20190405Tatum Direct.pdf

-' -' j_- i r i"-- ;-,
t l;J
. .' _: r'r I.. !?. .,^,l rj t;r l''L
' 1r'l1'
i - "" '';''"t:";;;:i'j
BEFORE THE IDAHO PUBLIC UT]LITIES COMMISSION
]N THE MATTER OE IDAHO POWER
COMPANY' S APPL]CAT]ON EOR
AUTHORITY TO STUDY THE
MEASUREMENT INTERVAL,
COMPENSATION STRUCTURE, AND VALUE
OF NET EXCESS ENERGY FOR ON_SITE
GENERATION UNDER SCHEDULE B4 AND
TO TEMPORARILY SUSPEND SCHEDULE
84 NET METERING SERVICE TO NEW
]DAHO APPL]CANTS.
IDAHO POWER COMPANY
D]RECT TESTIMONY
OE
TIMOTHY E. TATUM
CASE NO. IPC_E_19_15
1
2
3
4
5
6
1
B
9
O.Pl-ease state your name, business address, and
present position with
"Company").
A. My name
address is L227 West
am employed by Idaho Power
Regulatory Affairs 1n the
Idaho Power Company ("Idaho Power" or
is Timothy E. Tatum. My business
Idaho Street, Boise, Idaho 83102.
as the Vice President of
Regulatory Affairs Department.
I
10
O.Please describe your educational
A. I earned a Bachel-or of
degree in Economics and a Master of
degree from Boise State University.
Bus ine s s
background.
Administration
Business Administration
I have also attended11
72
13
el-ectric utility ratemaking courses, including "Practical-
Skills for The Changing Electrical Industry, " a course
74 offered through New Mexico State University's Center for
to Rate Design and Cost of
presented by Electric
15 Public Utilities, "Int.roduction
76 Service Concepts and Techniques"
L1 Utilitles Consultants, Inc., and Edison Efectric
Institute's "Efectric Rates Advanced Course." In1B 20L2, r
the79 attended the Utility Executive Course
20 University of Idaho, and subsequently
21 the UEC faculty in 2075.
22
23
.AZ1
(*uEC") at
became a member of
O. Please descrlbe your work experj-ence with
Idaho Power.
A. I began my employment with Idaho Power in 7996
in the Company's Customer Service Center where I handled
TATUM,
fdaho
DI
Power
1
Company
1
2
3
4
5
6
1
B
9
customer phone calls and other customer-related
transactions. In 7999, I began working in the Customer
Account Management Center where I was responsibl-e for
customer account maintenance in the areas of billing and
metering.
In June of 2003, I began working as an Economic
Analyst on the Energy Efficj-ency Team. As an Economic
Analyst, I was responsibl-e for ensuring that the demand-
side management (*DSM")
10 properly, preparing and
activities to management
conducting cost-benefit
expenses were accounted for
reporting DSM program costs and
and various external- stakeholders,11
72
13
74
providing DSM analysis
Resource Plan.
analyses of
support for
DSM programs, and
the Company's Integrated
15 In August of 2004, I accepted a position as a
16 Regulatory Analyst in the Regulatory Affairs Department.
l1 As a Regulatory Analyst, I provided support for the
18 Company's various regulatory activities, incl-uding tariff
79 administration, regulatory ratemaking and compliance
20 filings, and the development of varj-ous pricing strategies
2L and policies.
22 In August of 2006, I was promoted to Senior
23 Regulatory Analyst. As a Senior Regulatory Analyst, my
24 responsibiflt.ies expanded to include the development of
25 complex financial studies to determine revenue recovery and
TATUM, DI
Idaho Power
2
Company
1 pricing strategies, including the preparation of the
2 Company's cost-of-service studies.
3 In September of 2008, I was promoted to Manager of
4 Cost of Service and, in April of 20LL, I was promoted to
5 Senior Manager of Cost of Servi-ce and oversaw the Company's
6 cost-of-service activities, such as power supply modeling,
1 jurisdictional separation studies, class cost-of-service
8 studies, and marginal cost studies. In March 2075, I was
9 promoted to Vice President of Regulatory Affairs. As Vice
10 Presldent of Regulatory Affairs, I am responsible for the
11 overall coordination and direction of the Regulatory
12 Affairs Department, including development of jurisdictional
13 revenue requirements and class cost-of-service studies,
\4 preparation of rate design analyses, and administration of
15 tariffs and customer contracts.
L6 O. What is the Company's request in this docket?
Ll A. With this case, the Company requests that the
1B Idaho Publ-ic Util-ities Commission ("Commisslon") initiate a
L9 coll-aborative process to explore modiflcations to the
20 compensation structure and excess energy value applied
2L under Schedule 84, Customer Energy Production Net Metering
22 Service ("Schedule 84") that can be implemented by January
23 7, 2020. The Company further requests that the Commission
24 temporarily suspend service under Schedul-e 84 to any
25 prospective commercial, industrial, and irrigation net
TATUM, DI 3
Idaho Power Company
1
2
3
4
5
6
1
B
9
meteri-ng customers in Idaho during the pendency of this
case. The suspension would not apply to customers
currently taking service under Schedule 84 or customers who
have submitted applications for net metering servi-ce under
Schedul-e 84 as of the date of this fiJ-ing. Whil-e the
Company supports its customers who wish to instal-1 on-site
generation at their businesses and farms, the current
compensation structure provides an inaccurate economic
significant uneconomic investmentIead to
10
signal that may
by customers, if not modified.
11 O. There is an existing docket, Case No. IPC-E-
12 18-15 ("18-15 Case"), with the purpose of exploring
13 appropriate al-ternative compensation structures and the
74 value of on-site energy production for resldentla1 and
15 smal-I commercial customers. To what extent,
L5 the Company's request in this case impact the
11 A. Because the Company, Commission
1B other parties
customer-owned
to the 1B-15 Case are exploring
of net-excess energy value. The Company believes
if dfly, does
1B-15 Case?
