20171222Levin Direct.pdf

John R. Hammond, Jr. - ISB No. 5470
FlsueRPuscuttP
U.S. BANK PLAZA_ 7th Floor
l0l s. capitol Blvd., Suite 701
P.O. Box 1308
Boise, ID 83701
Telephone: [phone]
Facsimile: 208.331.2400
E-mail: [e-mail]
Attorneys for the Snake River Alliance and NW Energt Coalition
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE
APPLICATION OF IDAHO POWER
COMPANY FOR AUTHORITY TO
ESTABLISH NEW SCHEDULES
FOR RESIDENTIAL AND SMALL
GENERAL SERVICE CUSTOMERS
WITH ON-SITE GENERATION
RECEIVED
?[,?AECZZ pH 3: tB
L, i ;, iiri;i*5grfi l8r,o*
CASE NO. IPC-E-T7-13
PREFILED DIRECT TESTIMONY (NONCONFIDENTIAL) OF
AMANDA M. LEVIN
December 22,2017
CRiGINAL
PREFILED DIRECT TESTIMONY (NONCONFIDENTIAL) OF
AMANDA M. LEVIN
CONTENTS
I. INTRODUCTION
II. SUMMARY OF TESTIMONY...
III. IDAHO POWER'S REASONING IS FLAWED.
IDAHO POWER'S PROCESS IS BACKWARDS.......1 5
PROPOSAL IS UNWARRANTED AT THIS TIME GIVEN STATE OF
NET METERING IN COMPANY TERRITORY. ....22
CONCLUSION 26
.2
,4
IV.
V.
VI.
VII
IDAHO POWER HAS NOT SUBMITTED SUFFICIENT EVIDENCE...7
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1001.
1002.
1003.
1004.
EXHIBIT LIST
Professional Qualifications of Amanda M. Levin
IPC's Response to Vote Solar's Second Set of Data Requests to
IPC, Response to Request No. 42
IPC's Response to Vote Solar's First Set of Data Requests to
IPC, Response to Request No. 3
IPC's Response to the First Production Request from
Commission Staff, Response to Request No. 3
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PREFILED DIRECT TESTIMONY (NONCONFIDENTIAL) OF
AMANDA M. LEVIN
I. INTRODUCTION
Please state your name and business address.
My name is Amanda Levin. I am an Energy and Climate Analyst for the Natural
Resources Defense Council ('NRDC"), ll52 l5th Street NW, Suite 300,
Washington, DC,20005.
In what capacity are you submitting this testimony?
I am a witness for the Snake River Alliance and NW Energy Coalition.
Have you previously testified before the Idaho Public Utilities Commission
("Commission")?
No.
Have you prepared an exhibit describing your education, relevant
employment experience and other professional qualifications?
Yes, I have. My professional and educational background is provided in detail in
the attached Exhibit No. 1001 that is incorporated herein by reference.
Briefly though, in my current position at the NRDC I focus on analysis
and advocacy around carbon and energy polices, decarbonization strategies,
energy efficiency, renewables integration, and wholesale market reform. I also
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serve as an expert for NRDC and partner organizations in front of state utility
commissions, legislatures, and federal agencies.
My research on electric restructuring, alternative utility business model
design, and industrial energy efficiency program design has been published in a
variety of academic press and journals. I also have served as a witness in front of
the Washington Utilities and Transportation Commission and participated in
utility proceedings in the states of Virginia, New Mexico, North Carolina, and
Wisconsin.
il. SUMMARY OF TESTIMONY
Please explain the purpose of your testimony.
My testimony focuses on the implications of Idaho Power Company's ("Idaho
Power" or the "Company") Application on regulatory processes, policy
objectives, and ratemaking outcomes in the State of Idaho. I will first discuss why
the Company's reasoning and support for its proposal is insufficient and, at times,
not correct. I will then discuss why the Company's curent approach is wholly
backwards and how this improper process could have a detrimental impact on the
Commission's other policy objectives. Such an unorlhodox application and
process is also unnecessary given the status of net metering in the Company's
service territory.
a. Briefly summarize the key recommendations of your testimony.
a.
A.
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A.The Commission should reject Idaho Power's proposal to create new customer
classes for residential and small general service customers with customer-sided
generation. Idaho Power has not provided sufficient evidence or data in its
Application for such a measure.
Creating new customer classes is a significant and substantial change, and
should only be taken after robust, transparent evaluation of the costs and benefits
these customers contribute to the system and meaningful stakeholder engagement.
The process proposed in the Company's Application is wholly backwards; such
an extraordinary request is also unwarranted at this time given the status of net
metering in the Company's service territory. Moving forward with the creation of
separate rate classes at this time runs counter to the state energy policy and other
public policy objectives. Furthermore, it could result in new administrative
inefficiencies, increased rate volatility for net metered customers, and discourage
customers from investing in clean energy technologies.
The Commission should instead first open a comprehensive, general
investigation into the costs and benefits of distributed energy resources, the
profile and costs of serving self-generating customers, and rate design approaches.
The process should be transparent and open to all interested stakeholders.
To inform this process and any future rate or cost-of-service changes, the
Commission should order Idaho Power to begin collecting and compiling data on
the load and energy profiles of its net metering customers and the associated costs
and benefits of customer-sided generation in the Company's territory. Any future
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rate, rate schedule or cost-of-service changes for these customers should be based
on and supported by robust, verifiable analysis of this collected data.
III. IDAHO POWER'S REASONING IS FLAWED
What topics will you address in this section of your direct testimony?
I will address one of the Company's main claims that creating a separate class for
net-metered or distributed generating ("DG") customers is warranted given their
"two-way" relationship with the grid.t
Do you agree with the Company's distinction between "one-way" and 'otwo-
way" relationships?
No. Idaho Power's classification of differences between DG and non-DG
customers is inaccurate and misleading.
Please explain.
