities for CDG Sponsors to further reduce customer management and billing costs. However, the implementation details, including contractual relationships between utilities and CDG Sponsors, as well as bill formats and disclosure statements, among other things, have yet to be determined. CDG Sponsors, ESCOs and other interested parties should consider participating in stakeholder discussions to make sure their concerns are addressed and interests are aligned.