BQDM QUARTERLY EXPENDITURES PROGRAM REPORT Contents 1.0 Background ......................................................................................................................... 2 2.0 Executive Summary............................................................................................................... 2 2.1 Costs and Recovery ........................................................................................................... 2 2.2 Projects Summary ............................................................................................................. 4 2.3 Operational Savings and Other Benefits................................................................................ 9 3.0 Program Activity..................................................................................................................11 3.1 Customer-side Solutions .................................................................................................11 Small Business Direct Install Program.......................................................................................................... 11 Multi-Family Energy Efficiency Program ..................................................................................................... 13 Customer-side Solutions Pipeline Activities ............................................................................................... 16 3.2 Utility-side Solutions.........................................................................................................30 Distributed Energy Storage System ............................................................................................................... 30 Distributed Generation (DC-Link).................................................................................................................. 30 Voltage Optimization .......................................................................................................................................... 31 Utility Sided PV Pilot........................................................................................................................................... 31 Utility Sited Fuel Cell .......................................................................................................................................... 32 Non-Traditional Utility-side Solutions Pipeline Activities ..................................................................... 32 4.0 Synergies............................................................................................................................33 1 1.0 Background On December 12, 2014, the New York Public Service Commission (“Commission”) issued its Order Establishing Brooklyn/Queens Demand Management Program (“Order”).1 The Order requires Consolidated Edison Company of New York, Inc. (“Con Edison” or the “Company”) to submit quarterly reports to the Commission on its “expenditures and program activity” that include project costs, project in-service dates, Monthly Adjustment Clause (“MAC”) recoveries, incremental costs incurred, operational savings, and other benefits. This is the fifth Brooklyn Queens Demand Management (“BQDM”) quarterly report (“Report”) and primarily covers expenditures and program activity for the fourth quarter of 2015. 2.0 Executive Summary 2.1 Costs and Recovery The Company spent $5.9 million on the BQDM Program during the fourth quarter 2015, and has spent $19.8 million to date (see Figure 1 and Table 1). The costs incurred during the quarter are being amortized over a period of 10 years and recovered through the MAC in accordance with the Order. The Company incurred expenses related to efforts undertaken to address reliability needs in the BQDM target area (“BQDM Area” or “BQDM Target Area” or “Target Area”) 2 prior to the issuance of the Order. Those efforts were pursued through the then 1 Case 14-E-0302, Petition of Consolidated Edison Company of New York, Inc. for Approval of Brooklyn Queens Demand Management Program, Order Establishing Brooklyn/Queens Demand Management Program, issued and effective December 12, 2014. 2 References to Brooklyn-Queens Area in this filing refer to north central and eastern Brooklyn neighborhoods, including parts of Greenpoint, East Williamsburg, Bushwick, Bedford-Stuyvesant, Crown Heights, East Flatbush, Brownsville, and East New York, 2 existing Targeted Demand Side Management (“TDSM”) program.3 In order to accurately reflect all costs incurred to address the projected overload in the BQDM target area and to maintain a single set of accounting rules on all expenses related to the BQDM Program, charges being incurred under the TDSM program that are related to the BQDM target area have been reclassified to the BQDM program, so that the Company can collect all BQDM Program related charges incurred before or after the issuance of the Order as BQDM Program costs.4 Figure 1: BQDM Program Budget and Expenditures and southwestern Queens neighborhoods, including parts of Richmond Hill, Howard Beach, Broad Channel, Ozone Park, South Ozone Park, Woodhaven and Kew Gardens. 3 Case 09-E-0115, Proceeding on Motion of the Commission to Consider Demand Response Initiatives, Order Adopting with Modifications a New Targeted Demand Side Management Program for Consolidated Edison Company of New York, Inc., issued and effective June 1, 2011. 4 See http://www.coned.com/documents/elecPSC10/GR25-Forms.pdf, Leaf 343.1, Section 26.1.1 (43). 