With advanced metering infrastructure ("AMI"), ofly customer can have a two-
way relationship with the grid. AMI allows all customers, and any of their
"smart" (grid-enabled) devices, to follow and track customer usage, system
conditions, and energy prices and respond to this information, changing their
I See Prefiled Direct Testimony of Idaho Power Witness Connie G. Aschenbrenner, pg.
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consumption and load patterns in response to grid signals.2 While these
customers may not have on-site generation, this type of customer-grid interaction
is just as much of a "two-way" relationship and can look similar to net-metering
from a grid perspective, especially at lower levels of DG penetration.
For example, consider customers that have "smart" (grid-enabled)
appliances and thermostats. The customer could set their smart thermostat system
into "energy-saving" mode and enroll in an A/C Cool Credit cycling program.
The customer could also monitor the usage and cost of running their smart
dishwasher, clothes washer and dryer remotely. If prices fall in the middle of the
day (e.g., solar power ramps up, load is low), these "smart" devices and customer
loads can rise automatically to take advantage of this low-cost, excess power;
when prices rise (e.g. renewable power resources ramp down), loads will fall
automatically.
With AMI, smart devices in the customer's house can dynamically
respond to and communicate with the grid and the utility. The utility isn't just
sending power; the utility is sending power and information, and the customer (or
their devices) are acknowledging that information, altering behavior and grid
2 For example, see the Department of Energy's "Grid Modernization and Smart Grid"
landing page, available at https://energy.gov/oe/activities/technology-development/grid-
modern ization-and-smart- grid.
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energy demand, and even sending information back.3 Not only is this a "two-
way" flow of information between the utility and end-user, but the load and
consumption profile of this customer would look different than the typical
residential customer: they would likely have peaks at different times than the total
system or class peak and grid consumption would be more spread out over the
day.
Does Idaho Power currently encourage "two-way" relationships with
customers?
Yes. With "smart" devices and advanced meters, customers have a much greater
ability to adjust the way they operate and change their energy demand in response
to signals from the grid, markets, or utilities. This is a "two-way" relationship and
just as potent of an energy resource as distributed generation. In other words,
better optimizing energy use with smart devices has the same impact as
distributed generation from a grid perspective - when these devices turn down or
off it reduces the customer's grid energy consumption and stress on the grid
system like a net metering, rooftop solar unit would.
In fact, Idaho Power pays its customers to "cycle" their home's air
3 See Edison Electric Institute's "Smart Meters at a Glance", available at
http://www. eei. org/i ssuesandpo I icy/gri d-
enhancements/Documents/Smart%20Meters%20lEI%20lnfographic%20Sept20l6.pdf.
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conditioning to reduce the customer's grid energy demand during peak periods.a
The utility recognizes that this demand-reducing, load-changing behavior (spurred
by new technologies) has measurable grid benefits for customers and the utility.s
As such, these customers remain part of the same residential class as all other
residential customers and no proposal has been made to separate them out.
IV. IDAHO POWER HAS NOT SUBMITTED SUFFICIENT
EVIDENCE
What topics will you address in this section of your direct testimony?
In this portion of my testimony, I discuss where the Company is lacking sufficient
data for its proposal. I provide recommendations on what data Idaho Power
should collect, compile, and provide on DG customers to inform and support
future proceedings on the value of distributed generation and ratemaking and/or
rate design.
a. Has the Company provided adequate analytical support and evidence for its
proposal in your opinion?
A. No. In fact, in response to Vote Solar's Discovery Request, Idaho Power
acknowledges they have not engaged in any such process to evaluate the benefits
a See Idaho Power's "AC Cool Credit" Offering, https://www.idahopower.com/ways-to-
save/sav i n gs-for-your-home/rebates-and-offers/ac-coo I -cred iV.
5 For example, see Idaho Power's 2016 DSM Report on the cost-effectiveness and
performance of this program,
https ://docs. idahopower.com/pdfs/AboutUs/Plann i neForFuture/irp/AppendixB DSM.pdf.
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of net-metering (Exhibit No. 1002).6 The Company should collect and provide
data not only showing that these customers have different load or usage patterns
and profiles, but that these differences have a materiql impact on the cost to serve
these customers compared to other residential customers. Cost causation - the
concept that each group of customers pays the cost they impose on the utility
system - is a fundamental principle of ratemaking.z It ensures that rates are fair to
both customers and the utility, and are neither unjust nor discriminatory.
Before receiving approval for the creation ofa separate rate class, even if
no change to the rates are proposed, the Company should complete the load
research necessary to provide analytical support that these customers cause
different costs on the system, what costs should be allocated to these customers,
and how they should be allocated.
A.
What data and analysis does the Company provide in its Application?
The Company's witness, Connie G. Aschenbrenner, provides a few pieces of
evidence on the load characteristics and scale of net metering in the Company's
territory. This includes a summary of the Company's 2017 Annual Net Metering
Status Report, which details cumulative demand-side capacity, customers, and
6 See IPC's Response to Vote Solar's Second Set of Data Requests to IPC, Response to
Request No. 42.
7 For example, see the Michigan Public Service Commission's presentation "Tariff
Development II: Developing a Cost of Service Study", available at
pubs.naruc.org/pub/538I 93C0-2354-D714-5142-F855D2D063F9, see slides 3-4.
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applications by customer class, as well as near-term forecasts of growth in the
program. Witness Aschenbrenner also includes two figures to illustrate load
differences. The first shows the average load shape for residential non-net energy
metering and net energy metering ("NEM") customers on the single peak day of
2016. The second shows the average load shape of the residential class segmented
by monthly consumption and then the profile of net-zero customers on the same
peak day. Ms. Aschenbrenner also provides an annual bill comparison of a net-
zero customer and a nearby non-NEM residential customer.
Is this sufficient for showing that the creation of a separate class is warranted
in your opinion?