Staff, and
the val-ue of
t9 on-site generation in the context of
20 Schedul-e 6, Resldential Service On-S j-te Generati-on
2! ("Schedul-e 6") and Schedu]e 8, Small- Genera] Service On-
22 Site Generation ("Schedu1e B") installations, the Company
23 proposes
the issue
to merge this case with the 18-15 Case so1e1y on
24
TATUM, DI
fdaho Power
4
Company
25
1
2
3
4
5
6
1
9
this approach will lead to a more inclusive and
administratively efficient process.
O. How does the Company propose the 18-15 Case
and this case be processed?
A. There are two common and dlstinct issues that
have been presented for exploration in
18-15 Case: (1) the method under which
this case and the
on-site generation
the value of
10
productj-on is measured and compensated and
on-site energy production to Idaho Power's
Schedules 6 and 8 currently have a
(2)
electric system.
single meter-
11 based measurement and compensation structure. In contrast,
72 Schedul-e B4 applies a dual--meter measurement and
13 compensation structure. These existing differences are
74 Iikely to lead to different outcomes should any
15 modifications to the respective measurement and
76 compensation structures be approved and implemented.
L1 Therefore, the issue of measurement and compensation
18 structures are appropri-ateIy processed in separate cases.
19 However, the issue of the value of customer-owned,
20 on-site generation is most appropriately measured based on
2L the generation source type and not the customer class under
22 which a customer takes utility service. Because the val-ue
23 of on-site generation is resource-specific and not class-
24 specifi-c, Idaho Power believes that it woul-d be more
25 efficient to address this issue comprehensively for all on-
TATUM, DI
Idaho Power
5
Company
1
2
3
4
5
6
1
B
9
site generators, rather than in a piecemeal fashion. A
comprehensive approach wil-l- ensure that a consistent val-ue
is applied for all on-site generation according to resource
type, and not by customer rate schedule. A comprehensive
process to examine the value of on-site generation wil-1
al-so al-l-ow customers or stakehol-ders not currently
participating in
decisions in that
the 18-15 Case, but who may be impacted by
case regarding on-site generation
valuation, to participate
0. How does the
and contribute to the outcome.
Company propose the Commission
11 advise additional parties of the opportunity to participate
12 in the on-site valuation discussion in the 1B-15 Case?
13 A. The Company recommends that the Commission
74 issue a notice in this case to invite intervention from
15 those stakeholders not currently participating, but who may
16 ul-timately be impacted by the resul-ts from the 18-15 Case.
77 The Commission could clarify that the val-uation of energy
18 determined in both this case and the 18-15 Case wil-l- be
19 used to compensate aII on-site generation without regard to
20 the generating customer's cl-ass.
27 O. How is your testimony organized?
22 A. The first section of my testimony will discuss
23 pertinent history related to Schedule B4 that is currently
24 applicable to Schedule 84 net metering customers. In the
25 second sectj-on, I will describe recent and potential future
10
TATUM, D]
Idaho Power
6
Company
1 growth in Schedule 84. The third section of my testimony
2 details the potential cost-shlft impact this growth may
3 have on the standard service customers within Schedule 9
4 (Large General Service), Schedule 79 (Large Power Service),
5 and Schedul-e 24 (Agricultural Irrigation Service), referred
6 to as commercial, industrial, and irrigation ('CI&I")
7 cfasses. The fourth section of my testimony will outline
B the Company's request for the Commission to immediately
9 suspend new service under Schedule 84 and will al-so outline
10 the scope of what should be consj-dered as part of this
11 case. The concluding section wiII describe the Company's
72 efforts related to stakehol-der engagement.
13 I. HISTORY OF SCHEDT'LE 84
74 nv
metering
A
Please provide a general description of net
15
Net metering service is offered by the Company
71
servace.
l6
1B
I9
20
2L
22
23
to provi-de for the transfer of
from customer-owned generatj-on
of offsetting all or a portion
usage.
O.
implemented?
A.
electricity to the Company
facil-ities with the intent
of a customer's energy
Commission issued
creating Schedule
When was Idaho Power's Schedule B4 originally
On February L3, 2002, the
24 Order No. 28951 in Case No. IPC-E-O1-39
25 84 and removing net metering service from Schedule 86,
TATUM, DI 1
Idaho Power Company
1 Cogeneration and Smal-l Power Production Non-Eirm Energy,
2 ("schedufe 86") for customers takj-ng service under Idaho
3 Power Schedule 1 (Residential- Service) and Schedule 1
4 (Small- General Service), collectively referred to as R&SGS
5 customers. As part of that Order, the Commission directed
6 the Company to make an additional- fillngt within six weeks
7 extending net metering eligibility to the Company's
B remainlng customer cl-asses, essentially the CI&I classes.
9 Q. Following the Commission's Order, what did the
10 Company request in Case No. IPC-E-02-04?
11 A. By way of compliance with Commission Order No.
12 2895L, the Company filed an application in Case No. IPC-E-
13 02-04 presenting a net metering proposal for the Company's
74 other customer cl-asses (CI&I). The Company requested
15 approval of amendments to its existing Schedule 84 that (1)
tG a1l-ows customers receiving retail service under schedul-es
l1 other than Schedul-es 1 or 7 to connect a generating
18 resource they own or operate to the Company's system to
19 offset all or part of their electric consumption by means
20 of a financial- credit on thelr billing, (2) allows the
2l Company to continue to charge the CI&I net-metering
22 customer with a demand component in its retail rates for
23 the electrical- demand its l-oad pJ-aces on Idaho Power's
1 In the lulatter of the AppTication of Idaho Power Company for
Amendments to Schedufe 84 - Net ltletering, Case No. IPC-E-02-04.
TATUM, DI B
Idaho Power Company
1 system, (3) does not impose any monthly charges other than
2 those provlded for in the Company's standard service
3 schedule applicable to the net-metering cusLomer, (4)
4 credits all energy provided in excess of the customer's
5 consumption at a price that does not resul-t in a subsidy
6 from other customers, (5) permits generating projects with
I a capacity up to 100 kil-owatts ("kW") to interconnect to
8 the Company's system in a safe and reliable manner, and (6)
9 provides for broad-based access to customers to participate
10 in net metering.
11 O. What differences were proposed for CI&I net
12 metering customers compared to R&SGS customers?