3 Programs/Projects Incentives Program Implementation & Administration Sales, Marketing, and Training Technology, Measurement and Verification (M&V), and Evaluation Third-Party Oversight Total Customer Sided Solutions 15-Oct 15-Nov 15-Dec $ 966,056 $ 14,688 $ 6,260 $ 464,425 $ $ 1,451,429 $ $ $ $ $ $ 702,688 24,860 25,832 581,900 1,335,280 $ $ $ $ $ $ 1,081,811 $ 30,350 $ 9,948 $ 15,702 1,137,811 Utility Sided Solutions 15-Oct 15-Nov 15-Dec $ 92,790 $ $ $ 41,262 $ $ Q4-2015 Total BQDM Total $ 1,846,334 $ $ $ $ $ 2,750,556 2,050,284 42,039 1,062,027 5,904,907 $ $ $ $ $ $ 11,007,224 5,632,502 166,421 2,952,806 19,758,952 Table 1: BQDM Program Fourth Quarter 2015 Expenditures The work to implement the energy efficiency adder programs (which are described in more detail in Section 3 of this Report), research new technologies, manage RFI, RFP and other acquisition activities, and develop foundational elements of the program (i.e., accounting protocols, regulatory reporting, marketing approaches and outreach) was primarily conducted by Con Edison employees. The Company developed a General Accounting Procedure (“GAP”) 5 for treatment of costs and collections associated with the BQDM program and established internal billing accounts to properly manage program expenses. The Company commenced collections of expenses related to the BQDM program, through the MAC, in the third quarter of 2015. The Company recovered $145,662 in BQDM program charges in the fourth quarter of 2015 and $292,712 to date. 2.2 Projects Summary During the fourth quarter of 2015, the Company continued to make progress in contracting and installation of energy efficiency measures through incentive adders to two existing Energy Efficiency Portfolio Standard (“EEPS”) programs - the Small Business Direct Install (“SBDI”) and Multi-Family Energy Efficiency (“MFEE”) programs. During the quarter, the Company 5 The Company filed the GAP with the Commission on February 10, 2015. See http://documents.dps.ny.gov/public/Common/ViewDoc.aspx?DocRefId={59F25E6A-7ABA-4D95-BBD2-F6142F90C798} 4 contracted for 0.95 MW of load relief at the peak hour (between 9-10 pm for the constrained sub-transmission feeders in the BQDM area) based on current best estimates of hourly load relief patterns, which is equivalent to approximately 1.71 MW as measured under the Energy Efficiency Portfolio Standard (“EEPS”) rules; and of the contracted load relief (including contracted load relief from before the quarter), 1.53 MW of load relief at the peak hour based on current best estimates which is equivalent to approximately 2.94 MW as measured under the EEPS rules, became operational during the quarter. The cumulative total contracted amount of load relief to date is 8.36 MW at the peak hour based on current best estimates, which is equivalent to approximately 16.59 MW as measured under the EEPS rules and the total cumulative operational amount of load relief is 7.94 MW at the peak hour based on current best estimates which is equivalent to approximately 16.09 MW as measured under the EEPS rules.6 Figure 2 provides an illustration of solutions, both contracted and operational, for the SBDI and MFEE programs. Solutions illustrated as operational are a subset of contracted solutions and, the difference between contracted and operational amounts is indicative of the quantity of load relief solutions currently in the implementation pipeline. The Company expects to achieve this load relief through installation of efficiency measures at 3,850 small business and 726 multi-family buildings, which include over 5,000 apartments. 6 The Company is reporting expected load relief provided by a resource during the peak hour of the BQDM sub -transmission constraint. Previously the Company only reported load relief quantities for SBDI and MFEE on the basis of a system (or New York Control Area (“NYCA”)) coincidence measurement as calculated using the New York Technical Resource Manual (“TRM”), a metric primarily used to report EEPS programs’ progress. The Company will continue to report the capacity under EEPS for adder programs. 5 Figure 2: SBDI and MFEE Contracted vs. Operational Additionally, the Company is in the process of acquiring or installing non-traditional utility-sided solutions that are expected to be operational for the summer of 2016. The Company anticipates that it will be able to meet all the reliability needs for the projected overload in 2016 for a design peak day using a combination of customer-side solutions and non-traditional utility-side solutions. Since the quarterly report for the second quarter of 2015, the Company is providing charts showing current best estimates of load relief solutions’ contribution, both already acquired as well as anticipated for the next summer period, on an hourly basis in relation to the non traditional load relief need for each hour of the design peak day including the twelve hours in the BQDM overload period (approximately noon to midnight).7 The Company believes this provides a better illustration of the diverse nature of non-traditional solutions that are not all available during the entire forecasted overload period and that are thus insufficiently defined 7 The Company has completed initial data collection of energy consumption data from representative samples of customers who have participated in energy efficiency programs in the BQDM target area and is currently evaluating results to enable development of load curves that can be applied to small businesses and multi-family dwellings in the BQDM program area . The Company will revise the reported peak hour contributions and hourly load relief patterns after that effort is complete. 6 by use of either a singular peak demand MW metric or the maximum load relief provided by each of the solutions during the overload period. The first chart in Figure 3 below illustrates the anticipated hourly load relief provided by solutions that have already been implemented and are operational, while the second chart provides the anticipated load relief solutions that the Company expects will be available for the summer 2016 operational period (including the currently operational solutions). Figure 3: BQDM Load Relief Progress 7 The Company began and/or continued to pursue other load relief opportunities on both the customer side and utility side as shown in Table 2. The Company efforts during the quarter are described in greater detail in Section 3 of this Report. Design Stage* Deployment Stage* Customer-side Solutions Small Business Direct Install √ Multi-family Energy Efficiency √ Residential Energy Efficiency Program(s) √ Virtual Building Audits √ New York City Housing Authority √ Direct Customer Activity √ Dynamic Resource Auction** √ Fuel Cells √ Queens Resiliency Microgrid NP City Agency Solutions √ Commercial Refrigeration √ NP Utility-side Solutions Distributed Energy Storage System Distributed Generation (DC-Link) √ √ Voltage