No. Just showing different usage patterns is not sufficient for creating a new class.
Idaho Power needs to prove that the demand and usage profile of these customers
has a material impact on the cost to serve them. This is essential to determine that
costs are allocated appropriately and fairly between customers.8 New classes
should only be created when there is sufficient proof that a distinct group of
customers' energy activity is driving costs that these customers are not covering
under current rate tariffs. Even then, there may be other public policy reasons to
continue to allow some inter- or intra-class subsidization (e.g. promotion of clean
A.
8 For exarnple, see Brattle's "Retail Costing and Pricing for Electricity", presented at the
lnstitute of Public Utilities' Annual Regulatory Studies Program,
http://www.brattle.com/system/publications/pdfs/000/005/348/original/Retail_Costing_and_Prici
ng_of _Electricity .pdfl 1 47 I 21 9921 .
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energy resources, energy affordability for low-income households). In addition,
the creation of new rate classes may breed other, perverse impacts; allocating
costs among many smaller rate classes can result in increased administrative
inefficiency and more volatile rates stemming from the additional complexities of
modeling, allocating, and recovering the costs of service across many narrower
groups of customers.
It is important to remember that diversity in load within a class is not
necessarily problematic. It is an inherent part of average ratemaking, especially
for large classes. There is substantial load and usage variation among the
residential class, even when excluding customers who can self-generate. For
example, certain households may have night workers, where occupants work
outside of the home from 11 pm to 7 arn, and then are home during the day and
evening. These households will have usage patterns that look much different than
households where the occupant(s) hold a more typical 9 to 5 job. Some
households may have retired or elderly occupants, stay-at-home parents, or
occupants with telework/work-from-home schedules. Again, these households
will have usage pattems different from a household where all occupants are at
work or school during the day. A young single student in an apartment building
does not have the same net energy or load profile of a family of four outside of
city districts - but both are classified as residential class.
This individual diversity of load within a class is not a detraction. In fact,
this intra-class diversity can improve the load factor of the system - reducing each
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individual's cost of service. If individual peaks are slightly different from each
other, but around the same size, the utility can use the same-sized system to meet
all these peaks and customers without having to duplicate infrastructure
investments. In other words, if there are two customers each with a max demand
of 5 KW, but one has a peak demand at I I am and the other at 3 p-, the utility
doesn't need to build a 10 KW system to serve them, it may only need a 6-7 KW
system. This lowers the total system cost and each customer's cost on the system,
since some of the investments can be used by both customers. Especially if these
customers - whether night workers, customers with smart-thermostats or other
devices, or DG owners - are distributed widely and rather equally throughout the
utility's geographic footprint, it is much more likely that this variation in load and
usage profiles creates valuable and beneficial load diversity rather than separate
or incremental system costs.
What problems could be created if classes are created based solely on shown,
different usage patterns?
Just because individual usage pattems are not perfectly similar does not mean that
one should separate out each ofthese distinct usage patterns into separate classes.
This can create administrative inefficiency, requiring more complex and resource-
intensive processes and procedures. It can also produce less stable rates for each
class: due to the increased complexity of a cost of service study over many
smaller classes, this may result in greater variation in allocated cost to each class
from rate case to rate case that are then spread across a much smaller number of
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end-users, resulting in more drastic per-customer cost impacts.
To promote administrative efficiency and rate stability, the Commission
should move forward cautiously when deciding whether to create new, additional
rate classes. A utility must prove more than a separate usage or load pattern to
justify the creation of a new rate class. Distinct usage patterns within a single
class are not necessarily a problem; they may actually reduce the per-customer
system costs due to improved class load factors. A utility must show that these
variations in usage and load result in measurable, statistically significant
differences in the cost of service for this sub-group compared to others in the
class. And, even then, the Commission should ensure that any rate changes are as
fair and as stable as they can be and do not infringe upon other public policy
objectives, such as advancing the adoption of emerging adlor state-promoted
technologies.
What recommendations do you have on data process and procurement?
Creating a new rate class is a significant and substantive change. If done
improperly, it can lead to increased inefficiency and rate volatility. Any rate
design changes should be data-driven, with supporting analysis based on the
monitoring and measurement of actual DG system performance and customer
profiles. There must also be enough data points (either from absolute number of
customers or length of time covered) to provide statistically valid outputs for a
cost-of-service analysis. Too few data points and/or insufficiently robust analysis
could result in negative regulatory and customer outcomes due to inappropriate22
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class or cost basis changes.
Therefore, the Commission should consider requiring the Company to
collect and compile data on:e
o The hourly usage and demand of DG customers;
o Geographic information of the spatial distribution and size of projects at a
sub-station level;
o Coincident and non-coincident peaks of DG and non-DG customers for
residential and small general service classes separately;
o Estimated average annual fixed cost recovery for DG and non-DG
residential and small general service customers;
o The average percentage of "full costs of service" recovered from DG and
non-DG customers, by class; and
o The proportion and absolute number of customers who net out their
monthly or annual usage with customer-sided systems.
The Commission should consider requiring any future proposal or change to rate
design from the Company to be based on at least several years of data.
The company, in coordination with interested stakeholders, should also
figure out the data necessary for evaluating the costs and benefits of DG. This
e The Company has provided some limited, but not all, of this data during discovery. This
list serves as a more holistic set of data necessary for sufficient analysis of these customers.
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should include discussion of what costs and avoided costs should be considered
and what data is required to calculate these costs and avoided costs.
Without this more robust data gathering and analysis process, a proposal
like the one included in the Company's Application is technically and
substantively premature.
Do you have additional suggestions for possible analysis?
Yes. The Company has stated, that despite its assertion that net metering service
is a regressive wealth transfer, it does not have or gather income information
(Exhibit No. 1003).10 Given customer protections and concerns, the Commission
and the Company may consider conducting representative surveys over this data
collection period. These surveys could anonymously record data on household
size, square footage, installation of smart appliances or thermostats, and/or
household income for both DG and non-DG customers. This could help provide
some additional context and insight into the demographic implications of net
metering, while respecting customer protections.