13 A. R&SGS net metering customers utilize a single
L4 utility meter to net both consumption and excess
15 generation. fn the Company's proposal, the CI&I net
16 metering customer would continue to utilize a standard
L1 utility meter that measures the customer's demand and
18 energy, and a second meter would be instalfed to measure
L9 the energy provided by the customer's generating facility.
20 In addition, tf at the end of the billing period,
2L the CI&I net metering customer had delivered excess energy
22 to the Company, each kilowatt-hour ("kwh") of net energy
23 was to be credited at a price equal to 85 percent of the
24 most recently calcul-ated monthly per kWh Avoided Energy
25 Cost. In contrast, R&SGS net meterlng customers were
TATUM, DI 9
Idaho Power Company
1
aZ
3
4
5
6
1
B
9
credited for any Excess Net Energy at their speciflc retail
rate.
O How was the monthly Avoided Energy Cost
determined?
A The Avoided Energy Cost reflected the prj-ce
for non-firm energy, the same basis for the rates included
in the Company's Schedul-e 86.
O. Were there any other proposals made by the
Company in Case No. IPC-E-O2-04?
A. Yes. Idaho Power al-so proposed to track
payments made for power delivered in excess of consumption
and treat those costs as purchased power expenses to be
recovered through the Company's Power Cost Adjustment
74 (*PCA") mechanism. The Staff agreed that
10
11
t2
13
15 treatment was appropriate and recommended
t.his proposed
that payments
1n a new,76 made for excess power
71 separately identified
18 Regulatory Commission
19 Power. In Order No.
purchases be
sub-account
booked
to Federal
(*FERC") Account 555,
29094, the Commission
Energy
Purchased
20 the PCA treatment of excess power purchases
agreed, finding
under Schedule
2L 84 to be reasonable.
22 O. Since Schedule 84 was j-mplemented, have there
23 been any changes which have impacted the Company's CI&I net
24 metering customers?
25
TATUM, DI
ldaho Power
10
Company
1
2
3
4
5
6
1
B
9
Yes. The outcome of Case No. IPC-E-72-21
resulted in two substantial changes to Schedule B4: (1) the
Excess Net Energy compensation structure changed and (2)
net energy metering aggregation was adopted.
O. Please explain what 1s meant by "Excess Net
Energy. "
A. Schedule 84 defines "Excess Net Energy" as
"the positlve difference between the kwh generated by a
Customer and the kilowatt-hours (kwh) supplied by the
Bilting Period. " It is the
A
10 Company over the
amount of energy
applicable
a customer
have
11
79
20
27
))
generates above and beyond what
72 that customer consumes.
13 O.What change to the billing of Excess Net
L4 Energy did the Company propose in Case No. IPC-E-72-21?
15 A. At the time of the Company's proposal in Case
76 No. IPC-E-|2-2'1, customers could request a check from the
71 Company to monetize
Because EERC could
Excess Net Energy financiaf credits.
1B interpreted this practice as
transaction subject to FERCevidence of a
; urisdiction,
for Excess Net
credit for the
wholesale
the Company proposed to stop paying customers
Energy and instead provide them with a kwh
Excess Net Energy they generated in each
23 bilting period.
24 In that case, the Company also proposed that any kwh
25 credits remaining after the customer's December billing
TATUM,
Idaho
DI
Power
11
Company
1
2
3
4
5
6
1
U
9
period would expire. The Commission found the Company's
proposal
metering
instead
denied t.he
each year.
Net Energy
customer's
Company's
Rather,
fair, just, and reasonable to compensate net
customers for Excess Net Energy using a kwh credit
of a financial payment;however,
have the
the Commission
request to
the Commission ordered that the Excess
k!{h credits expire
electricity expire until the
customer is no longer a customer at the site of the net
10 metering
kwh credits
or more premises
credi-ts to offset
would carry over to
usage and would not
offset the
through multiple
al-lowed to apply
the other meters.
aggregation. "
additional- comments
generation system.
. What was the other change that was implemented
72 in Case No. IPC-E-12-21?
13 After the Commissi-on issued Order No. 32846 in
14 Case No. IPC-E-72-21, the Commission received petitions for
from a number of15 clarification and/or reconsideration
[t
parti-es, ultimately resulting in the Commission issuing
Order No. 32880 to soficit additional comments on whether a
1B net metering customer who takes service
11 U
I6
19 meters at one
20 net metering
A
21 I wil-l- refer to this practice
should be
usage on
as "meter
ZZ
23
24
n Did the Commission receive
regarding metering
A. Yes.
aggregation?
The Commission received supplemental
25 comments from a number of the intervening parties and
TATUM, DI T2
Idaho Power Company
l- several members of the public regarding the meter
2 aqqregation issue. Idaho Power submitted the only comments
3 opposing meter aggregation. The Company stated that meter
4 agqregation exacerbates the potential under recovery of
5 fixed costs from net metering customers. Further, the
6 Company argued that aggregation does not align with the
7 intent of net metering as an avenue to offset usage and
8 diminishes the j-ncentive for customers to right-size
9 generation units.
10 O. What was the Commission's decision regarding
11 meter aggregation?
12 A. The Commission issued Order No. 32925 which
13 directed the Company's net metering service to provide for
74 meter aggregatlon for net metering customers, providing all
15 of the followlng eligibility criteria were satisfied:
76 (1) The customer may only apply the Excess
L1 Net Energy credits to accounts held by the customer;
18 (2) The aggregated meters must be located
19 oD, or contiguous to, the property on which the
20 designated meter is located. Contiguous property
2! includes property that 1s separated from the
22 premises of the designated meter by public or
23 raj-l-road rights of way,'
24
25
TATUM, D]
fdaho Power
13
Company
1
2
3
4
5
6
1
B
9
(3) The designated meter and the
TATUM,
Idaho
aggregated
f eeder,'
10
meters must be served by the same primary
and
(4) The electricity recorded by the
designated met.er and any aggregated meters must be
for the customer generator's requirements.
O. Did the Commission discuss the potential- for
cost shift in its order approving meter aggregation?
A. Yes. On page 5 of Order No. 32925, the
Commission stated:
IE] ven with one dellvery point, net
meterj-ng customers may not pay thelr fufl
f ixed costs g j-ven the current rate
structure. We find that allowing
customers to apply credits to offset
usage on contlguous meters that are
served by the same primary feeder is a
reasonable means by which to limit the
potential under-recovery of fixed costs.