Optimization √ Utility Side PV Pilot √ Fuel Cell √ Foundational Elements Distributed Energy Resource Evaluation Tool √ Solutions Technology Validation √ Community Engagement and Outreach √ Auction Designs and Analyses √ Measurement & Verification Pilot √ Demand Management Tracking System √ Table 2: BQDM Program Activity 8 *- “Design Stage” refers to early efforts initiated by the Company during the quarter to determine whether, and if yes, how to proceed to implementation in a manner consistent with the objectives of the BQDM program. “Deployment Stage” refers to implementation efforts either substantially complete or well underway that are serving to meet the objectives of the BQDM program. “NP” refers to efforts the Company is no longer pursuing and does not expect to be a part of the BQDM program portfolio of solutions before 2018. ** - “Dynamic Resource Auction” refers to market-driven approaches to procure demand response type resources with specific performance attributes. 2.3 Operational Savings and Other Benefits The Company defines “operational savings” as reductions in costs incurred or expected to be incurred by the Company for the operation of the electric sub-transmission and distribution system supporting the BQDM target area. No operational savings have yet been identified as resulting from activities conducted in the fourth quarter of 2015. The majority of the load relief the Company acquired during the fourth quarter of 2015 came from the SBDI adder initiative. SBDI is an EEPS program and the adder provides an additional incentive through the BQDM Program, over and above the incentive provided through SBDI, to increase SBDI participation in the BQDM Area. Under the SBDI adder initiative, more than 3,800 small businesses in the BQDM Area have installed or agreed to install efficiency measures that will collectively reduce electricity demand by 5.42 MW at the peak hour, which is equivalent to approximately 14.95 MW as measured under the EEPS rules, and with a maximum contribution8 of 9.07 MW at noon-19 pm based on current best estimates, reduce electricity 8 Beginning with the report for the second quarter of 2015, the Company has provided maximum contribution for each of the customer side solutions being implemented. The company uses “maximum”, when referring to load relief in this report, to identify the largest anticipated load relief amount (MW) that Company expects the resource will provide during any hour of the overload period. For example, the SBDI program’s maximum load relief, during the BQDM overload period of approximately noon to midnight, is expected to occur between 4 -5 pm, while the maximum load relief is expected from 8-9 pm for the MFEE program. 9 In previous reports the Company noted that the SBDI program’s maximum load relief during the BQDM overload period occurring between approximately noon and midnight was expected to occur between 4-5 pm; however beginning with this report, the Company notes that the hour when maximum load relief can be expected to occur is actually from noon – 1pm. To 9 bills for these customers by an average $3,100 per year, and result in approximately 69,619,696 kWh of annual consumption reduction. The outreach to these businesses, in an area that continues to undergo considerable change, has been a positive development for the BQDM project. Participation by these small businesses will deliver direct benefits to an important segment of the community, and contributes to establishing a positive experience in the wider community as the project progresses. Additionally, the SBDI Adder initiative outcomes are anticipated to displace peaking generation and reduce wholesale capacity needs. A portion of load relief was also secured during the fourth quarter of 2015 through an adder to the MFEE initiative. The MFEE Adder initiative commenced in December 2014. Results, based on buildings that have installed or have agreed to install efficiency measures, through December 31, 2015, include the in-dwelling and common area measures representing approximately 2.94 MW of load relief at the peak hour, which is equivalent to approximately 1.63 MW as measured under the EEPS rules, and a maximum contribution of 3.0 MW at 8-9 pm, based on current best estimates.10 Over 720 buildings, including approximately 5,023 individual apartments, have participated or agreed to participate in the MFEE Adder initiative, collectively calculate the maximum expected load relief for the SBDI program as reported in previo us quarterly reports, the reported number should be multiplied by 1.06. 10 Note that the EEPS related load relief reported for MFEE is based on NYCA system coincidence (NYCA peak typically occurs between 2 and 6 pm), and is anticipated to result in a higher quantity of load relief during the BQDM networks’ peak hour in the late evening between 9 and 10 pm. This occurs as MFEE measures, such as residential lighting improvements, yield higher amounts of load relief during the evenings when residents have retu rned to their homes and are using energy more efficiently. 10 expected to result in an estimated 9,299,638 kWh of reduction in annual energy consumption. Given that multifamily buildings vary in size between 5-75 units per building and the MFEE program includes a varying mix of common area and in-unit measures, the annual savings per building varies widely. However, on average, reductions in energy use by participating multifamily buildings are expected to result in savings of $1,900 per year per building, assuming a retail rate of $0.15/kWh. 3.0 Program Activity 3.1 Customer-side Solutions In the fourth quarter of 2015, the Company’s SBDI Program and the MFEE Program, both direct installation programs that have been augmented with adders through the BQDM program, continued to offer an implementation vehicle with proven technologies, which the Company is using with high confidence to reduce load. Importantly, the programs continue to enable the Company to positively engage important members of the targeted community as the Company looks to develop additional resources that can provide critical load relie f in the BQDM target area. Small Business Direct Install Program The