20180126King Rebuttal.pdf

Preston N. Carter (ISB No. 8462)
Deborah E. Nelson (ISB No. 57ll)
Givens Pursley LLP
601 W. Bannock St.
Boise,ID 83702
Telephone: [phone]
Facsimile: (208) 388-l 300
prestoncarter@ givenspursley. com
den@ qivenspursley.com
I 405 8620_3.docx ll 391 5 -21
Attorneys for ldaho Clean Energlt Association, Inc.
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER
COMPANY'S APPLICATION FOR
AUTHORITY TO ESTABLISH NEW
SCHEDULES FOR RESIDENTIAL AND
SMALL GENERAL SERVICE
CUSTOMERS WITH ON-SITE
GENERATION
Case No. IPC-E-f 7-f3
REBUTTAL TESTIMONY OF KEVIN KING
ON BEHALF OF
IDAHO CLEAN ENERGY ASSOCIATION, INC.
JANUARY 26,2018
RECEIVED
?$tfi JAN 25 Pl't 2:57
]
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a. Please state your name and address.
A. My name is Kevin King and my business address is 401 N. Main St., Meridian, ID
83642.
a. On whose behalf are you testifying?
A. I am testifying on behalf of the Idaho Clean Energy Association (ICEA).
a What is the purpose of your rebuttal testimony?
A. On behalf of ICEA, I would like to provide an industry perspective in response to the
recommendations made in the testimony of the Commission Staff, Stacey Donahue and Dr.
Michael Morrison. Secondly, I will propose recommendations that, in ICEA's opinion, will
strengthen Staff s proposal.
a. Have you reviewed the testimony of Dr. Michael Morrison and Stacey Donahue?
A. Yes.
a Overall, what is your reaction to Staff s testimony?
A. ICEA appreciates and wholeheartedly agrees with Staff s primary recommendation that
Idaho Power's current proposal is notjustified and should not be adopted.
ICEA also appreciates Staff s effort to apply an evidence-based, objective, and non-
discriminatory approach to this process. Stafls focus on the relevant issue - how to value
excess generation - enables stakeholders to scope the issues and consider alternatives. ICEA and
its members stand ready to work with Staff and other stakeholders toward fair and long-term
solutions to appropriately value excess generation.
I particularly would like to highlight Ms. Donohue's direct testimony (page 11, lines 14-
20):
Staff does not believe that power consumed by the customer at the
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I time it is produced by the customer's own generation should be
2 included in the cost shift calculation. The only transactions that
3 should be considered are those that happen at the meter: 1) the
4 power supplied by the Company, and 2) excess generation supplied
5 by the customer.
6 ICEA strongly agrees with this principle, which supports each Idahoan's right to control their
7 own energy consumption while not unduly impacting others.
8 Q. What is your reaction to the other parts of the Staff s testimony?
9 A. Conceptually, I agree with the philosophy that customers pay retail rate for what they
10 consume and receive fair compensation for what they upload. However, the Staff testimony and
I I that of other parties makes clear that the parties and the Commission do not have sufficient data
12 or analysis to understand the impacts of Staff s proposals. Therefore ICEA favors creating a
l3 predictable, measured approach to consider these proposals. ICEA also recommends that any
14 potential changes are made in a manner that is gradual, that fully recognizes the benefits of solar,
15 and that occur after the level of installed rooftop solar capacity justifies the administrative burden
16 for the utility, regulators, and stakeholders (like distributed energy providers) to implement
17 changes.
18 The remainder of my testimony will address four aspects of the Staff s testimony:
19 (a) Opposing Idaho Power's request to segregate net metering customersl
20 (b) Valuing exports from net metering customers at an avoided cost determined in a
2l subsequent docket;
22 (c) Proposing a shift from monthly to hourly netting of consumption and
23 production;
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I (d) Deferring a decision on Schedule 72.
2 My testimony will conclude with a few additional observations and a summary of
3 recommendations.
4 (a) Opposing Idaho Power's request to segregate net metering customers
5 Q. Do you agree with Dr. Morrison's opposition to the Company's proposal to establish two
6 new rate classes for net metering customers?