In that same Order, the Commission found it fair,
11
1 .-tIL
13
74
15
76
l1
1B
t9
)i
27
22 just, and reasonable to only allow the customer to apply
23 kwh credits between the same schedules, between Schedul-es 1
24 and J or between Schedules 9, 79, and 24, and also directed
25 Idaho Power to "keep US apprised of meter aggregation in
26 its terri-tory. "z
21 Were there any additional- changes to Schedule
28 84 since 20t2?
DI
Power
L4
Company
2 Order No. 32925 at 7-8.
1
2
3
4
5
6
1
B
9
A
requested
new tariff
Yes. In Case No. IPC-E-LI-73, Idaho Power
the establishment of two new rate cl-asses and two
schedules.The Company requested that R&SGS net
removed from Schedule B4 andmetering customers be
transferred to Schedules 6 and B With this change, the
Schedule 84 today areonly Idaho customers remaining on
CI&I net metering customers.
With the R&SGS net metering customers no longer
10 is specific to a Schedule 84 that
11 metering customers.
72 II. SCHEDT'LE 84 GROIflTH
13 O. Why does the Company believe it is necessary
t4 for the Commission to lmmediately suspend new service to
15 Idaho applicants under Schedule 84 and establ-ish a
included
analysis
CI&I net
in Schedule 84, the remainder of testj-mony and
consists only of
modifications to
energy value applied
and prospective Idaho CI&I
16 col-l-aborative process to explore
Ll compensation structure and excess
18 under Schedul-e 84 to all current
L9 net meterlng customers?
20 A
2L wait to take
22
23
24
issues being
resolved, the
net metering
specifically
While the Company's inltial preference was to
any action rel-ated to Schedule 84 until the
explored as part of the 18-15 Case were fully
Company has observed significant growth in
capacity occurring in Schedule 84,
the irrigation net metering class. The
TATUM,
Idaho
D]
Power
15
Company
)tr,
1
2
3
4
5
6
1
B
9
lmmediate suspension of Schedu1e 84 to prospective Idaho
CI&I net meterlng customers should be considered because
the currenL compensation structure establ-ished under
Schedul-e B4 provides an inaccurate economic signal that may
lead to significant uneconomic investment by an increasing
number of customers.
O. Will you please provide an example of what you
consider a "significant" investment to be in this context?
A. My understanding is that certain individual
irrigation customers have already invested, ot are
considering investing, as much as $3.5 million in on-site
generation systems informed, dt least in part, by a payback
analysis that assumes the continuation of the current
Schedule 84 retail rate-based compensation structure and
related meter aggregation rules over the llfe of the
10
11
l2
13
74
15
76 system.
instal-l-
The number of customers making the decislon to
L1 on-site generati-on based on these, or similar
18 assumptions, is growing rapidly.
79 O. What level of growth has the Company observed
20 for Schedule 84?
2l A. The Company has experienced significant growth
22 in Schedule 84, as shown in Figure 1 bel-ow.
23
24
25
TATUM, DI
Idaho Power
76
Company
1 Figrure 1
9MW
8MW
7MW
6 r{!{
5MW
4MW
3MW
2MW
1 l,lSI
- tvl9t
11
T2
13
74
20L3 20L4 20]-s
lcumu].ative Capacity
20L6 20L7
tPending Capacity
2OL8 2019 Q1
YTD
Idaho ScheduJ.e 84 Total Nameplate Capacity
2OL2 - 2OL9 Q1 YrD
@E@@Em @
20t2
2
3
4
5
6
1
B
9
Erom 2012 through 2078, Schedule 84 has experienced
a 32 percent compound annual growth rate ('CAGR") in active
cumul-ative generation capacity. From year-end 2018 through
the end of March 2019, there has been a 774 percent
increase in net metering capacity, including pending net
meterj-ng customers.:
Upon review of the customer composition of the
growth in Schedule 84, 1t is apparent a signi-ficant
difference in the growth by customer cfass exists. For the
commercial- and industrial customers within Schedule 84,
there is a consistent CAGR of 26 percent; in contrast, the
irrigation cl-ass has a 13 percent CAGR from 20L2 through
3 Pending net metering customers are customers who have sent j-n
thelr completed application and paid a $100 application fee.
Historically, 96 percent of customers that have appJ-ied for net metering
service have transitioned to Schedule 84.
10
TATUM,
Idaho
DI
Power
11
Company
3.82 r,r9r
4. 57 MI,I3. 97 r4tr
2. r13 MW
1
2
3
4
5
6
1
B
9
20L8, with most of that growth occurring j-n the l-ast year.
And in just the three months between year-end 20LB and
March 3I, 2019, the growth in active and pending capacity
in the irrigation customer cl-ass has grown 366 percent,
from 1.09 megawatts ("MW") to 5.06 MW.
In additj-on to the active and pending applications
described above, the Company is aware of an additional 5.19
MW of capacity from irrigation customers who have requested
the Company provide detailed information on their meter
data points, including geographic information system
("GIS") data flagging contiguous property, names of
distribution feeders for each meter, transformer sizes, and
rate schedule detail- for each meter, with an interest in
installing photovoltaic systems on their properties. If
all t.hese systems come on-Iine, thj-s woul-d represent a
March 3L, 20!9, year-to-date over year-end 20LB increase in
irrigation net meteri-ng capacity of 900 percent. Figure 2
represents active and pending growth between 20L2 and 2019
for only the irrigatlon class and includes the capacity
associated with the informal inquiries described above.
10
11
72
13
L4
15
t6
t1
1B
79
20
2L
ZZ
23
24
TATUM, DI 18
Idaho Power Company
25
1 Figure 2
Idaho ScheduJ.e 84 (Irrgiation OnIy)
Total Nameplate Capacity
2OL2 - 2OL9 Q1 YrD
L2
10
8
5
4
2
MW
ltlr
MW
l4l9l
MW
MW
MW
1.09 MW
0.04 MW
20L2
0.04 MW
2 013
0.04 MW 0.09 Mw
20L4 2015
0.12 MW 0.13 MW
-
2
3
4
5
6
7
B
9
lCumulative Capacity rPendj-ng Capaci.ty
2OL6 2OL'7 2018 2019 Q1
YTDrlnformal Inguiry Capacity
O. What are the Company's concerns when seeing
this amount of growth in net metering capacity in Schedule
B4?