As will be discussed more below, any and all findings from this analysis
or a cost-benefit analysis of DG should be disclosed to the public, interested
stakeholders, and regulators prior to proposing any rate changes.
l0 See IPC's Response to Vote Solar's First Set of Data Requests to IPC, Response to
Discovery Request No. 3
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V. IDAHO POWER'S PROCESS IS BACKWARDS
a. What topics will you address in this section of your testimony?
A. I will briefly discuss the common process of determining and implementing a rate
change like proposed in the Company's Application. From this, I will explain why
the Company's Application should be denied at this time and recommend a
revised schedule and process for the issues presented in this case.
a. Is Idaho Power's request in this case unusual?
A. Yes. The Company's Application and approach is very unusual. While many
states across the country have been discussing how to properly value distributed
energy resources, how to allocate costs, and whether to explore alternative rate
designs or create new rate classes, this appears to be the only case that I am aware
of where a utility has filed for the creation of separate rate classes as a first step.
There have been similar discussions in recent months in Nevada, Kansas,
Iowa, and Arizona. These other instances were in the context of a rate case or
general proceeding. No utility filed for the creation of a separate rate class without
either completing a valuation of solar or cost of service study beforehand or as
part of the application. In the case of Kansas, the general proceeding only allows
the utility to file for the creation of a separate class in a future rate case.
a. Are you aware of any other jurisdiction that has created a new rate class for
net metered customers that has not undertaken a cost/benefit analysis?
A. No. The only jurisdictions I am aware of that have approved separate rate classes
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for investor-owned utilities are Nevada, Arizona, and Kansas. In each state, the
decision to create a separate rate class was undertaken in either the context of a
rate case or other proceeding designed to evaluate the costs and benefits of DG.
California and Hawaii have NEM successor tariffs in place. However, at least in
California, customers still take service under residential rates; the compensation
rates are a separate tariff that applies only to net excess generation.ll In addition,
new laws in Montana and North Carolina do allow establishing a separate rate
class as part of a comprehensive DG proceeding.l2
Nevada ended net metering and created new rate classes for those
customers at the end of 2015, after the utilities filed for the approval of eight net
metering schedules.13 Their Application included a Net Metering Cost of Service
Study and Narrative.la While the Nevada PUC did approve the utilities' joint
Application in2015, the legislature reinstated net metering in2017. AB 405 raises
the compensation rate back up to 95 percent of retail rates initially, with the rate
declining by 7 percent for every 80 MW of additional distributed generation
ll See Net Surplus Compensation Rate for California.
l2 See Utility Dive, "In new trend, utilities propose separate rate classes for solar
customers without rate increase", November 2,2017, https://www.utilitydive.com/news/in-new-
trend-utilities-propose-separate-rate-classes-for-solar-customers-w/508393/.
l3 See Application of Nevada Power Company d/b/a NV Energy for approval of a cost of
service study and net metering tariffs, Docket No. I 5-07041 .
ra The COSS and all technical appendices are Volume 2 of 2 in the original application in
Nevada
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capacity until it hits a floor of 75 percent of the retail rate.l5
Arizona ended net metering for new customers at the end of 2016 as part
of the Commission's Value-of-Solar Proceeding.t6 The decision establishes
rooftop solar customers as a separate class and replaces the compensation rate
with a Value of Solar ("VOS") rate.
In Kansas, Westar was granted approval to create a "Residential Standard
Distributed Generation" Tariff for systems beginning operation after October
2U5.n This came out of a rate case settlement;18 as part of the settlement, the
Kansas Corporation Commission opened up a general docket to examine issues
surrounding rate design for DG customers.le Following this general docket, the
Kansas Corporation Commission has ruled that other utilities can file for a
ls See Utility Dive, "Nevada governor signs net metering bill", June 16,2017,
https://www.utilitydive.com/news/nevada-governor-signs-net-metering-bill/445 177l.
I6 Arizona Corporation Commission, Docket E-00000J-14-0023,
httn://edocket.azcc.gov/Docket/DocketDetailSearch?docketld:1 8350#docket-detail-container2.
l7 The distributed generation tariff for residential service is available on Westar's website
at
https://www.westarenergy.com/Portals/0/Resources/Documents/Tariffs/061 7 Resident Standard
Distributed_Generation. pdf.
l8 Kansas Corporation Commission See Docket No. l5-WSEE-1 l5-RTS.
le Kansas Corporation Commission Docket No. l6-GIME-403-GIE, In the Matter of the
General Investigation to Examine Issues Surrounding Rate Design for Distributed Generation
Customers
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separate DG rate class in future rate cases.20
a. Are you aware of any other jurisdiction that has created a new rate class of
any sort while keeping the rates and/or tariffs identical to another rate class?
No, not that has been approved. Interstate Power and Light ("lPL") in Iowa
proposed the creation of a separate rate class but with the same rate tariffs as
residential in April of 2017.21 IPL also did this within the context of a general
rate case, which Idaho Power has not done. The proceeding is still open and no
ruling has been made.
Is anything being done on this issue by other jurisdictions in the Northwest
United States?
Yes, both Oregon and Montana are currently attempting to gain clarity on the
costs and benefits of distributed generation prior to moving forward on potential
new rate classes and/or tariffs.
Initiated in January 201 5 as a result of a legislative-mandated report
evaluating the effectiveness of solar programs in Oregon, the investigation to
determine the resource value of solar ("RVOS"), is split into two phases.22 Phase
one involved the Oregon Public Utilities Commission ("OPUC") hiring an outside
20 See Kansas Corporation Commission, Final Order in Docket No. l6-GIME-403-GIE,
Filled September 21, 2017.