7 A. Yes. In summarizing his recommendations, Dr. Morrison states (page 22, Direct
8 Testimony) "The new rate classes provided by the Company are unnecessary." On behalf of
9 ICEA, I strongly agree with this conclusion that Idaho Power did not establish any factual basis
10 for segregating NEM customers based on consumption patterns.
l l (b) Valuing exports from net metering customers at an avoided cost determined in a
12 subsequent docket
13 a Please comment on Staff s proposal to value NEM generated power delivered to the grid
14 using avoided costs rates.
l5 A. First, ICEA agrees with Staff that any potential cost shift that may occur between NEM
l6 and non-NEM customers is small today and for the foreseeable future. Although Staff proposes
17 changing the valuation of exports primarily out of principle, ICEA submits that the materiality of
l8 any potential cost shift should be considered before imposing the administrative costs and
19 disruption associated with changing the value of exports. Because any potential cost shift is
20 immaterial, ICEA recommends no changes to net metering policy at this time.
2l More generally, ICEA agrees that it is fair to compensate customers for excess generation
22 at arate that reflects the cost and benefits of that power. Because Idaho Power cannot show any
23 meaningful impact of using the retail rate to value excess generation today, ICEA believes the
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I retail rate remains an adequate proxy that balances accuracy with administrative ease. As NEM
2 pariicipation grows, however, ICEA acknowledges that the need for more precision increases.
3 Staff describes that the DSM avoided cost was used as a placeholder for estimating the
4 impact of Staff s proposal, as described on page 11, lines 7-12 of Dr. Morrison's Direct
5 Testimony (revised):
6 In order to estimate an average net metering customer's bill under
7 Staffs proposal, I used 2015 DSM avoided cost rates; however, as
8 I indicated earlier, I believe that the exact methodology for
9 calculating net metering avoided cost rates should be determined in
l0 a separate docket.
11 ICEA agrees with Staff that a proceeding to determine a robust method to value exported
12 energy is a good step to take at the appropriate time. Valuing excess at DSM avoided costs is one
13 methodology worth considering because it focuses on costs avoided by the actions of individual
14 customers. However, the current DSM methodology would need to be improved and expanded to
l5 capture all of net metering's costs and benefits. ICEA believes that ICL Exhibit 404 provides a
16 good list of elements that should be included in the analysis of the costs and benefits of
17 distributed generation. These elements from Exhibit 404 include, but should not be limited to,
l8 the following:
19 . Energy (including system losses)
20 o Capacity (including generation, transmission, distribution, and DPV installed capacity)
2l o Grid Support Services
22 o Financial Risk (including fuel price hedging and market price response)
23 o Security Risk (including reliability & resilience)
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1 o Environmental
2 o Social & Economic Development
3 Further, as I recommended in direct testimony, ICEA asks that the process for determining
4 the appropriate valuation ofexcess generation be governed by the regulatory version ofa
5 "referee" and include representation from stakeholders.
6 (c) Proposing a shift from monthly to hourly netting of consumption and production
7 Q. Please comment on StafPs proposal to change from monthly to hourly netting on
8 consumption and generation.
9 A. Staff states the following (page 22, Morrison Direct):
l0 The simplest way to eliminate this intraclass subsidy is to modify
I I Schedule 84 so that net metering customers pay full retail rates for
12 the hours in which they are net consumers of energy, and receive
13 credit at avoided cost rates for the hours in which they produce
14 excess energy.
15 Hourly netting introduces some practical concerns for solar installers and our customers,
16 which I would like to highlight:
17 1. Wide Range of Impacts. Staff has provided an estimate of their proposal's impact on the
18 average net metering customer's bill. Dr. Morrison Direct Testimony, p. 11, lines 2-t9.
19 However, there is a great deal of disparity in the level of impacts across all net metering
20 customers. Some would be minimally affected, while others would be substantially
2l affected. Estimating the impact to an average net metering customer is useful but does
22 not fully illustrate the impacts of the proposal.
23 2. Complexity. Given the wide range of impacts, customers cannot rely on a description of
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the impact on the average customer in order to determine how the hourly netting proposal
will impact them. It is actually quite complicated for a customer to determine how hourly
netting would impact him or her: a customer would need a spreadsheet that provides
annual hourly usage data; a solar installer would then need to marry this spreadsheet,
hour-by-hour, with projected hourly production data; the customer would then need to
apply some complex calculations regarding which tiered rate would be offset and which
avoided cost rate would apply. This analysis would be beyond the capability of most net
metering customers. Even if customers attempted the calculation, there is a high
likelihood that they would reach incorrect or inaccurate results.
I am also concerned that the complexity could lead to different companies all
acting in good faith but providing inconsistent information to customers. As an industry
association, ICEA supports providing clear, understandable, and accurate information to
all Idahoans.