A. The Company is concerned that fl-awed economic
signals and incentives provided through retail rate net
metering, frdy mislead customers considering very large
business investment decisions in on-site generation.
Specifically, potential irrigation net met.ering customers
may not be considering the financial impact that a change
to the Excess Net Energy credit may have on their
investment decisj-ons, if Excess Net Energy were to be
credited at a different rate, i.e., a value-based rater ds
is currentl-y being discussed in the 18-15 Case.
Also, it is important for customers t.o fu11y
understand the potential cost shift that large increases in
10
11
t2
13
74
15
L6
TATUM, DI
Idaho Power
19
Company
79
3.29 l4rr
1.. ?? l,$'r
tt
1 the net metering capacity may have on the remaining
2 standard service customers who are not installing net
3 metering systems. The Company believes that the current
4 Schedule 84 pricing for Excess Net Energy combined with the
5 current meter aggregation rules are not aligned with the
5 costs and benefits of on-site generation, ultimately
7 removing any incentive for customers to right-size their
8 systems, especially for an irrigation customer.
9 Q. Has the Company witnessed significant growth
10 in the magnitude of Schedule 84 Excess Net Energy transfers
11 in recent years?
\2 A. Yes. At the end of 2015, two commercial-
13 customers transferred a total of 51,687 kwh of Excess Net
74 Energy credits. In 2016, three commercial customers
15 transferred a total of 15,595 kVrlh of Excess Net Energy
76 credits. In 2071, seven commercial customers transferred a
L7 total of !44,348 kwh of Excess Net Energy credits to other
1B commercial- and irrigation
commercial customers and
customer accounts. In 2078, si-x
79 three irrigation customers
20 transferred a totaf of 322,142 kWh of energy credits. The
27 followi-ng Figure 3 shows the total kWh transfer for years
22 20L5 through 2078 by customer class.
23
24
25
TATUM, DI
Idaho Power
20
Company
1 Figure 3
350,000
300,000
250, 000
200, 000
150, 000
100, 000
50, 000
kwh
kwh
kwh
kwh
kwh
kwh
kv{h
kwh
service is
reduce al-l-
Company is
guidel j-nes
Idaho Schedule 84
Total Net Excess Transfers
2015 - 2018
2015
Schedule 84
201"6 20]-7
lCommercial tlrri.gation
20]-8
2
3
4
5
6
7
8
9
to aIlow
or part
aware of
states that the lntent of net metering
customers "to generate electricity to
of their monthly energy usage." The
circumstances where the current
10
and criteria for Excess Net Energy aggregation
their nethave incentivized some customers to oversize
meterJ-ng systems in relation to the load at the
interconnected site.
0. Why does the Company believe that the current
treatment of net monthly Excess Net Energy credits and
meter aggregation transfers may encourage customers to
oversize their net metering systems?
A. As of March 7, 2019, the Company had 23
pending irrigation net metering requests averaging 99.3 kW
of nameplate generation capacj-ty, near the maximum aIl-owed
size of 100 kW under Schedule 84. Assuming 12 months of
11
72
13
t4
15
\6
71
TATUM, DI
Idaho Power
2t
Company
197,675 kl*r
L24,461 k.wt\144,348 kwh
75,595 kwh51 ,687 kr{tr
1B
1
aZ
3
4
5
6
1
B
9
historical usage at each of these metering points, the
Company anticipates approximately 2,000,000 kwh of annuaf
Excess Net Energy credits woul-d be eligible for transfer
from these systems. This data would suggest that these net
metering systems are oversized for the purpose of
transferring the Excess Net Energy credits at the end of
the year to offset usage at another site.
O. fs Idaho Power aware of specific customer
lnquiries whj-ch may appear to support the theory that
customers intend to oversize net metering systems on a
11 larger scal-e?
72 A. Yes. The irrigation customer class has had a
slgnificant increase in cumulative generati-on capacity
within the last two years. Nearly all of the actj-ve or
pending irrigation net meterj-ng customers in 2018 and 2019
have j-nstalled or requested to install-, oD average, 99 kW
systems. Schedule 84 does not allow for customers to
install more than 100 kW at an individual- meter point. And
while the Company cannot determine a customer's intent, ds
I mentioned above, the Company has received multiple
inquirj-es from eight different irrigation customers which
comprise 746 customer meters, dsking the Company to provide
detailed information on thelr systems, including GIS data
flagging contJ-guous property, names of distribution feeders
for each meter, transformer sizes, and rate schedule detall
13
74
15
76
t1
1B
79
20
27
22
23
24
10
TATUM, D]
Idaho Power
22
Company
25
1
2
3
4
5
6
1
B
9
for each meter. One customer alone requested this
information on more than
fact pattern, the Company
suspect that these customers are looklng to
points for thesystems at
of building
eventually
O.
requesting meter aggregation in accordance
Commission-approved tarlff schedufe?
A. As I stated above, the intent
certain metering singular purpose
an Excess Net Energy credit balance that can
offset energy
Why is the
usage at multiple metering points.
Company concerned about customers
50 metering points. Based on this
bel-ieves there is good reason to
overs r ze
with its
10
11
72
13
t4
15
16
L1
1B
79
20
27
22
23
24
25
of the Company's
Schedule 84 net metering service is to allow customers "to
generate electrj-cj-ty to reduce aff or part of their monthly
energy usage." However, the Company does not believe that
when the Commission authorized meter aggregation that it
contemplated the unique characteristic of irrigation
customers who tend to have much larger clusters of meters
on contiguous property than any other customer c1ass, and
who have unique consumption profiles where they consume
Iittle to no energy during the fate fall, winter, and early
spring months when they are not growing crops and consume
only during their growing season. The criteria in the
Company's currently approved Schedule 84 effectlvely allows
the irrigation net metering customer to use the grid as a
battery to store excess energy generated in the non-growing
TATUM, D]
Idaho Power
23
Company
1
2
3
4
5
6
1
B
9
season, and offset usage during growlng-season months. The
current criteria for meter aggregation incentivizes
irrigation customers to oversize their systems in order to
generate Excess Net Energy to be transferred to other
sites, rather than installing generation that is more
aligned with the customer's usage needs.