Company initiated the “SBDI Adder” initiative on August 1, 2014. The SBDI Adder initiative is open to commercial customers with a peak demand of 110 kW or less, increased to 300 kW or less beginning in the first quarter 2016. Participating customers receive a walk-through survey identifying cost-effective electric efficiency measures. Customers may elect to have all 11 or any of the recommended measures installed. The basic EEPS SBDI Program provides a payment of up to 70 percent of costs for the selected measures and the customer is responsible for the remaining amount. Under the SBDI Adder initiative, customers in the covered networks receive 100 percent of costs, so measures are effectively installed at no direct cost to them. The Company delivers this program through an implementation contractor responsible for the sales and installation of measures. The status of SBDI Adder initiative as of December 31, 2015 is set forth below. Response in the fourth quarter continued to be strongly driven by a focused outreach to small businesses in the community. As of December 31, 2015, 5.42 MW of peak hour load reduction 12 projects, which is equivalent to approximately 14.95 MW as measured under the EEPS guidelines, with maximum load relief of 9.07 MW at noon-1 pm based on current best estimates, involving 3,850 small business customers, have been contracted. A total of 5.3 MW at the peak hour, which is equivalent to approximately 14.62 MW as measured under the EEPS guidelines, with maximum load relief of 8.87 MW at noon-1 pm based on current best estimates, is operational as of December 31, 2015, at 3,812 customer sites. Figure 4: Small Business Direct Install Contracted vs. Operational The Company projects that the SBDI initiative will deliver around 6.88 MW of peak hour load reduction, which is equivalent to approximately 19 MW as measured under the EEPS rules , with maximum load relief of 11.52 MW at noon-1 pm based on current best estimates, by the summer of 2016. Multi-Family Energy Efficiency Program The Company developed an adder initiative for the existing EEPS MFEE Program, which of fers multi-family dwellings of 5-75 units (including all multi-family buildings with 5 or more units 13 beginning in the first quarter 2016) a survey identifying potential load-reduction measures. The existing, or basic, MFEE Program includes both measures installed within the dwelling units and measures installed within the common areas. Under the EEPS program, 100 percent of the cost of measures installed within the dwelling units is covered, but the program requires a landlord or building manager contribution for a percentage of the cost of measures installed in the common areas. Under the BQDM MFEE Adder initiative, eligible buildings within the BQDM networks will continue to have no out-of-pocket costs for measures installed in dwelling units, but will also receive the full cost of measures in common areas. The MFEE Adder initiative is delivered through a central implementation contractor that in-turn is utilizing four independent subcontractors within the BQDM Area. The MFEE Adder initiative commenced on December 10, 2014. Results for contracted load relief through December 31, 2015 include contracted in-dwelling and common area measures in approximately 726 buildings, representing 2.94 MW of peak hour load reduction, which is equivalent to approximately 1.63 MW as measured under the EEPS guidelines , with maximum load relief of 3.0 MW at 8-9 pm based on current best estimates involving 726 buildings. A total of 2.64 MW at the peak hour in 672 buildings, which is equivalent to approximately 1.46 MW as measured under the EEPS guidelines , with maximum load relief of 2.65 MW at 8-9 pm based on current best estimates, is operational as of December 31, 2015. The program typically delivers approximately 90 percent of its load reduction contribution through the common area 14 measures. The MFEE initiative provides valuable load relief that typically extends into late evenings, and is thus coincident with the peak of the networks targeted by the BQDM program. Figure 5: Multifamily Energy Efficiency Contracted vs. Installed The Company projects that this initiative will deliver around 3.6 MW of peak hour load reduction, which is equivalent to approximately 2 MW as measured under the EEPS rules , with maximum load relief of 3.62 MW at 8-9 pm by the summer of 2016. The status of the MFEE initiative as of December 31, 2015 is set forth below. 15 Customer-side Solutions Pipeline Activities Residential Energy Efficiency Program(s) Residential (1-4 family) properties make up 57% of all customer accounts which represents approximately 30% of total peak demand in the BQDM area. The Company is targeting this customer segment understanding the unique challenges in achieving significant load relief by engaging a large number of customers to install energy efficiency measures, when solutions at a single customer location may only provide a small amount of load relief. Such a program, in addition to providing critical load relief to the Company, is expected to serve to positively engage a large customer segment in BQDM area. 16 The Company began discussions with a firm with longstanding expertise in the residential segment to assist with developing the program and a concurrent outreach approach to enable the installation of measures at homes that will foster greater community engagement, provide customers with long term bill savings, and offer a proactive direct-install program that seeks to attract high levels of customer participation. Under this program, the Company considered deploying new technologies such as Wi-Fi enabled devices that could additionally provide learning opportunities. However, discussions concluded unsuccessfully given the vendor’s inability to offer load relief measures appropriate to the BQDM program needs at an appropriate price. The Company intends to request clarifications from other respondents to the RFI who proposed residential energy efficiency programs as part of their responses in January 2016 and proceed to contracting with a newly selected firm soon thereafter. CHP and Alternative Solutions The Company has worked closely with NYSERDA’s combined heat and power (“CHP”) program administrators as well as the natural gas provider in the area, National Grid (“NG”), and its CHP team to investigate the potential for CHP development. The Company, working in collaboration with NYSERDA, is offering additional funds up to the base incentive level that NYSERDA offers under its CHP Acceleration Program, covered by Program Opportunity Notice (“PON”) 2568,11 to installations in the BQDM area. The NYSERDA CHP Acceleration Program provides incentives for the installation of pre-qualified and conditionally qualified CHP systems by approved CHP 11 Information about NYSERDA’s CHP Acceleration Program can be found at http://www.nyserda.ny.gov/PON2568; Website last accessed at 2/22/2016. 