3. Uncertainty. The above factors lead to uncertainty regarding the value of investing in
rooftop solar, which takes a toll on solar installers and can urulecessarily discourage
customers who could otherwise benefit from rooftop solar. Currently, one of the
challenges for solar installers is the administrative time required to help customers
determine if rooftop solar is a good fit for the customer. Many customers evaluate the
investrnent based on their historical bills and performance data we provide or that is
publicly available. With hourly netting, customers would need to be very adept at Excel
and motivated to spend the time to figure out the return on an investment in rooftop solar.
In my experience, this type of uncertainty and effort required to evaluate an investment
can dampen demand for what could otherwise be an economically beneficial option.
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I 4. Risks to limited-income customers. As described in my direct testimony, a significant
2 segment of customers we solar installers serve are those planning for fixed income
3 constraints and therefore trying to control and levelize their future energy costs. ICEA
4 believes that helping people manage energy bills is good public policy, and our
5 businesses provide a valued service to help Idahoans do so. Given that some portion of
6 customers would be substantially impacted by hourly netting, and that it is complex to
7 determine what the impacts would be on a given household, I am concerned that some or
8 many customer with fixed or limited income could face signif,rcant increases in their bills
9 Q. In light of ICEA's concerns, do you have any recommendations regarding Staff s
l0 proposals for hourly netting and using avoided costs to value net metering exports?
I 1 A. Yes. Given the practical concerns above, I would recommend, if it is determined in a
12 subsequent docket that the value ofexcess generation is substantially different than retail rates,
1 3 that at a date in the future when the installed capacity of rooftop solar reaches a significant level,
14 an appropriate value for distributed generation be applied to excess generation on a monthly
15 netted basis rather than an hourly netted basis.
16 If it is determined in a subsequent docket that the method for compensating excess
17 generation should change, I would emphasize the need for stability, gradualism, and visibility to
l8 future changes. For example, Staff has proposed both hourly netting and valuing excess
19 generation at avoided cost. Again, I do not believe the practical concerns and burdens created by
20 hourly netting are justified by the insignificant level of cost shifting. However, if changes to
2l monthly netting or the value of exports do occur in the future, I recommend that any changes be
22 phased in separately with clear, long-term visibility. Customers and solar installers have little
23 data or experience base to project the complex impact of both changes. Phasing changes in
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I separately would not eliminate the concerns I have expressed above, but it would help provide
2 installers and customers the time and visibility necessary to predict and mitigate the impact of
3 the changes.
4 (d) Deferring a decision on Schedule 72
5 Q. Staff has recommended that Idaho Power's proposed changes to Schedule 72be denied
6 and that changes to ScheduleTZbe submitted and considered as part of a separate case. How do
7 you respond?
8 A. ICEA appreciates Staff s recognition that the changes to Schedule 72 are more significant
9 than represented by Idaho Power in its application. I agree that the changes are outside the scope
10 ofthis docket and shouldbe denied.
I I Regarding the initiation of a new case, please recognize that ICEA and its members bear
12 a heavy cost to provide time and administrative costs to respond to dockets affecting our
13 businesses. ICEA proposes that, before filing a separate case on Schedule 72,Idaho Power be
14 required to l) provide evidence that there's a material problem to be resolved; and 2) involve
15 ICEA in reviewing the issues and considering solutions before a case is filed.
16 Additional observations and comments
17 a. Staff recommends that, though any potential cost shift is financially insignificant, the rate
l8 design for net metering should nevertheless be addressed at this time. Please respond.
19 A. As described in my direct testimony, solar installers value stability and predictability. I
20 support a fair and objective process to resolve the appropriate methodology for valuing excess
2l customer-generated solar power. However, note that:
22 o Staff and other intervenors confirm that the potential cost shifting is insignificant.
23 . Implementation of any changes creates an administrative burden on solar installers.
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IPC-E-17-13
I r In order to accurately advise potential solar customers, solar installers need time to build
2 a base of experience with readily available data in order to best help customers consider
3 their options.
4 In light of these considerations, I propose that any changes to net metering rate policy not
5 go into effect until after the total nameplate capacity of net metering residential solar reaches a
6 benchmark level of 60MW, which is approximately an additional 50 MW. For context, please
7 note from Ms. Donahue's testimony (page 3, Lines 14-16) that Idaho Power's system peak-hour
8 load requirement is forecasted to grow by 50MW for each of the next twenty years.