III. POTENTIAI, COST-SHIFT IMPACT
O. Do current net metering practices create the
potential- for cost shifting related to Schedule 84 net
metering customers?
A. Yes. As discussed in Case No. IPC-E-72-27 and
in annual net metering status reports to the Commission,
the current practice of applying standard retail- rates to
the net metering service creates the potential- for
inappropriate cost shifting between net metering customers
and standard service customers. Any reduction in energy
consumption as a resul-t of on-site generation results in a
reduction in the flxed costs recovered through the
volumetric rate. Eigure 4 shows the percentage of fixed
costs col-l-ected through fixed and volumetric energy
charges:
TATUM, Dr 24
Idaho Power Company
10
11
72
13
t4
15
76
71
1B
t9
ZU
27
22
Z3
24
25
37*
5?t
a3t
1 Figure 4
Percentage of Fixed Costs CoLlected through
Fixed Charges vs. Volumetri-c
1 00r
90*
80t
70s
50t
50t
40t
30ts
20*
10r
0t
Med. Com. Large Com
rFixed Costs in Energy
Industrial Irrigation
rFixed Costs - Demand/Cust
2
3
4
5
6
1
B
9
o
A
What can be learned from a review
Figure 4 presents the percentage
fixed costs that are collected from
of Figure 4?
of the
fixed serviceCompany's
charges and variabl-e demand
of fixed costs included in
charges versus the percentage
the volumetric energy charges
for each primary CI&I class.
the rate structures for the
As can be seen in Figure 4,
CI&I classes assign between 43
10
percent to 63 percent of
energy charges. Because
fixed cost col-l-ection to the
the retail energy charges for CI&I
the compensation rates
TATUM, Dr 25
Idaho Power Company
11 net metering customers are used as
L2 for energy generation, the Company is paying a rate of
13 compensation for customer-owned generation that refl-ects
74 the costs of utility-provided services beyond power
15 generation, not solely the value of the customer-owned
75 generation. To the extent that retail rates exceed the
53t
47*
38r
62$53t
1 value of the on-site generation, that difference represents
customersa per-unlt
over time.Another and more obvious problem with using the
retail rate for compensation of customer-owned generation
j-s that retail rates differ by customer class. As a
resul-t, the Company is effectively paying different prices
for the same resource type (e.9., solar) simply based on
the rate classification of each individual customer.
o In light of those
2
3
4
5
6
1
B
9
cost shift to other standard service
11 proxy for the vafue of customer-owned on-site generation.
72 A No. Retail rates for the CI&I cl-asses likely
13 far exceed the true value of the Excess Net Energy from
74 customer-owned on-site
l-0 the retail rate can conti-nue to
concerns, do you believe
be used as a reasonable
generation. The following Figure 5
likeIy rate disparities:
$0.0217s
$0.02129
15
76
clearly illustrates the
Figtrre 5
Large Commercial
Primary*
Large Commercial
Secondary*
,Jackpot Solar**
Schedule 85 Non-Pisl***
Energy Rate Cornparison
$ /kr{lx
Industrial* 90.04335
$0.04576
$0 .0s921
Irrigation* $0.06216
-
NOTE:* Current average energry rate, including 2018 Power cost Adjustnenti* Jackpot Solar Power Purchase Agreement, first year contract price for 120 t&I*** Schedule 85 - 2018 annual average market based rate
TATUM, Dr 26
Idaho Power Company
71
1
Z
3
4
5
6
1
B
9
A
Pl-ease
Figure
describe Figure 5.
5 presents the current average retail
energy rates for each of the CI&I classes compared to
proxy for theexamples
vafue of
that may represent a reasonable
solar generation on Idaho Power's system. For
comparison purposes, Figure 5 incl-udes the first year per
unit cost of a recently executed power purchase agreement4
(*PPA") between Idaho Power and Jackpot Holdings, LLC
("Jackpot Solar") for L20 MW of solar generation and the
10 annual- average non-firm energy price available to
11 cogeneration and small power producers under Schedule 86.
72 As can be seen in Figure 5, the retail energy rates for
13 each of the CI&I cl-asses differ by as much as $0.079/kWln or
74 $19.00 per megawatt-hour ('MWh"). A1so, when the differing
15 retail- rates are compared to the per-unit cost of Jackpot
76 Solar energy and the non-firm Schedule 86 energy rate, the
l1 retail- rates exceed those proxy valuations by as much as
1B $0. 040/kwh , or $40 . 00/MWh.
79 The Company acknowledges that the retail rate
20 compensation structure under net metering was established,
27 in part, to provide a simple and administratively efficient
22 method of compensatj-ng on-site generators. However, the
a In the ylatter of the Application of ldaho Power Company for
Approval of a Power Purchase Agreement with Jackpot HoTdings, LLC, for
the SaLe and Purchase of up to 220 l"Iegawatts of RenewabLe Sofar
Generation, Case No. IPC-E-19-14 (fi1ed ApriI 4, 2019).
TATUM, Dr 21
Idaho Power Company
1
2
3
4
5
6
1
U
9
rapid growth in net meterJ-ng and the potentially Iarge
disparity between reta1l rates and a reasonabfe value of
on-site generation warrants the immediate and careful
reexamination of the Schedule 84 compensation structure
requested in
rv.
o.
application
A.
pursuing the
not prove to
To mitigate the
install-ation of
be economic under a
this case.
POTENTTAL MODIFICATIONS TO SCHEDULE 84
What is the Company requesting in its
in this case?
10
the Company has
requesting the
servi-ce avaifable to
compensation
two requests. First, the
Commission immediately suspend
risk of CI&I customers
net meteri-ng
different
systems that may
CASE,
11
72
13
74
15
t6
71
1B
t9
20
27
))
23
structure,
Company ls
Schedule 84 Idaho CI&I applicants
as of the date of thisduring the pendency of this
filing. Second, the Company
establish a schedul-e in this
is requesting the Commission
case that could facilitate a
change to
early as
O.
compensation
A
Schedule 84
structure under
the compensation structure under Schedul-e 84, as
January 7, 2020.