2l Iowa Utilities Board, Docket RPU-2017-0001, Application for Approval of Non-
Standard Notices.
22 Oregon Public Utilities Commission, Docket No. UM I 716.
a.
A.
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consultant, E3, to provide expert analysis in the development of a methodology
and related computational model that would produce an RVOS based on a variety
of inputs. Stakeholders, including utilities, environmental groups, ratepayer
advocates, and the solar industry spent considerable time in phase one developing
arguments and evidence to support the inclusion or exclusion of various value
streams, or "elements." After multiple rounds of testimony, the Commission
concluded phase one in September 2017. The result was the adoption of E3's
RVOS methodology, with some tweaks, that would produce a"25-year marginal,
leveled value for a generic, small-scale solar resource installed rn2017."
Phase two commenced immediately after the conclusion of phase one,
requiring that the utilities calculate RVOS values for their respective systems.
This involves the utilities determining values for each of the l1 elements the
Commission adopted at the conclusion of phase one. These values are: l) energy,
2) generation capacity, 3) transmission and distribution capacity, 4) line losses, 5)
integration costs, 6) administration costs, 7) hedge value, 8) market price
response, 9) grid services, l0) RPS compliance, and 1l) environmental
compliance. The bulk of each utility's RVOS will come from the first four
values, which will mostly derive from each utility's existing avoided cost
calculation methodology. The remaining values either require additional work,
will use placeholder values, or will come from pertinent utility assessments. In
early December 2017, the utilities filed their initial RVOS calculations, which
will subsequently be reviewed by stakeholders who will file testimony in the
Prefiled Direct Testimony
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coming months.
In Montana where the debate over net metering has mostly occurred inside
the capitol, the state legislature recently approved legislation requiring
NorthWestern Energy to "conduct a study of the costs and benefits of customer-
generators" and "submit the study to the commission for the purpose of making
determinations in accordance with a public utility's general rate case..."23
Subsequently, and as allowed by the statute, the Montana Public Service
Commission ("MPSC") opened a general docket and hired Plugged In Strategies
as a consultant to provide input on the methodology of the cost-benefit analysis
done by NorthWestern Energy ("NEW"). After taking comments from all
interested stakeholders, the MPSC issued a Notice of Commission Action
outlining the minimum information required for the cost-benefit analysis to be
informative. The NCA also laid out the well-known process to follow the cost-
benefit analysis: "NWE must submit the study to the Public Service Commission
("Commission") as part of a general rate application... . The Commission will
evaluate NWE's study and make findings regarding whether customer-generators
should be classified separately from other customers for rate design purposs5."24
The statute requires the cost/benefit analysis to be completed by April 1,2018 and
23 Montana Legislature, HB 219 l-rttn:l lleo mt onv/hil ls/201 7/sesslaws/chO?4R ndf
Prefiled Direct Testimony
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Page2} of32
24 Montana Public Service Comrnission, D2017.6.49,
http://www.psc.mt.gov/Docs/ElectronicDocuments/pdffiles/D201 7649NCA.pdf.
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NWE has hired Navigant as its third-party consultant to conduct the study.
a. How would you suggest the Commission move forward?
A. Creating a separate class should be the last step of the process. It should only
occur if and after the utility can prove that these customers not only have a
different load profile , but different costs of service . This requires extensive
gathering and submission of data on customer-sided DG. The process should start
with data collection and remain data-driven throughout.
The utility must first monitor, measure, and gain sufficient experience
with these customers and their behaviors. This can provide critical insights into
these customers, how they interact with the system, and potential opportunities to
improve the operations of these systems and the grid. Data collection and analysis
are also the key foundations for any comprehensive proceeding on the value of
solar and appropriate rate design for DG customers.
Next, before proposing changes to rates or classes, there should be a
general proceeding which provides all interested stakeholders an opportunity to
discuss how to properly value customer-sided technologies. In this more general
proceeding, stakeholders should determine what costs and benefits should be
included in a valuation of solar, develop clear and transparent methods to
calculate these costs and benefits, and discuss potential rate design approaches
and offerings for these customers that reflect the full value of distributed
generation and prevent unnecessary subsidization. Until there has been a
Prefiled Direct Testimony
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proceeding on the costs and benefits of these customers to the grid and utility,
there is not sufficient data or basis for cost causation or suppor-t for the creation of
separate classes.
Then, once the data, methods, and stakeholder engagement has been
conducted, the Company should model the impacts of any proposed separate rate
class, cost allocation method, or rates and allow other parties to evaluate the
modeling outcomes. This will ensure the proposed treatment of DERs within the
territory advances economic efficiency and public policy objectives, and does not
unduly discriminate against specific classes of customers.
Finally, only after a robust, honest evaluation of costs and benefits based
on actual system performance, the utility may file for a change to rate classes or
rates. Any change to rate classes should be done within a rate case.
VI. PROPOSAL IS UNWARRANTED AT THIS TIME GIVEN
STATE OF NET METERING IN COMPANY TERRITORY
a.The Company states that the creation of a separate rate class is necessary
given the fast growth in net metering service. Do you agree?
No. Idaho Power points to similar discussions occurring in other states, such as
Nevada, Arizona, California, and Hawaii.25 However, the status and pace of net
metering is very different in these locations than within Idaho Power's own
territory.
A.
2s See Prefiled Direct Testimony of Idaho Power Witness Timothy E. Tatum, pg. l7-18
and Exhibits 3 and 5.
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While the Company focuses on the double-digit growth rate, this focus is
misleading. While net metering service has been growing within the Company's
territory at a rather fast pace in the last few years, the absolute number of NEM
customers and applicants is still incredibly small. At the time of the filing, Idaho
Power had 1,400 residential and small general service net metering customers.