17 system vendors in the size range 50 kW – 1.3 MW. By providing incentives in addition to that offered by NYSERDA, the Company expects to increase adoption of rapidly deployable CHP technology to reduce baseload electric demand throughout the year, especially during summer 2017 and 2018 around the peak hours. New York City Housing Authority The Company identified that publicly administered housing buildings within the BQDM program Target Area, including over 60 complexes and over 29,000 housing units, account for over 46 MW of demand. The Company worked with the New York City Housing Authority (“NYCHA”) and a contracted partner to prepare a report identifying energy and demand savings opportunities in such facilities, and existing funding opportunities that may be available but may not as yet be fully leveraged. Coming in to the fourth quarter, the Company and NYCHA had alre ady agreed to pursue 2.4 MW of load relief measures, centered on in-unit and common area lighting, as well as an in-unit window air conditioner swap pilot in a development where NYCHA already has a major capital improvement project planned. 18 During the fourth quarter, the Company worked internally to develop a pro-forma BQDM Program Agreement,12 which will be used as the contracting mechanism for the NYCHA initiative, as well as for other projects within the BQDM portfolio. NYCHA has worked on a parallel path to develop the requisite Request for Proposal to satisfy NYCHA’s competitive procurement requirements. As currently anticipated, NYCHA will be responsible for implementation, including through use of its Energy Performance Contract (“EPC”) mechanism that allows it to leverage funds used for energy efficiency projects and reinvest the savings achieved via the efficiency gains into additional projects. The deployment timeline is dependent on the EPC process. The Company intends to have an agreement with NYCHA completed in the first quarter 2016, and be ready to commence execution thereafter, with an expectation that project construction will take place between the fourth quarter of 2016 and second quarter of 2017. During the fourth quarter, the Company also engaged with NYCHA on a smaller initiative, to support its Weatherization Assistance Program. This program targets smaller buildings and includes energy efficiency opportunities funded by the State. With a fixed budget, NYCHA is able to complete weatherization upgrades in a set number of apartments. With Con Edison 12 The BQDM Program Agreement refers to a pro forma standardized agreement developed by the Company that it intends to use as the legal template, with terms and conditions specific to the BQDM program, when entering into contractual relationships with firms providing customer side solutions. 19 supporting lighting measures at the same rate as used for the Multi Family Energy Efficiency Program, the objective is to achieve 20.65 kW in peak hour demand reduction. Direct Customer Activity In addition to contractual discussions with firms that can provide potential load relief, as discussed in this report, the Company has also engaged in discussions with BQDM customers that have expressed interest in pursuing load relief solutions at their locations. The Company has been encouraged by the active engagement of such customers who have the ability and willingness to implement load relief projects that would both benefit them as well as address BQDM program needs. The Company is evaluating potential specific project opportunities at those locations for their feasibility, efficacy, cost-effectiveness, and appropriateness so they may be considered for inclusion in the BQDM solution portfolio. The Company anticipates additional progress in discussions in 2016. Innovative Distributed Generation The Company continues to analyze the acquisition of resources, such that the overall portfolio of solutions serves to meet the reliability needs in the targeted area during the entire period of overload. The Company has investigated innovative solutions that could provide reliable load relief during the entire period of more than 12 hours of potential overload. In particular, the Company studied the use of efficient fuel cells or other similar resources that generate electricity through non-combustion chemical mechanisms and determined that they are able to 20 provide long periods of load relief efficiently and reliably, with minimal operational overhead. These resources can be built with minimal lead time, while using a relatively small footprint in the land-constrained targeted area. The Company has investigated business arrangements that would incent adoption of such technologies such that third party capital can be leveraged in a manner that is both beneficial to the customer and cost-effective to the Company. Customers who have the potential to realize savings and gain additional benefits by implementing this solution have been identified and are currently being engaged. As customers are continuously being engaged, site visits are being conducted and additional analyses provided to help customers determine if fuel cells are feasible and beneficial to their operations. The Company expects that customers will make the decision on whether or not to pursue fuel cells, to explore other or additional load relief options, or to undertake any initiatives at all, with an awareness of Con Edison’s ability to incentivize adoption of appropriate load relief measures. . The Company anticipates progress as detailed analyses and customer engagement are completed in the first quarter of 2016. Queens Resiliency Microgrid Early in the fourth quarter, Company engineers and the third-party provider we have been working with agreed on a suitable engineering design and scope of work. A proposal was generated for a land lease on the customer’s property, based on the agreed upon design and space needed. The proposal was presented to the customer by the third-party provider, which would be the party entering into the land lease with the customer. The Company, in turn, would have an agreement with the third party for a turnkey solution. 