9 Q. Do you have any other observations about Staff s proposals?
l0 A. Yes. Staff proposes changing net metering rate policy out of principle of faimess. While,
I 1 as discussed above, I don't think changes are justified at this time, if changes to net metering
12 policy are considered, changes to policy based on a principle of fairness should also include
13 changes to ensure net metering customers are ffeated in a non-discriminatory manner. For
14 example, the rate programs available to residential customers for utility-supplied power should
15 be available equally to net metering and non-net metering customers. I agree with Staff s
16 philosophy that net metering customers should pay falr rates for energy that is downloaded and
17 receive fair compensation for energy that is uploaded. If changes to net metering policy were
l8 implemented to change the method for valuing excess generation, I know of no reason to deny
19 net metering customers the opportunity to participate in Time of Day rate programs or in any
20 other rate program available to standard customers for the company-supplied power they
2l consume.
22 Summary of recommendations
23 a. Please summarize your specific recommendations.
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IA ICEA recommends:
That the Commission deny the Company's proposal to establish two new rate classes,
which are unnecessary and unjustified.
That the Commission establish guidance that power consumed by the customer at the
time it is produced by the customer's own generation should not be included in a cost
shift calculation.
That a separate docket determine a robust methodology for valuing excess generation,
that the analysis is performed by a neutral third party and govemed by an objective
"referee", and that the methodology covers the full range of benefits and avoided costs
provided by distributed generation.
That any changes to net metering rate policy should not go into effect until after the total
nameplate capacity of net metering residential solar reaches a benchmark level of 60MW.
That when the installed capacity of net metering residential solar reaches the benchmark
level, an appropriate value for distributed generation be applied to excess generation on a
monthly netted basis rather than an hourly netted basis.
Regarding the method for compensating excess generation changes, that changes should
be phased in separately and with clear,long-term visibility.
That, if the Commission were to approve changes to the methodology of compensating
net metering customers for excess generation, the variables affecting those changes be
available and visible to customers for two years before going into effect.
That net metering customers be allowed to participate in Time of Day rates available for
the company-supplied power they consume.
That proposed changes to Schedule 72be defied and that such changes be proposed in a
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separate docket only after the Company has evidence of a material problem and after the
Company reviews any issues and potential solutions with ICEA and other relevant
stakeholders.
Does this conclude your testimony?
Yes.
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CERTIFICATE OF SERVICE
I certify that on January 26,2018, a true and correct copy of the REBUTTAL TESTIMONY OF
KEVIN KING was served upon all parties of record in this proceeding via the manner indicated
below:
Commission Staff
Diane Hanian, Commission Secretary Hand Delivery & Electronic Mail
Idaho Public Utilities Commission
472 W . Washington Street
Boise, ID 83702
Diane.holt@puc. idaho. gov
(Original and 9 copies provided)
Sean Costello, Deputy Attorney General Electronic Mail
Idaho Public Utilities Commission
472W. Washington Street (83702)
P.O. Box 83720
Boise, ID 83720-0074
S ean.costello@f'uc. idaho. gov
Electronic Mail
Lisa D. Nordstrom
ldaho Power Company
1221 West Idaho Street(83702)
P.O. Box 70
Boise, ID 83707
lnordstrom@ idahopower. com
dockets@ idahopower.com
Matthew A. Nykiel
Benjamin J. Otto
Idaho Conservation League
P.O. Box 2308
102 E. Ettclid, #207
Sandpoint, ID 83864
mnykiel@ idahoconservation. org
[e-mail]
Briana Kobor
Vote Solar
360 22"d Street, Suite 730
Oakland, CA94612
[e-mail]
Timothy E. Tatum
Connie Aschenbrenner
Idaho Power Company
1221 West Idaho Street (83702)
P.O. Box 70
Boise, ID 83707
ttatum@ idahopower. com
caschenbrenner@ idahopower. com
Abigail R. Germaine
Boise City Attorney's Office
150 N. Capitol Blvd.
P.O. Box 500
Boise, ID 83701-0500
aeermaine@ c ityo fbo i se. ore
Vote Solar
c/o David Bender
Earthjustice
3916 Nakoma Road
Madison, WI 53711
dbender@ earthj ustice. ore
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KING, DI-REB
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IPC-E-17-13
Electronic Mail (continued)
Idaho Irrigation Pumpers Association, Inc.
c/o Eric L. Olsen
Echo Hawk & Olsen, PLLC
505 Pershing Ave., Suite 100
P.O. Box 6119
Pocatello,ID 83205
[e-mail]
Elias Bishop
Auric Solar,LLC
2310 s. 1300 w.