This is just 0.25 percent of its customer base. In other words, the Company is
proposing to create two separate rate classes for just 0.3 percent of its residential
customers and 0.17 percent of its non-residential customers.26 To put this in
perspective, Hawaii shifted away from net metering when penetration rates were
as high as 16 percent.2T
Creating new rate classes for such a small portion of customers and load
as is the case in Idaho is unjustified and statistically dubious. In fact, it is likely
many other sub-groups that meet similar "criteria", such as night workers (e.g.
different load profile) or customers who have installed smart devices (e.g. "two-
way" relationship) constitute a greater number of customers and load than current
net metered customers. Yet, despite this, the Company has only targeted net
metering service customers.
Is the creation of a separate rate class necessary to study these net metering
customers?
26 Reflects June 201 7 NEM numbers. In the Octob er 20ll update included in the
Company's Answer to IECA's Motion to Dismiss, Idaho Power quoted total applications of
1,893, but not by class. This would reflect 0.36 percent of customers. Customer count taken from
EIA Form 861, reflecting end-of-year 2016 values.
27 See Greentech Media, "Hawaii Regulators Shut Down HECO's Net Metering
Program", October 74,2075, https://www.greentechmedia.com/articles/read/hawaii-regulators-
shutdown-hecos-net-meterin g-program#gs.X gGAnas.
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No. While the Company has suggested that establishing separate classes now will
"position the Company to study this segment of customers"2S, Idaho Power
admitted in discovery that "the Company is currently able to gather the
information that is necessary to study various segments of customers" without
creating a separate class (Exhibit No. 100+7.20
Is the Company at risk of financial harm if the decision to create a separate
class is postponed until after a general proceeding on costs and benefits of
distributed generation?
No. The Company has a Fixed Cost Adjustment30 mechanism that would allow
Idaho Power to f,rle a request to increase effective rates for residential and small
general service customers in the case the Company under-recovers its fixed costs
for serving these customers in a given year (e.g. actual grid energy sales are lower
than forecasted because of customer conservation or self-generation) .:t Thus,
there is no immediate concern or risk of the utility under-recovering its prudent
costs for the residential and small general service classes if the Company's
Application is denied at this time.
28 See Pg. 9 of the Company's Application.
29 See IPC's Response to the First Production Request from Commission Staff, Response
to Request No. 3.
3o See Idaho Power's Schedule 54.
https://docs.idahopower.com/pdfs/aboutus/ratesregulatory/tariffs/286.pdf.
3l From Idaho Power's 2016 DSM Report, pg. 166: "Under the FCA, rates for Idaho
residential and small general-service customers are adjusted annually up or down to recover or
refund the difference between the fixed costs authorized by the IPUC in the most recent general
rate case and the fixed costs Idaho Power received the previous year through actual energy sales.
The FCA addresses, for residential and small general-service customers, the percentage of fixed
costs that are recovered through their volumetric energy charges."
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Z)
a Do you have any suggested principles the Commission and Company should
consider when determining future changes to net-metering or net-metered
customers?
Yes. As penetration of demand-side technologies, including distributed
generation, increases, there may be reason to explore alternative rate and
compensation mechanisms. However, Idaho Power has not yet reached levels
where this is necessary. The Company and the Commission should use this time
to have robust, honest discussions with stakeholders to determine what
alternatives may work for the utility, customers, and solar providers in the state
when penetration levels are much higher.
Any future mechanism should:32
o Not infringe on the ability for customers to install storage, distributed
generation, or energy effrciency technologies and reduce their consumption of
grid electricity.
o Be gradual. Rate changes should be implemented gradually and predictably
for existing NEM customers.
o Be sustainable, clear, and fair. Solar compensation rates should reflect the full
benefits.
o This could include a value of solar compensation rate at higher
penetration levels, which includes both short and life of system
benefits of distributed generation.
o Promote synergistic behavior and technology adoption. Rate design options,
such as time-of-use, critical peak pricing, or other time-varying options, may
A.
32 Principles drawn from "Principles for the Evolution of Net Energy Metering and Rate
Design", May 2017.
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result in customer, renewable integration, and grid benefits. More optimal
timing of consumption to match a home's solar production can reduce
integration challenges and costs at higher levels of penetration.
. Allow for and incentivize the adoption of distributed generation coupled with
storage or electric vehicles; ensure that barriers to customer adoption of these
newer technologies are not created.
In addition, any revisions to compensation rates or assertions of cost shifting must
be demonstrated with valid, transparent data that reflects both the values of
distributed resources and the costs of providing service. Before approving a
substantial rate design change, the Commission should consider requiring an
independent cost-benefit analysis.
Consideration of a separate rate class must be based on material public
analysis demonstrating both significantly different load and cost characteristics.
VII. CONCLUSION
Briefly summarize your key recommendations.
I recommend that the Commission reject Idaho Power's Application to create a
separate rate class for net metering customers. The Company has not provided
sufficient data to support such an extraordinary request, portions of the reasoning
provided are false, insufficient and incorrect, and there is no pressing need for
such a significant and substantive step at this time.
The Commission should instead first order and open a comprehensive
public proceeding on the valuation of DERs and the costs and benefits of these
customers to the grid and utility. As part of this general proceeding, the
Commission should also order that Idaho Power begin collecting and publicly
Prefi led Direct Testimony
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Page26 of32
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submitting data on the usage and profiles of these customers to inform both the
general proceeding and any future rate proceedings.
Does this conclude your testimony?
