20171221Otto Direct.pdf

Matthew A. Nykiel (lSB No. 10270)
P.O. Box 2308
102 S. Euclid #207
Sandpoint, lD 83864
Ph: (208) 26s-956s
Fx (208) 26s-96s0
m [e-mail]
RECEIVED
?011 OtC 2l PH 3: I 6
- "r: -l If\: .- 1 .'1-q,'u:Llw: ;i i-ri,. " i;0l.ii,itSSl0i'l
Attorney for the ldaho Conseryation League
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO
POWER COMPANY'S
AUTHORITY TO ESTABLISH
NEYV SCHEDULES FOR
RESIDENTIAL AND SMALL
GENERAL SERVICE
CUSTOMERS WITH ON.SITE
GENERATION.
cAsE NO. IPC-E-t7-t3
DIRECT TESTIMONY
BENJA]'ilN
'
OTTO
December 2ar2Oa7
)
)
)
)
)
)
I
2
3
4
5
6
7
I
9
t0
il
t2
t3
l4
t5
l5
t7
t8
t9
20
2t
72
Q. Please state your name, affillatlon, and background.
A. My name is Benjamin J. Oao. I am the Energy Associate for the ldaho Conservation League.
I hold a Bachelor of Ara from Prescon College, a Masters of Studies in Environmental Law
from Vermont Law School, and a Juris Doctorate from Lewis and Clark Law School. I am a
licensed acorney in the state of ldaho.
I began my legal career as a Legal Fellow at Advocates for rhe West, a non-profit law
firm in Boise, ldaho. ln 20 !0, I ioined the ldaho Conservation League (lCL) as the Energy
Associate. My responsibilities include entating with ldaho's regulated utilities in lntegrated
Resource Planning, energy efficiency protram development, and other processes that impact
enert), conservation and clean energy. I have represented ICL in many ldaho Public Utilities
Commission proceedings over the years including general rate cases and issue specific dockets
filed by Avise, ldaho Power, lntermounuin Gas, and Rocky Mountain Power. I assist my
colleagues at ICL to monitor and influence energy development proposals that may impact
ldaho's natural values and communities. As part of my portfolio, I sit on the board of directors
for the Nonhwest Energy fficiency Alliance, Renewable Northwest, and I am the Chairperson
of the Northwest Energy Coalition, all non-profit groups working to advance clean energy in
ldaho and across the Northwest.
ln all of these endeavors, my goal is to ensure ldahoans have access to affordable and
reliable enerty that protects the quality of life that makes ldaho special- clear air, clean warer,
healthy natural landscapes, and a stable climate.
Q. Please summarize your testimony and recommendations.
2
rPc-E- r7- r3
Otto, Di
ldaho Conservation League
I
2
3
4
5
6
7
8
9
l0
il
t2
l3
t4
t5
t6
t7
t8
t9
20
2l
22
23
A. My testimony provides the ldaho Conservation League's response to ldaho Power's reguest
to segregate customers with distributed energy systems. This testimony is based on my
personal knowledge and experience with this issue and provides ICL's policy position in this
docket. ln sum, lrecommend the Commission:
l. Deny ldaho Power's request to close Schedule 84 and establish the new Schedules 6 and
8. ldaho Power has not established that the benefit of this request is material enough to
expend the administrative burden and cause the customer chilling impacts of this
customer segretadon.
2. Approve ldaho Power's request to require smart inverters according to industry standard
definitions. lt is my understandint that installing these inverters is common practice in the
area already.
3. Direct stakeholders to begin a process to address the core issue regardint customer
owned distributed teneration s)rstems - what costs do these customers cause and what
value do they bring to the system. Because the lntegrated Resource Plan process is the
source of avoided costs for demand and supply side resources, I recommend the
Commission direct ldaho Power to conduct this analysis in the contex of the upcoming
IRP.
Q. Has the ldaho Conservatlon League engaged with ldaho Power regarding
distributed energy in the Past?
A. Yes, I have been watching the growth of ldaho's distribured energy sector since 2008.
As a member of ldaho Power lntegrated Resource Advisory Committee and Energy Efficiency
Advisory Boards, as well as my work representing ICL before this Commission, I have been
Otto, Di 3
ldaho Conservation League IPC-E- 17- 13
I involved with the regulatory and planning issues brought by distributed energy since 2009. More
2 specifically in 2013, ICL participated in ldaho Power's prior request to setretare distributed
3 energy customers. ln that dockeq and in every opportunity since then, ICL has asked ldaho
4 Power to entage in a robusg transparent and inclusive process to consider the value of
5 distributed energy resources. ln fact, in the month just prior to ldaho Power's filing of this
6 Application, I reiterated directly to the Company ICL's desire to entate in just such a process
7 at any time.
