New York Legislature Passes Cross-Utility Crediting for CDG Projects

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On June 10, 2021, the New York legislature passed a bill allowing customers to subscribe to certain community distributed generation (CDG) projects sited outside of their utility service territory, a practice known as “cross-utility crediting.” This bill, which aims to increase access to CDG projects particularly for those in New York City’s disadvantaged communities, awaits Governor Cuomo’s signature.

Under current rules, CDG subscribers can only enroll in projects that are located in their utility service territory. A Con Edison customer in Brooklyn, for example, can only sign up for projects located in Con Edison’s territory (i.e., New York City and parts of Westchester County). A downstate Con Ed customer cannot enroll in an upstate CDG project in National Grid territory, or vice versa. Although this arrangement makes billing easier to manage for the utility, it also creates a barrier to CDG participation especially in New York City, which has millions of potential customers but few appropriate sites for large solar projects. Projects in rural parts of the State, where it is often easier to build solar projects, are also limited in the customers they could serve. The New York Solar Energy Industries Association, among others, identified this restriction as an environmental justice issue given its outsized impact on downstate low and moderate income customers, and urged policymakers to adopt cross-utility crediting.

The legislature responded. Senate Bill S3521A, available here, aims to remove this impediment but with certain conditions. In keeping with its environmental justice focus, projects participating in the cross-utility crediting program must provide at least thirty-five percent of their bill credits to “disadvantaged communities,” as defined under section 75-0111 of the State’s environmental conservation law, including “low and moderate income communities.” The bill also adopts a narrower definition of “community distributed generation facility,” limited only to solar photovoltaic projects that are five megawatts or less.

In terms of implementation, the Public Service Commission (“Commission”), within ninety days, shall “direct electric corporations to file a model tariff providing for the transfer of bill credits associated with the electricity produced by community distributed generation facilities in one electric corporation territory to the accounts of subscribers in other electric corporation territories, and any other settlement systems and processes necessary to effectuate such transfers in a cost-effective manner.” After receiving public comment on these model tariffs, the Commission shall approve these tariffs within 270 days from the statute’s effective date. If passed, the statute will take effect immediately, beginning the 270-day timeline.

This cross-utility crediting bill may signal a growing trend among states with community solar or net metering programs. As my colleague Zach Gerson noted, Massachusetts recently passed a climate bill that, among other things, allowed solar net metering facilities to designate customers of any distribution company located in the Commonwealth to receive credits. The policy rationale was similar to that of New York’s Senate Bill S3521A – it was more difficult to sign up customers in certain parts of Massachusetts due to bill credit transfer restrictions. Should Governor Cuomo sign the cross-utility crediting bill into law, Massachusetts’s experience may benefit policymakers in New York when it comes to implementation.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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