Yes
Prefi led Direct Testimony
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Amanda M. Levin
Page27 of32
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 22"d day of December, 2Ol7,l served a true and
correct copy of the foregoing by delivering the same to each of the following individuals by
electronic mail, addressed as follows:
IDAHO POWER COMPANY:
Lisa Nordstrom
Idaho Power Company
t22r W. Idaho St. (83702)
PO Box 70
Boise,ID 83707
lnordstrom@ idahopower. com
dockets@ idahopower.com
Timothy E. Tatum
Connie Aschenbrenner
Idaho Power Company
l22l W. Idaho St. (83702)
PO Box 70
Boise, ID 83707
ttatum@ idahopower. com
caschenbrenner@idahopower. com
COMMISSION STAFF:
Sean Costello
Deputy Attorney General
Idaho Public Utilities Commission
472 W . Washington (83702)
PO Box 83720
Boise, ID 83720-0074
sean. costel lo@puc. idaho. gov
IDAHYDRO:
Idahydro
clo C. Tom Arkoosh
Arkoosh Law Offices
802 W. Bannock Street, Suite 900
PO Box 2900
Boise, ID 83701
t o m . arko o [e-mail] m
[e-mail]
tr U.S. Mail
fl Facsimile
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Prefiled Direct Testimony
(Nonconfidential) of
Amanda M. Levin
Page 28 of 32
IDAHO IRRIGATION PUMPERS
ASSOCIATION, INC.:
Idaho Irrigation Pumpers Association, Inc
c/o Eric L. Olsen
Echo Hawk & Olsen, PLLC
505 Pershing Avenue, Ste. 100
PO Box 6l 19
Pocatello, ID 83205
elo(Eechohawk.com
Anthony Yankel
12700 Lake Avenue, Unit 2505
Lakewood, OH 44107
[e-mail]
IDAHO CONSERVATION LEAGUE:
Matthew A. Nykiel
Idaho Conservation League
PO Box 2308
102 S. Euclid#207
Sandpoint, ID 83864
mnykiel @ idahoconservation. org
AURIC LLC:
Elias Bishop
Auric Solar, LLC
2310 S. 1300 W.
West Valley City, UT 84119
[e-mail]
Preston N. Carter
Deborah E. Nelson
Givens Pursley LLC
601 W. Bannock Street
Boise, ID 83702
prestoncarter@ givenspursley. com
den@ givenspursley. com
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Prefiled Direct Testimony
(Nonconfidential) of
Amanda M. Levin
Page 29 of 32
SIERRA CLUB:
Kelsey Jae Nunez LLC
Sierra Club
920 N. Clover Drive
Boise, ID 83703
kel sey@kel se)rj aenunez. com
Tom Beach
Crossborder Energy
2560 9th Street, Suite 213A
Berkeley, CA 94710
E-mail : tomb@crossborderenerg)r.com
ELECTRONIC SERVICE ONLY
Michael Heckler
[e-mail]
Zack Waterman
zack. waterman@sierraclub. org
CITY OF BOISE CITY:
Abigail R. Germaine
Deputy City Attorney
Boise City Attorney's Office
150 N. Capitol Blvd.
PO Box 500
Boise, ID 83701-0500
Telephone: [phone]
Facsimile: [phone]
agermaine@cityofboi se. org
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Prefi led Direct Testimony
(Nonconfidential) of
Amanda M. Levin
Page 30 of32
IDAHO CLEAN ENERGY
ASSOCIATION:
C. Tom Arkoosh
Arkoosh Law Offices
802 W. Bannock Street, Suite 900
PO Box 2900
Boise, ID 83701
tom. arkoosh@arkoosh. com
[e-mail]
David H. Arkoosh
Law Office of David Arkoosh
PO Box 2817
Boise,ID 83701
[e-mail]
VOTE SOLAR:
David Bender
Earthjustice
3916 Nakoma Road
Madison, WI 53711
dbender@ earthj ustice. org
Briana Kober
Vote Solar
360 22"d Street, Suite 730
Oakland, CA 94612
[e-mail]
tr U.S. Mail
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Prefi led Direct Testimony
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Amanda M. Levin
Page 31 of32
INTERMOUNTAIN WIND
AND SOLAR, LLC:
Ryan B. Frazier
Brian W. Bumett
Kirton McConkie
50 East Temple, Suite 400
PO Box 45120
Salt Lake city, uT 84111
[e-mail]
[e-mail]
Intermountain Wind and Solar, LLC
1952 West 2425 South
Woods Cross, UTG 84087
dou g@imwindandsolar. com
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Prefiled Direct Testimony
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Amanda M. Levin
Page 32 of 32
EXHIBIT 1OO1
Professional Qualifications of Amanda M. Levin
0. Please state your name, business address, and occupation.
A. My name is Amanda Levin and my business address is I 152 15th Street NW, Suite
300, Washington, DC, 20005. I am an Energy and Climate Analyst for the Natural
Resources Defense Council ("NRDC").
0. What is your educational background?
A. I have a Bachelors in Public Policy from Stanford University and a Master's in Public
Policy, with a concentration in Energy and Environmental Policy, from Stanford
University.
a. Briefly describe your role as an energy analyst at NRDC.
A. I have worked at NRDC as an energy and climate analyst since June 2014.
My current work focuses on analysis and advocacy around carbon and energy
polices, decarbonization strategies, energy efficiency, renewables integration, and
wholesale market issue reforms. I also serve as an expert for NRDC and partner
organizations in front of state utility commissions, legislatures, and federal agencies.
I have written and published numerous reports on utility rate design, clean
energy deployment, federal and state energy policies, and decarbonization strategies.
My research on electric restructuring, alternative utility business model design, and
industrial energy efficiency program design has been published in a variety of academic
press andjournals.
a.
A.
a.
A.
Have you previously testified in front of the Idaho Public Utilities Commission?
No.
Have you previously testified in front of Public Utilities Commissions in other
jurisdictions?
Yes. I have previously testified in front of the Washington Utilities and Transportation
Commission. I have also participated as an intervenor in utility proceedings in the states
of Virginia, New Mexico, North Carolina, and Wisconsin.
