Review of integrated resource bidding at Niagara Mohawk

In June 1988, the New York Public Service Commission (PSC) ordered the state`s investor-owned utilities to develop competitive bidding programs that included both supply and demandside resource options. The New York State Energy Research & Development Authority (NYSERDA), the New York Department of Public Service, and the Department of Energy`s Integrated Resource Planning program asked Lawrence Berkeley Laboratory (LBL) to review the integrated bidding processes of two New York utilities, Niagara Mohawk and Consolidated Edison. This interim report focuses on Niagara Mohawk (NMPC). In terms of overall approach, our analysis is intended as a critical review of a large-scale experiment in competitive resource acquisition implemented by New York utilities at the direction of their state regulators. The study is not a formal impact or process evaluation. Based on priorities established jointly with project sponsors, the report focuses on selected topics: analysis of the two-stage scoring system used by NMPC, ways that the scoring system can be improved, an in-depth review of the DSM bidding component of the solicitation including surveys of DSM bidders, relationship between DSM bidding and other utility-sponsored DSM programs, and major policy issues that arise in the design and implementation of competitive resource procurements. The major findings of this report are: NMPC`s solicitation elicited an impressive response from private power developers and energy service companies. In the initial ranking of bids, DSM projects were awarded significantly more points on price and environmental factors compared to supply-side bids. NMPC`s scoring system gave approximately twice as much weight nominally to price as to non-price factors (850 vs. 460 points).