Has the Company explored options for how the
Schedul-e B4 coul-d be modified?
Yes. Generally, the Company believes that the
compensation structure should be modified in
24 three important areas. First, the measurement interval for
25 determining Excess Net Energy should be shortened from the
TATUM, DI 28
Idaho Power Company
1 current monthly interval- to no greater than hourly
2 intervals. Second, measured Excess Net Energy shoul-d be
3 compensated at a value-based rate and not a retail- energy
4 rate. Third, because Excess Net Energy credits are for
5 actual generated power used instantaneously by other
6 customers on Idaho Power's system, the costs should be
7 treated as a power supply expense. Such treatment would
B appropriately classify the cost of Excess Net Energy as a
9 system cost rather than the current treatment of assigning
10 the cost of the Excess Net Energy to the customer class
11 under whlch the on-site generator takes service.
L2 If properly implemented, these modifications would
13 send more approprlate economic signals to customers
14 considering on-site generation and 1i-mit inappropriate cost
15 shlfting between net metering customers and standard
16 service customers.
l1 O. As part of its application in this case, is
1B the Company proposing that the Commission immediately adopt
19 the modifications you describe above?
20 A. No, not immediatefy. While the Company
2L supports adopting some form of the compensation structure
22 modifications discussed in my prior answer, the Company
23 al-so believes that it is important to fu11y vet those
24 modifications and other potential modifications 1n the
25 coflaborative process proposed 1n this case prior to making
TATUM, Dr 29
Idaho Power Company
1
2
3
4
5
6
1
B
9
a final recommendation to the Commission. However, prior
to the collaboration process, the Company believes it is in
the best interest of customers to temporarily suspend
service to new Idaho net metering customers under Schedule
84.
O. Does the Company plan to propose changes to
retail- rates charged for electric service under Schedul-e 84
as part of this case?
A. No.
changes rel-ated to
The Company
11 The Company believes that Case
12 approprlate venue
10 a Schedule
does not plan to propose rate
84 customer' s consumption.
No. IPC-E-18-16s is the
13 modifications to
for rate design and rate structure
be explored for CI&I customer classes.
74 O.Given the status of the 18-15 Case, why does
15 the Company believe it is in the public interest to open
76 this additional- docket to evafuate changes to Schedule 842
l1 A The Company believes it is most efficient to
18 evaluate the va-Iue of on-site
and
energy production one time,
rate classes involved.19
20
2T
with all- impacted
Eurther, while the
the conclusi-on of
initiall-y planned
Case to evaluate
to wait until
changes to
the size of
parties
Company
the 18-15
22 Schedule 84, once the Company became aware of
5 In the l"Iatter of the Petition of ldaho Power Company to Study
Fixed Costs of Providing Electric Service to Customers, Case No. IPC-E-
18-16.
TATUM, DT
Idaho Power
30
Company
1
2
3
4
5
6
1
8
9
the investments being considered by several of its
irrigation customers and the potential for cost shifting
within the irrigation cl-ass, it determined it was in the
best interest of al-l customers to initlate thi-s docket to
address these lssues now.
V. STAIGHOLDER ENGAGEMENT
O. Did the Company engage with impacted
stakeholders or customers prior to the filing of this case?
A. Yes. The Company discussed its plans to make
a filing with several parties participating in the 18-l-5
11 Case.
72 O. General-1y, what feedback did you receive?
A. In the Company's opinion, the stakeholders it
engaged with understood the Company's desire to
comprehensively address the question of valuing Excess Net
Energy productj-on at one time, rather than having a
separate process immediately followlng the 18-15 Case to
address the val-ue of Excess Net Energy for other customer
13
t4
15
t6
19 classes subject to
stakeholder the
the provisions of Schedule 84. One
20
10
t7
1B
2t
22
(*rrPA") -
suspension
supported the
of service to
I rrigatlon
Company's
new Idaho
Idaho Pumper's Association
desire to seek a
applicants under
23 Schedule 84.
24 o.Why do you believe the IIPA supports the
25 Company's request to suspend Schedule 84?
TATUM, DI
Tdaho Power
31
Company
1
1
2
3
4
5
5
1
B
9
My understanding is that ffPA' s position is
the instalfation ofone of ensuring lntra-cl-ass equity as
on-site generation
Company, supports
desire to install
expands. Whil-e the IIPA, Iike the
Tdaho Power's irrigation customers who
on-site generation to offset a
their energy needs, I understand that the IIPA is
supportive
results in
Exhibit No.
of continued expansion under a
the suspension
]IPA.
to my testimony is a letter
of Schedule B4 submitted to
portion of
not
10
cost shift to the broader base
structure that
of its members.
of support for
Idaho Power by
11
L2 a. Were there any specific concerns raised by
13 other stakeholders?
L4 A. Yes. The Company heard from other
15 stakehol-ders that they did not support or believe a
76 suspension of Schedule B4 was necessary whife the
71 compensation structure and value for Excess Net Energy was
18 being eval-uated. I also heard from at least one
19 stakehofder a concern that a suspension could be viewed to
20 conf l- j-ct with the Company's recently announced goal to
2L strive for 100 percent clean energy by 2045.
22 a. Given the feedback you received, do you
23 continue to believe a suspenslon to Schedule 84 is
24 necessary?
25
TATUM, Dr 32
Idaho Power Company
1
2
3
4
5
6
1
B
9
A. Yes. Customers are consldering significant
financial lnvestments that I believe are largely based on
their assumption that current retail rate net metering and
meter aggregation will continue unchanged j-n Schedufe 84.
The Company does not believe it is appropriate or in the
best interest of any of its customers to operate under that
assumption, when the Company fully intends to request
modifications to the compensation structure offered under
Schedul-e 84, potentially to be implemented as soon as
January I, 2020. While the Company is unaware of specific
instances of this occurrinq with the CI&I customer classes,
it has heard from numerous residential customers that solar
10
11
72
13 insta1lers may have
certainty to those
during the pendency
promised "grandfatherlng" or other rate
customers. By suspending Schedule B474
15 of this case, the Commissi-on can
LG to customers that it is not reasonab]-e to assume that
I1 compensation
not subject
O.
structure or vafue for Excess Net Energy
signal
the
-.i ^l5
1B to change.
