Pushing forward on what some are calling “Utility 2.0,” New York on Thursday adopted a regulatory reform framework aimed in large part at paving the way for more cleaner, distributed energy on the grid.

A whole host of factors is driving the state here: A post-Sandy desire to address climate-change risks, increasingly cheaper renewables, smart new energy-management technology, the prospect of economical energy storage and an aging infrastructure that will require heavy investment no matter what.

All of which terrifies utilities (or ought to).

The state isn’t unique in facing these issues – conflict between those pushing for more customer-sited energy generation and utilities is bubbling up all around the U.S. – but Gov. Andrew Cuomo’s Reforming the Energy Vision (REV) plan is emerging as one of the boldest, most comprehensive approaches to taking on the challenge.

“A 21st century economy needs a 21st century power grid, and these reforms will ensure New Yorkers get the best possible service from their utilities while improving the statewide economy,” Cuomo said in a statement. “This state is in need of a modern and efficient energy system, and we are proud to take the steps to build a sustainable way to deliver energy to every home in New York.”

Through the state’s Public Service Commission (PSC), New York is telling utilities to draw up plans, by mid-December, for bringing more distributed energy online, setting the utilities up as “Distributed System Platform” (DSP) providers. This is a big change for utilities, accustomed to the current three-function system of generation (almost always from big, centralized plants), transmission and distribution.

Cuomo said the policy framework adopted by the PSC would “improve and enable”:

• Competition: By restricting utilities from owning local power generation and other energy resources, customers will benefit from a more competitive market, with utilities working and partnering with other companies and service providers.
• Consumer Protection:Establishing expanded outreach and consumer protections will benefit low- and moderate-income customers and promote greater transparency and community engagement.
• Energy Efficiency:Requiring utilities to improve their ongoing energy efficiency programs will reduce customer energy bills and curb statewide greenhouse gas emissions.

In addition, in a separate release, the PSC detailed its approval of the state’s first community choice aggregation (CCA) pilot program, in Westchester County. A handful or so such programs focused specifically on accessing green energy have been founded around the U.S. – Marin Clean Energy in California was among the first. These are opt-out programs that allow local governments to aggregate electricity demand.

“The innovative community aggregation pilot program approved today furthers the Governor’s strategic REV plan by supporting communities that desire to find ways to negotiate with third-party energy providers to meet their community’s energy supply needs and to get the best price possible,” said PSC Chair Audrey Zibelman.