West Valley city, UT 8411,9
Elias.bishop@ auricsolar. com
ZackWaterman
Idaho Sierra Club
503 W. Franklin Street
Boise, lD 83702
Zach. waterman@ sierrac lub. org
Tom Beach
Crossborder Energy
2560 9th Sfieet, Suite 2l34
Berkeley, CA947l0
tomb@crossborderenerqy. com
Snake River Alliance NW Energy Coalition
c/o John R. Hammond Jr.
Fisher Pusch LLP
101 South Capital Blvd., Suite 701
Boise, ID 83702
[e-mail]
Anthony Yankel
12700 Lake Avenue, Unit 2505
Lakewood, OH 44107
[e-mail]
Idahydro
c/o C. Tom Arkoosh
Arkoosh Law Offices
802 W. Bannock Street, Suite 900
P.O. Box 2900
Boise,ID 83701
Tom.arkoosh@arkoosh. com
Erin.cecil@arkoosh. com
Sierra Club
c/o Kelsey Jae Nunez
Kelsey Jae Nunez LLC
920 N. Clover Drive
Boise,ID 83703
kelsey@kelseyiaenunez. com
Michael Heckler
3606 N. Prospect Way
Garden City, ID 83714
Michael.p.heckler@ smail.com
Snake River Alliance
wwilson@ snakeriveralliance. ore
NW Energy Coalition
diego@nwenerg),.org
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IPC-E-17-13
Electronic Mail (Continued)
Intermountain Wind and Solar, LLC
c/o Doug Shipley
Dale Crawford
1952 West 2425 Sofih
Woods Cross, UT 84087
doue@ imwindandsolar. com
dale@ imwindandsolar. com
Intermountain Wind and Solar, LLC
c/o Ryan B. Frazier
Brian W. Burnett
Kirton McConkie
50 East South Temple, Suite 400
P.O. Bo 45120
Salt Lake city, UT 84111
[e-mail]
[e-mail]
Preston N. Carter
/
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c,**-
GTvENS PunsLEY,,"
Attorneys and Counselors at Law
501 w. Bonnock Slreel
PO Box27n
Boise, lD 83701
Telephone: 208-388- I 200
Focsimile: 208-388-l 30O
ww.givenspursley.com
Preston N. Corter
[e-mail]
208-38a-1272
Diane Hanian, Commission Secretary
Idaho Public Utilities Commission
472 W . Washington Street
Boise, ID 83702
Gory G. Allen
Chrislopher J. Beeson
Joson J. Blokley
Clint R. Bolinder
Jeff W. Bower
Preston N. Cqrter
Jeremy C. Chou
Williom C. Cole
Michoel C. Creomer
Amber N. Dino
Brodley J. Dixon
Thomos E. Dvorok
Jeffrey C. Feredoy
Mortin C. Hendrickson
Brion J. Holleron
Ke6tl H. Kennedy
January 26,2018
Direct Testimony on Rebuttal
IPC-E-17-13
Preston N. Carter
Neol A. Koskello
Deboro K. Krislensen
Michoel P. Lowrence
Fronklin G. Lee
Dovid R. Lombordi
Kimberly D. Moloney
Kennelh R. McClure
Kelly Greene McConnell
Alex P. McLoughlin
Melodie A. McQuode
Chrislopher H. Meyer
L. Edword Miller
Potrick J. Miller
Judson B. Montgomery
Emily G. Mueller
Deboroh E. Nelson
W. Hugh O'Riordon, LL.M.
Rondoll A. Pelermon
Jock W. Relf
Michoel O. Roe
Jomie Coplon Smith
P. Mork Thompson
Jeffrey A. Wor
Robert B. White
Kenne'lh L. Pu6ley (1940-2015)
Jomes A. Mcclure {1924-201 l)
Roymond D. Givens 11917-2008lI
;:
--1i-J"l : -ar.
r i i:--
3a L-
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Dear Ms. Hanian:
Enclosed for filing is the original and 9 copies of the Rebuttal Testimony of Kevin King.
Please accept the original as the reporter's copy under Commission Rule 231.04. Two CDs
containing a searchable PDF version of the Rebuttal Testimony is also enclosed. The parties will
be served electronically.
Please do not hesitate to contact our office ifyou have any questions or concerns.
Sincerely,
Re:
Case No.
PNC/KIh
Enclosures
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