I
9
r0
il
t2
l3
t4
t5
t6
t7
t8
l9
20
2l
22
23
Q. ldaho Power alleges distrlbuted energy users shift costs onto other
customers. Do you agreel
A. I agree that distributed energy users are different in some respecc from other customers.
But I do not agree with ldaho Power's method to measure these differences. ldaho Power uses
the cost of senrice method in an attempt to capture the coss and benefis of distributed energy
on the system. This method of assessing cost causation on a monthly basis is wholly
inappropriate for considering the value of a long-lived resource. For example, demand side
measures are not valued using cost of service because they deliver long-term benefits to the
utility. Recognizing this fact, stakeholders devised methods to capture the full range of costs and
benefits of demand side measures and use the lntegrated Resource Plan process to calculate
these values. Determining the costs and benefits of customer owned distributed generation
reguires the same or similar approach.
Even if the Company's method was appropriate, the alleged shift today is de minimis
compared to the administrative burden of segregatint customers. First, it is imponant to focus
on the subset costs that are unique to distributed energy system customers. EverT customer
Otto, Di 4
ldaho Conservation League IPC-E- 17- 13
I
2
3
4
5
6
7
8
9
r0
il
t2
t3
14
l5
l6
l7
r8
l9
20
2t
72
has the right to control the amount of energr they consume. To the extent a distributed enerty
system customer reduces consumption behind the meter they are no different than any other
member of the residendal or small commercial class. Any consideration of cost shifting
atributable to behind the meter consumption must include all customers, not just the subset of
distributed energ), system owners.
It is only the uploading of kwh onto the gird that makes a distributed energy system
customer unique. To determine the possible extent of any cost shifting from this behavior I
examined tdaho Power's response to Staff Data Request #8, which provides hourly load data
for net metering customers with l2 months of data in 2016. From this data seg lfound a total
of 2,058,853 kwh of customer produced enerty uploading to the grid. To roughly estimate the
value of this excess I apply ldaho Power's Tier I Residential energy rate of $0.0869 and
calculate a total of $ 178,915. This represents 0.035% of the residential class revenue ldaho
Power repors on page 39 of its 20I 6 Form l0-K of $5 14,954,000. This rough estimate of the
alleged cost shift is generous in three ways. Firsg my calculation assumes all exporting
customers are residential when some are commercial, thereby reducing the percentage of class
total and reducing the urgency of this issue. Second, disributed energ), system customers can
only use credits to offset energy costs so man), customers can never monetize these excess
credits. Third, a neighbor consumes any excess energy and then pays ldaho Power the full retail
rate. Meanwhile the Company avoids is the costs of generating and delivering that energy from
far-flung plans. lnstead of lumping to solutions by segregatint customers, I recommend the
Commission use this opportunity to all elements of this dynamic that may incur costs or
provide value for customers.
Otto, Di
ldaho Conservation League
5
tPc-E-r7-t3
I I must also point out that through my experience in general rate cases I have observed
2 that many potential inequities and cost shifting occur within customer classes already due to the
3 nature of ratemaking. Rate settint requires making assumptions about cost causation and the
4 amount of energy each customer will consume. But all parties know there will be wide variation
5 within the class. For example, ldaho Power's cost of service methodolo$/ zrssumes an
6 apartment in Nampa is the same as a ranch house in Salmon. Likewise, the Company makes no
7 attempt to address other obserrrable and predictable differences between members of a class
8 like:
9
t0
il
t2
r3
t4
t5
t6
l7
t8
l9
2A
2t
22
23
. All electric versus gas heated homes
. Having air conditioning or not
. Being in mountainous climates or the southern ldaho desert
. Single hmily homes versus apartmen$
. Electric meters per mile of distribution circuit
As a result, costs differences between these identifiable customer segments are socialized in the
ratemaking process because the administrative burden outweighs the benefits of accuracy. lf
socializing these costs across huge swaths of customers is appropriate, doing the same for the
small set of distributed energy customers while stakeholders determine rnor" ,..rr"te costs
and benefia is appropriate.
Q. Why do you recommend the Commission approve ldaho Power's request
regarding smart inverters?
A. ICL believes that maintaining system reliabiliry is important and rhat smart inverrers on
distributed enert) systems is a cost effective means to achieve this goal. We agree with using
Otto, Di 6
ldaho Conservation League IPC-E- 17- l 3
I industry-accepted sundards to define the technology instead of mandating a specific product I
2 have spoken with several distributed enerty installation companies who report using inverters
3 capable of meeting this standard is common practice in the area. And I know that ldaho Power
4 has worked with the installer companies to refine this request.