21 Once presented with the proposal, the customer responded that it was unwilling to participate in the project at this time. Without the customer’s participation, the location specific micro-grid project was no longer feasible, and the Company decided to conclude the effort. Opportunities with City Agencies In addition to work with NYCHA described earlier in this report, the Company is continuing to work with other City agencies to identify a range of viable demand reduction solutions. During the fourth quarter, the City presented the projects it vetted through a project solicitation conducted over the summer, totaling 372 kW worth of load reduction opportunities. These projects include interior and exterior lighting at several City agency facilities, and have been evaluated for technical and implementation feasibility. A funding level has been agreed upon for these projects, which may also be used as the amount that Con Edison could contribute to other City agency projects that they may present in the BQDM area. The City will be conducting another round of project solicitations during first quarter 2016. Commercial Refrigeration In the fourth quarter of 2015, the Company continued the evaluation of the five Commercial Refrigeration proposals that were received via the Commercial Refrigeration RFP, and developed an evaluation matrix on the basis of items that were critical in achieving the required demand reduction during peak hours. 22 Based on the outcome of the bidding process, two respondents were short listed based on their proposals. The winning bidder’s proposal included four distinct energy efficiency measures. We held discussions with the winning bidder’s engineering team to vet the load reduction impact of each of the proposed measures and concluded that case lighting is an approved measure in the SBDI program, 500 kW of case lighting reduction was included within the SBDI program, increasing the 2016 SBDI peak load reduction goal from 7.5 MW to 8 MW. In an attempt to explore additional and innovative core refrigeration measures, we also entered into discussions with the second short-listed respondent, who offered a unique thermal storage solution. In order to evaluate its solution, we have requested a more detailed implementation plan. We intend to review this implementation plan for applicability to the BQDM program needs and, if appropriate, proceed to contract during the first quarter of 2016. Request for Information (“RFI”) On July 15, 2014 the Company issued a broad RFI which drew 78 responses initially followed by an additional six. An RFI, by its nature, allows for broader responses than an RFP but requires a greater level of scrutiny and validation of the information provided. The proposals presented via the RFI have provided the Company with valuable insight into potential solutions, including indicative pricing, operational needs and reliability, potential environmental impacts and, in a few cases, potential customer partners. As the quality of the RFI responses varied significantly, 23 gaining confidence and insight has taken considerable work. Developing a comparative analysis among the solutions presented has been a complex undertaking.13 The Company recognizes that the solutions presented in the RFI responses do not represent the complete universe of potential solutions for the BQDM Program. The Company has remained open to other solutions, either via solution providers or customers. The Company will continue to use both RFI submissions and other available solutions to inform purchasing actions for the BQDM Program. Distributed Energy Resource Evaluation Tool The Company has built a tool, using both internal and external expertise, to evaluate on a comparable basis a diverse range of distributed energy resources (“DER”) while accounting for the duration of their availability (e.g., four-hour battery, eight-plus--hour energy efficiency, two-hour demand response), their risk, their maturity, their flexibility and their ability to otherwise meet the needs in the BQDM Area. The Company also developed a portfolio approach to identify a mix of resources that can meet the reliability need over the 12 hours on a design peak day. Using the evaluation tool, the Company is evaluating DER solutions using a combination of multiple criteria. Con Edison is using the tool to inform some of the solutions that the Company is considering for inclusion in the BQDM portfolio. The Company intends to supplement results from the evaluation with additional qualitative assessments of the 13 The Company’s efforts in this regard are being conducted in a manner to provide the broadest benefit to future efforts by the Company in other targeted projects and to contribute to the Commission’s REV initiative. 24 solutions’ ability to meet the BQDM program timing and reliability needs while fostering engagement with the community. Solutions Technology Validation The Company has validated potential DER solutions for both the quantity of load reduction and the length of the resource’s availability (or duration) based on technical judgment provided by internal and external subject matter experts. These assessments of the validated solutions have been incorporated into the evaluation tool criteria. Community Engagement and Outreach The Company has continued to be proactive in engaging with community stakeholders to understand the priorities in the diverse and rapidly changing communities across Brooklyn and Queens. In the fourth quarter of 2015, Con Edison held meetings with four elected officials in Brooklyn and Queens to discuss BQDM program progress and site specific initiatives in their district. Meetings were held with Assemblyman Joseph Lentol, Senator Joseph Addabbo, Assemblyman Philip Goldfeder and Councilman Eric Ulrich to discuss ongoing BQDM activities and proposed battery storage, fuel cell and solar installations projects. Outreach Materials were distributed to elected officials that identified the successes and progress towards BQDM goals of the MFEE and SBDI programs per individual legislative districts. In addition, the Company’s Public Affairs staff partnered with Senator James Sanders to host a clergy breakfast in support of houses of worship participating in the small business program. 