Review of Consolidated Edison's Integrated Resource Bidding Program

Competitive bidding has emerged as the dominant method for procuring new resources by US utilities. In New York, the Public Service Commission (NYPSC) ordered the state`s seven investor-owned utilities to develop bidding programs to acquire supply and DSM resource options. Utilities were allowed significant discretion in program design in order to encourage experimentation. Competitive bidding programs pose formidable policy, design, and management challenges for utilities and their regulators. Yet, there have been few detailed case studies of bidding programs, particularly of those utilities that take on the additional challenge of having supply and DSM resources compete head-to-head for a designated block of capacity. To address that need, the New York State Energy Research and 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 bidding programs of two utilities that tested the integrated ``all-sources`` approach. This study focuses primarily on Consolidated Edison Company of New York`s (Con Edison) bidding program; an earlier report discusses our review of Niagara Mohawk`s program (Goldman et al 1992). We reviewed relevant Commission decisions, utility filings and signed contracts, interviewed utility and regulatory staff, surveyed DSM bidders and a selected sample of DSM non-bidders, and analyzed the bid evaluation system used in ranking bids based on detailed scoring information on individual bids provided by Con Edison.