5 lmportantly, these smart inverters provide grid suppon services and increased system
6 visibility to ldaho Power. I recommend the Commission include these elements of potential
7 value when outlining any subsequent process to value distributed enerty systems.
8
I
r0
il
t2
t3
t4
l5
t6
t7
t8
t9
20
2t
27
23
Q. ls your positlon that ldaho Power should take no action regarding
dlstributed energy systems!
A. No. ICL's position is that the appropriate next step is to conduct a robust and transparent
process to understand the costs and benefits of distributed energy systems. This process is the
necessary precursor to considering what policy response to distributed energy growth is
appropriarc. ldaho Power proposes a policy response - customer segregation - before
lustifying that specific policy by documenting meaningfully different cost causation between
segregated customers. What if the Commission approves the customer segregation and the
resulting valuadon proceeding concludes the retail rate remains an accurate proxyl Then the
setreption would only have added administrative costs and customer confusion. By engaging in
a valuation proceeding firsq this Commission can enact thoughtful classification and rate policy
at the appropriate time with the added benefit of robust and complete facts.
Q. What do you recommend the Commission do regarding a process to
determine the cost and benefits of distributed energy systems?
Otto, Di
ldaho Conservation League IPC-E- 17- 13
7
I
2
3
4
5
6
7
I
9
r0
il
l2
t3
t4
t5
t6
l7
t8
t9
70
2t
22
A. I recommend the Commission provide stakeholders with some policy guidance retarding
the scope, scale, and timing of this process. As I suted before, ICL has been engaged in this
issue with ldaho Power for several years. During that time, I have obserrred that a few issues
hamper the stakeholder's ability to move forward. I believe the Commission can assist this
important process by providing stakeholders with the following guidance.
l. All customers have a right to reduce enerty consumption behind the meter. Because
reducing individual consumption is no different from any other member of the customer
class, policy consideration for disributed energy sysems should focus on excess energy
only.
2. Distributed enerty sysrcms should be evaluated using a resource valuation process, not a
cost of service method.
3. Distributed enerty systems provide a rante of elements to the system. ICL Exhibit 404
provides a good startint point for stakeholders to determine the appropriate list of
elements to consider.
4, Any process should be transparent, utilize neutral technical experts, and allow
stakeholders to review inputs, data, process, and outputs before any decision-making.
5. Any potential changes to customer classifications or rates must occur in a general rate
case. This clear direction will ensure the Commission can review and approve any potential
changes in the appropriate context.
Q. ldaho Power's Application proposes that any future rate change be
applied gradually. Do you have thoughts on this proposall
Otto, Di
ldaho Conservation League
8
rPc-E- t7- t 3
l
2
3
4
5
6
7
I
9
l0
lt
t2
t3
t4
l5
t6
t7
r8
t9
20
2t
22
23
A. I have received many worried phone calls since ldaho Power filed this Application. Current
distributed energy system owners are worried about the time and scale of any rate change.
Future distributed enerSy owners are hesitant to act because of ldaho Power's filing. To help
resolve this uncertainty I recommend the Commission provide guidance though this docket.
Regarding current distributed enerSy system owners, while I don't believe any rate
changes are warranted, I do stand by traditional ratemaking principles of gradualism and
avoiding rate shock. These long-standing policy considerations provide this Commission with
ample discretion in any future decision regarding rates and classifications. I encourage the
Commission ro reassure customers that any future change will consider impacts to customers'
investment-backed expectations.
Regarding future customers, I recommend the Commission address two issues. Firsg
establish thar any potential setretation will not be retroactive but will only apply after a final
Commission order on the merits. Further, as with any legislative change, I recommend the
Commission provide a 60-day grace period to allow customers to adjust to the change. Second,
I recommend the Commission direct stakeholders to align the valuation process with the
upcoming 20 l9 lntegrated Resource Plan process. Providing guidance on these timing issues will
provide cusromers with more information to shape their decisions about investing their own
dollars in distributed energy systems.
Q. Why do you recommend uslng the 2019 IRP process to yalue dlstributed
energy systemsl
A. The lntegrated Resource Plan process is currently the source of values for demand and
supply side resources. This system wide, long-term look enables a complete consideration of
Otto, Di 9
ldaho Consenration League IPC-E-17-13
I how customer-owned distributed energy systems fit into rhe larger utility system; The long-
2 term nature of the plan capures the 20- to 30-year expected life of disturbed energy sysrems.
3 The IRP is the source of avoided costs used to value non-utiliry owned resources like demand
4 side measures and independently developed supply side resources. Prior IRP processes have
5 included special topic breakout sessions to allow interested stakeholders to delve more deeply
6 into specific issues. Finally, the IRP process is an established public engagement venue with a set
7 timeline, both of which will provide cenainty on the process to evaluate current and future
8 distributed energy customers.
