At the Electricity Resource Bazaar: Lessons from Case Studies of Integrated Bidding in New York

This article evaluates the integrated bidding programs of two utilities in New York state: Niagara Mohawk and Consolidated Edison. Both programs involve DSM as well as supply resources. In terms of ratepayer benefits, bid prices for winning projects compare favorably to each utility's alternative supply options and to prices obtained by other utilities. In terms of project viability, both utilities experienced problems that could undermine the confidence of private developers in bidding processes. In terms of fairness, controversial items were NMPC's handling of its own plant refurbishment project and of DSM bids made by energy service companies and Con Edison's threshold and eligibility requirements for DSM bidders. To avoid these and other pitfalls, utilities and regulators are encouraged to offer separate solicitations for supply and demand-side resources and to consider a "preferred resources" approach to resource acquisition.