25 The Company’s continued participation in the Brooklyn Borough President’s Renewable and Sustainable Energy Task Force (“ReSET”) led to inclusion of the Company’s Neighborhood Program information in Energy Incentive Lease Inserts, which accompany all REBNY brokered commercial lease signings in Brooklyn. The Company has also continued its outreach efforts with a focus on promoting the Co mpany’s MFEE and SBDI programs to economic development partners and City agencies such as the Business Improvement Districts and Chambers of Commerce organizations in Brooklyn and Queens. For example, the Company also continued discussions with the New York City Department of City Planning in regards to the BQDM program as it pertains to its East New York Rezoning Environmental Impact Statement and the New York City Economic Development Corporation’s study of the East New York Industrial Business Zone. The Company plans to continue community oriented engagement activities and one -on-one meetings with elected officials and City agencies on a regular basis to keep the greater New York City community abreast of the Company’s plans and actions and to maximize the effectiveness of its outreach strategies. Dynamic Resource Auction The customer-side solutions described above, together with non-traditional utility-side solutions, are anticipated to provide sufficient load relief to alleviate potential overloads d uring 26 the summer of 2016. In addition, in order to meet the reliability need around the peak hour ( 910 pm) in the targeted area in subsequent years as well as any other deficiencies identified as the portfolio evolves, the Company is developing a descending clock auction to procure resources with specific performance attributes. The resources being sought are dynamic, i.e., callable, and are expected to be dispatched for up to 4 hours at a time during the BQDM Area peak period. The Company anticipates obtaining the resources through a competitive market acquisition process, a descending clock auction, which would attract a cost-effective mix of demand response (“DR”) type solutions to meet the Company’s performance objectives. The Company has been working to design the attributes of the auction, including qualification criteria, performance requirements, financial arrangements, and payment and incentive structure and anticipates continued efforts and significant progress in the first quarter of 2016. The Company is in the process of aligning the descending clock auction and rules with the existing Demand Response program(s) to account for the potential overlap of resources and to allow participants to participate in the Company’s programs minimizing the possibility of contradictory rules. The auction is expected to be conducted in early 2016 to obtain solutions for the following years. Measurement & Verification Pilot The Company has undertaken significant efforts to enhance customer energy data collection and metering services to better understand the customer energy usage patterns in the MFEE and SBDI segments. The SBDI and MFEE adder programs have a total of 7.94 MW at the peak 27 hour, which is equivalent to approximately 16.09 MW as measured under the EEPS rules, of demand reduction that are currently operational. The company is using 24-hour load curves to determine hourly load savings and, verification of the load curves requires metering and verification of the pre and post-installation conditions. The Company is performing market characterization and an enhanced metering study of small business and multifamily buildings aimed at identifying energy-consuming equipment, the prevalence of this equipment, and the corresponding load shapes at the equipment level, as well as the apartment and building levels. Through this effort, Con Edison can effectively determine how to meet the demand constraints. The Company has received preliminary results and anticipates a revised version of the results generated from the study in the first quarter of 2016. The Company intends to incorporate the results into the process used to track the load relief contribution of various solutions within the BQDM portfolio of resources. Specific efforts being conducted by the Company includes the following:  Light metering across multiple space types  A complete inventory of energy-consuming equipment at each facility  End-use metering, including plug load and circuit-level metering  Panel-level metering to capture whole-building and apartment loads  Identification of predictive variables to translate findings to other net-works Site-level targets for metering and detailed equipment end-use inventory targets have been reached for the multifamily common area (42 sites), multifamily in-unit (108 sites), and SBDI 28 facilities (127 sites) whose peak demand is under 110 kW. The Company has begun collection of data for small commercial facilities with a peak load between 110 kW and 500 kW with a targeted sample of 48 sites. The Company is currently in the process of verifying the multifamily direct-install for in-unit customers; 2,991 total in-unit customer homes have been verified with minor discrepancies found at only 64 sites. Verification of these sites is conducted by shadowing the implementation contractor and verifying the installs on the site. SBDI “adders” verification is conducted on a sample of projects, pre and post measure install. Demand Management Tracking System The Company is developing a new Demand Management Tracking System (“DMTS”) with capabilities to manage customer relationships, project management activities and to serve as the system of record for the Company’s energy efficiency and demand management programs. This system is being utilized to process, monitor and store project information, in addition to customer leads, and for the purposes of program reporting. DMTS is currently being used for the Demand Management Program and the BQDM Program. Work to configure the system for the Commercial and Industrial portfolio of energy efficiency programs is currently underway. Additional programs will be configured throughout 2016. DMTS is intended to become the primary source of information for internal and external reporting, including regulatory reporting, once all the programs have been fully implemented. 