9
t0
ll
t2
r3
t4
15
t6
t7
l8
l9
20
7t
Q. Please summarlze your re,commendation to th6 Commlsslon.
A. I recommend the Commission issue an Order:
L Denying ldaho Power's request to close Schedule 84 and esablish the new Schedules 5 and
8.
2. Approve ldaho Power's request to require smart inverters according to industry standard
definitions.
3. Direct ldaho Power and stakeholders to use the 2019 IRP process to address the core
issue regardint customer owned distributed generation systems - what costs do these
customers cause and what value do they bring to the system.
Q. Does this conclude your direct testimony!
A. Yes.
Otto, Di
ldaho Conservation League
t0
rPc-E- r7- r 3
CERTIFICATE OF SERVICE
I hereby ceftify that on this 2lth day of December 20l.7,1 delivered true and correct
copies of the foregoing DIRECT TESTIMONY OF BENJAMIN OTTO to the following persons
via the merhod of service noted:
Hand deliverT:
Diane Hanian
Commission Secretary (Original and nine copies provided)
ldaho Public Utilides Commission
427 W. Washingon St.
Boise, lD 83702-5983
Elecronic Mail:
ldaho Power
Lisa D. Nordstrom
Tim Tatum
Connie fuchenbrenner
ldaho Power Company
P.O. Box 70
Boise, ldaho 83707
[e-mail]
ttatu [e-mail]
caschen bren [e-mail]
dockets@ idahopower.com
ldaho PUC Stoff
Sean Costello
Deputy Attorneys General
ldaho Public Utilities Commission
477W. Washington
Boise lD 83702
[e-mail]
ldohohydro
C Tom Arkoosh
Arkoosh Law Offices
802 W Bannock St., Suite 900
PO Box 2900
Boise, lD 83701
[e-mail]
[e-mail]
ldoho I rrigation Pumpers Associotron
Eric L. Olsen
Echo Hawk & Olsen PLLC
505 Pershing Ave., Suite 100
PO Box.6l l9
Pocatello, lD 83205
[e-mail]
Anthony Yankel
29814 Lake Road
Bay Village, Ohio 44140
Fax [phone]
[e-mail]
Auric ILC
Elias Bishop
Auric Solar, LLC
23 t0 s t300 w.
West Valley City, UT 841 l9
[e-mail]
Preston N. Carter
Deborah E. Nelson
Givens Pursley LLC
601 W Bannock St.
Boise, lD 93702
[e-mail]
[e-mail]
il
Sierro Club
KelseyJae Nunez, LLC
Sierra Club
920 N. Clover Drive
Boise, lD 83703
kelsey@ kelseyjaen u nez.com
Zack Waterman
ldaho Sierra Club
503 W. Franklin St.
Boise, lD 83702
zack.waterman@s ierracl u b.org
[e-mail]
Ctty of Boise
Abigail R. Germaine
Deputy City Attorney
Boise City Attorney's Office
105 N. Capitol Blvd.
PO Box 500
Boise, lD 83701
[e-mail]
ldoho Cleon Energy Associotron
C Tom Arkoosh
Arkoosh Law Offices
802 W Bannock St., Suite 900
PO Box 2900
Boise, lD 83701
tom.arkoos [e-mail]
[e-mail]
David H. Arkoosh
Law Office of David Arkoosh
PO Box 2817
Boise, lD 83701
[e-mail]
Vote Solor
David Bender
Earthjustice
3916 Nakoma Road
Madison, Wl 5371 I
d [e-mail]
Briana Kober
Vote Solar
350 22nd Street, Suite 730
Oakland, CA 94612
[e-mail]
J. Kahle Becker
223 N. 6th St., Suite 325
Boise, lD 83702
kahle@kah lebeckerlaw.com
Snoke River Allionce ond NW Energy Coolition
John R. Hammond, Jr.
Fischer Pusch, LLP
l0l S. Capitol Blvd., Suite 701
PO Box 1308
Boise, lD 83701
[e-mail]
Wendy Wilson
Executive Director, Snake River Alliance
wwi lson @snakeriverall iance.ort
Diego Rivas
Policy Associate, NW Energy Coalition
[e-mail]
lntermountoin Wind ond Solor, LLC
Ryan B. Frazier
Brian W. Burnett
Kirton McConkie
50 East Temple, Suite 400
PO Box45l20
Salt Lake City, UT 841 I
[e-mail]
[e-mail]
lntermountain Wind and Solar, LLC'
1952 West 2425 South
Woods Corss, UT 84087
[e-mail]
[e-mail]
<& "fZ:MatrhaFJ<y(.ei
l2