79 Do you believe the Company's request in this
20 matter conflicts with its recently announced "Clean Today.
27 Cleaner Tomorrow"a qoal-?
))
6 Idaho Power has set a goal- of providing 100 percent clean energy
by 2045 while keeping prices low and reliabllity high
(www. idahopower. com/clean) .
TATUM,
Idaho
D]
Power
33
Company
1
2
3
4
5
6
1
'.i
9
A.
clean energy
number of its
No. The Company's
focused ongoal was
customers who have
recent announcement of a
responding to a growing
made it clear they want
the Company bel-ieves itaccess to clean energy.
is in the best interest
However,
of its customers to strive to
achieve this goal by pursuing cost-effective clean energy
an example of
the PPA with
terms of the
Jackpot
PPA, the
which was evidenced by the Company signing
Sol-ar I mentioned above. Under the
Company wiII
10 for $0.02175lkwh ln the first year
11 is expected to displace higher cost
72 resulting in lower net power supply
13 customers.
74 Continulng to use a
the compensation for Excess
procure 720 MW of energy
of the agreement, which
resources, ultimately
expenses for al-l-
customer class's retail rate as
hand,
Iess,
costs of
15 Net Energy on the other
76 when the value of that energy production is likely
71 may ultimately lead to higher
services across the Company's
detriment of customers.
18 c 6 rrTt ^a
procuring energy
area to the
L9
20 vI. coNcLusloN
27 Please summarize the company's request in this
22 case.
23 A. The Company
24 initiate a collaborative
requests that the Commission
process in this case to explore
25 modifications to the compensation structure and excess
TATUM, DI 34
Idaho Power Company
u
1
2
3
4
5
6
'7
B
9
energy value applied under Schedule 84, Customer Energy
Production Net Metering Service, that can be implemented by
January I, 2020. The Company further requests that the
Commission temporarily suspend service under Schedule 84 to
any prospective Idaho net metering customers during the
pendency of this case.
O. Does this conclude your testimony?
A. Yes.
10
11
72
13
L4
15
76
l1
1B
79
20
27
22
23
.AZ1
TATUM, DI
Idaho Power
35
Company
25
I
2
3
4
5
6
1
I
9
I, Timothy E. Tatum, having been duly sworn to
testify truthfully, and based upon my personal knowledge,
state the foJ-lowing:
I am employed by Idaho Power Company as the Vice
President of Regulatory Affairs in the Regulatory Affairs
Department and am competent to be a witness in this
proceedj-ng.
I dec1are under penalty of perjury of the laws of
the state of Idaho that the foregoing pre-fil-ed testimony
and exhib'it are true and correct to the best of my
information and belief.
DATED this 5th day of April 201,9.
T ].mo thy Tatum
SUBSCRIBED AND SWORN to before me this 5th day of
22 April 2019.
STATE OF IDAHO
County of Ada
ATTESTATION OF TESTIMONY
5>.
No ary Pub
Residing a
10
11
72
13
T4
15
76
71
1B
t9
20
2t
23
24
25
26
21
2B
29
30
31
6
for Idahoise, Idaho
expires: L2/20/2020
TATUM, D]
Idaho Power
36
Company
KIMBERLY K. TOWELL
coMMlssloN #16958
NOTARY PUBLIC
STATE OF IDAHO My commission
BEFORE THE
IDAHO PUBLIG UTILITIES COMMISSION
cAsE NO. IPC-E-I9-1 5
IDAHO POWER COMPANY
TATUM, DI
TESTIMONY
EXHIBIT NO. 1
IDAHO TRRIGATTON PUMPERS ASSOCIATION, lNC.
P.O. Box2624
Boise,lD 837OL-2624
Com missioner Paul Kjellander
Com missioner Kristine Raper
Commissioner Eric Anderson
ldaho Public Utilities Commission
472W. Washington
Boise, lD 83702
RE: ldaho Power Company Schedule 84/Commercial, lndustrial & lrrigation Customers
Dear Commissioners Kjellander, Raper & Anderson
The ldaho lrrigation Pumpers Association, lnc. ("llPA")would like to address a matterthat
requires the Commission's prompt attention. The llPA has been actively participating in ldaho Power
Company's ("lPC"l recentfilings involving onsite generation forthe residential and small general service
customers, e.g., IPC-E-17-13, IPC-E-18-15 & IPC-E-18-16. Note, these cases have not directly addressed
these same issues as applicable to Commercial, lndustrial and lrrigation customers who want to invest in
onsite solar generation.
As costs for onsite solar generation have fallen, lrrigation Customers' interest in lowering their
overall irrigation pumping costs through onsite solargeneration has dramatically increased. The llPA is
aware of lrrigation customers who have made, or are considering making, significant investments in
onsite solar generation based on current Schedule 84. However, llPA believes that the calculation of the
credit for Excess Net Energy underthe current Schedule 84 overvalues the credit in light of current and
foreseeable electricity prices. This price distortion causes lrrigation customers to make investment
decisions based on inaccurate cost recovery assumptions. This distortion also creates an interclass
subsidy paid by those lrrigation customers who do not have onsite solar generation to those class
members who do.
The llPA is supportive of renewable onsite generation as an important part of IPC's future
distributed generating resources. However, the prices paid for onsite generation must be fair and
equitable to all other lrrigation customers. Given the Excess Net Energy credit overvaluation, the llPA
supports IPC's request for the entry of a freeze on new Commercial, lndustrial and lrrigation customers
under Schedule 84 and for the initiation of a new docket to look at these issues specifically unique to
this group of customers, This proposed new docket should be able to utilize the existing good work that
has already taken place in the other cases, e.9., IPC-E-18-15 & IPC-E-18-15, and should be targeted to be
completed by year's end.
Respectfully,
ldaho Irrigation Pumpers Association, lnc.
Exhibit No. 1
Case No. IPC-E-19-15
T. Tatum, IPC
Page 1 of 1