29 For the BQDM program, DMTS includes details, such as project and measure information, related to the SBDI and MFEE adder programs. Project details also include load relief quantities which are being used to validate payments to contractors. The MFEE program began uploading project data to the system in October 2015. The SBDI program is expected to start adding data into the system in February 2016. 3.2 Utility-side Solutions Distributed Energy Storage System The Distributed Energy Storage System (“DESS”) will provide Con Edison with 12 MWh of stored energy and can be configured to deliver this power at 1 MW for 12 hours or 2 MW for 6 hours. Con Edison signed the contract with the vendor on August 18, 2015. Site studies and surveys have been completed. Final design drawings were expected in January 2016. Construction is expected to commence in 2016. Distributed Generation (DC-Link) This solution considers the deployment of the company’s existing Mobile Power Interface (“MPI” or “DC Link”) combined with a Mobile Electric Generator (“MEG”). Previously considered for the 2016 goal, this initiative is now planned to meet the 2017 goal as the Company evaluates diversified generation solutions (e.g., fuel cells, additional batteries, solar) as well as the feasibility of gas driven distributed generation associated with a DC-Link. The distributed generation is in the pre-RFP development stage. 30 Voltage Optimization The purpose of the project is to optimize the voltage on the 27kV primary system, including the 4kV overhead system, by implementing enhanced, efficient voltage control. The Company estimates that approximately 7 MW of demand reduction can be achieved. A Conservation Voltage Optimization (“CVO”) pilot at 4% optimization was completed for one week in December and the data analysis showed a definite load reduction as a result of CVO and is undergoing further data analysis along with previous tests which were conducted in the third quarter. The Brooklyn/Queens (B/Q) regional engineering team has begun its efforts on overhead phase balancing. These initial phase balancing efforts will guide the B/Q engineers on determining which network sections are cost effective to phase balance versus other options under consideration. Collaboration with personnel at the Controls Center has commenced for CVO at Brownsville1 and 2 area substations and preliminary scoping has been completed in preparation for the continued expansion of CVO initiative. In the first quarter of 2016, Con Edison expects to begin collaboration with the M&V vendor to develop a strategy for the spring pilot and summer implementation. Utility Sided PV Pilot The Photo-Voltaic (“PV”) project RFP was closed on September 14, 2015. Bid submissions were reviewed for completeness and technical presentations were scheduled for October. Based on feedback from vendors, the RFP language was clarified and re -released with a close date of December 1, 2015. The bids are currently being reviewed. The project attempts to investigate the utility-side possibility of generating an aggregate of 1 MW by means of PV systems installed 31 on the grounds of 10 unit substations and other buildings located in the BQDM Area, that include Brownsville 1 and 2 substations as well as the Company’s Cleveland Street location. The Company has set an in-service target of June 2017. Utility Sited Fuel Cell Similar to storage solutions, the Company believes there are many benefits to using fuel cell technology on the Company’s system. The Company issued an RFP to solicit solutions of up to a 1 MW fuel cell at a Company owned location within the BQDM Area. The Fuel Cell RFP was competitively issued in June 2015 and the solicitation closed on July 17, 2015. Technical presentations were completed on September 9, 2015. The Company, through a procurement process tailored to the BQDM program, has been reviewing the proposals submitted to understand the pricing proposals and determine the most cost-effective option. The project has an anticipated in-service date of June 2017. Non-Traditional Utility-side Solutions Pipeline Activities Con Edison is investigating additional projects that fall under the non-traditional utility-side solutions category. As these projects evolve, more details will be provided in future reports. 32 4.0 Synergies In addition to load relief projects being pursued under the BQDM program, the Company is also assessing other load relief solutions being developed in the BQDM territory.14 In particular, Company personnel responsible for the BQDM program have worked closely with personnel managing the Demand Management Program (“DMP”) - DMP was instituted to incentivize development of load relief solutions, which would serve as part of the solution to a potential supply constraint resulting from retirement of the Indian Point Energy Center - to identify synergies and benefit from mutual load relief efforts. The Company estimates that DMP solutions currently being pursued in the BQDM Area, if fully implemented, could provide over 500 kW of load relief at the peak hour and over 1.1 MW of maximum load relief between noon and 1 pm. 14 The Company is providing assessments of potential load relief provided by the Demand Management Program (“DMP”) beginning with this report, given that the DMP has now completed allocating available funds to load relief projects. 33