EXHIBIT 1OO2
IPC's Response to Vote Solar's Second Set of Data Requests to IPC,
Response to Request No. 42
(attached)
BF9UEqI XO, g?: Reference lhe statement by Mr. Tatum on page 5, lines 17-
?0 of his direct testimony, thal: "The existing R&SGS rate design does not reflecl the
costs and benefits CIf the transaction between ldaho Power and its cuslomers with on-
site generatio*."
a" Flease provido all analyses that the Company has conduc&d that quantify
the cost to srn e sustomers with on-site generation and all data reli*d upon, lf
applioabb, pl*ase provide supporting wnrk paper* in their natiye format with frnnulas
and links intacl.
b. Please provide alf anxlyses that the Company has conducted that quantify
the benefits associaled with *ervirq customers with on-site generation and all data
relied upon. lf applicable. please provide supporting work papero in their native format
with formulae and links intact.
RESPONSE TO- REQUEST NO.42:
a. The Company parform*d trrrro reparate analyses to estimate the cost shifl,
and the cosl lo serve residenlial custoffers wilh orr-sita generation, as of the end of
2015 and 201$. Pleas* sea the r*sponse and Attachments to Request No. 17 for a
description of the analysis and the v***pape rs frr the analyee*,
b. The Cornpany has ntt condurted any analyser to quantifu tht benefita
associated wilh serving ruslcrners wilh on-eite generation. l-l$wever, the Company ha*
requested a new dncket be apeced at the conclusion of this case with the purpo*e nf
establishing a compcnaation sl&,cture for custornqr*owned DfRs that reflects both the
benefits and costs that DER interconnection brings to the electric system.
The response lo this Request is spon*or"ed by Connie Aschenbrenner, Rate
Design Manager, ldaho Power Company"
IDAHO POWEB COMPANY'S fiESPONSE TO VOTE SOLAR'S
STCOND SET OF OATA REQUESIS TO IOAHO POYVER COMPANY . 38
EXHIBIT IOO3
IPC's Response to Vote Solar's First Set of Data Requests to IPC,
Response to Request No.3
t
(attached)
RgnUfr$T ll*. 1: Reference Application, page 5, paragraph 7. Please provide
all analyses showing. confirming, or in any way $upporting your aseertion that net
metering service acts as a regressive wealth transfer from lower-inc*rne to hlgher-
income customers in your service lerrilory, includi*g your ddinitions of "lourer-income'
and'higher-income'as used in this paragraph, and all income data for th* rasidential
cuntorners taking service under $chedule 84, *ustnrn*r Hn*rgy Fr*duction Net
Melering, that you relied on to make the assertion r*garding th* tran*far of raealth frorn
loyrer-income to higher-income customers.
SfSPOh{SE, Ig." EFAIEST f.IO. !: ldaho Powsr does nct galher income
information for its custorner* and has not porfonn*d an analysis acmrding to incorne
level. The di*cussion on page 5, paragraph ?, *f th* Application yvas a r*f&ran*s tn Mr"
Talum's lestimony. ln his testimony, Mr. Tatum refercned an Oclober 201$ Public
Utiltre* Fortnightly article when he stated that othem in the industry have eancluded flrat
the nel nctering poliry is regremive in nature and that the oub*idy frcm non-solar to
aolar customars constftutes a regressiva y*Bnltfi trarsfer from lower-inmrne slrstome,B
to higher-income customer$. Mr. Tatum *xpressed that ldaho Frer sharcs tlTis
cancern.
The response ta this Request is sponsored by Tim Tatum, Mce President of
Regulatory Affairs, ldaho Power Cornpany.
IDAHO POWER COMPASIY'S RTSPONSE TO VOTE SOLAR'S
rIRST SET OF DATA REQUESTS TO IDAHO POWER COMPA'IY - 4
EXHIBIT 1OO4
IPC's Response to the First Production Request from Commission Staff,
Response to Request No.3
(attached)
REQUt9IL ilO, A: On page I of lts Application, the Company states that
"Establishing separate customer classes now will position the Company to study this
segment of customers, providing the data necsssary to understand how this customer
segment utilizes this system." What information ryill the Company be able to gather that
is nol currently available for {h**e customers?
qFq,f-#ilSr Tq,AHngfSI Xq. qr To provide context, the fullquota from page
1$ of Mr. Timothy E. Taturn's testirnony stated that;
The *sHblishment of simila*y *ituated customer$ or
customer classes has been a long-xtanding and impodant
first step in the ratemaking proceas" Taking this important
firsl ratemakins $tep now will posilios the Carnpany to study
this *egrnent of customers, providing the data necessary to
understand how this cuslomer seg,nenl utilize* the
Carnpany*s sy$tem. The data quanlifying the usage of the
syatem will inferm r*rhat costs (revenue requirement) aro
appropriately allocated to the newty established cu*tomer
classes in a future rate proceeding {class cost-of-senrice
process).
Talum Dl, p. 19, lines 14-24
The Company is currently able to gather ths infonnation lhat is neceosary lo
etudy variou$ $egments nf custorners; however, rhould the Commisrisn dacline to
suthoriz* the establishmeat of the requested nevr customer classes. the Company
raould have no reason to modify its class cost-otservice study or ratemaXeing processes.
lf the ldaho Fublic Utiliti*s Commission ("'Comrnission") detenn,ines there are
differencas that wanant the establishment of new s.mtomer classes, the Company will
a*sigfl costs to the new customsr classes in the class cost-of-service study and de*ign
rates specific to those clasees as part of a future rate proceeding. lf the Commiasion
determines no differences exist that warrant the rreation of a new customer class for
'NAHO
POWER COMFANY'$ RT$PONSE TO THE FIRST
FRo0ucrCIN RTQUEST OF r|-lE CoitjiMl$$r0r{ STAFF - 5
cultorners with on-site generation, the Company will continue to allocate costs to the
residential and small general service customer clesses that exist today.
The respon*e to this Requesl is *ponsored by Tim Tatum, M*e Fresident of
tegulatory Affairs, ldaho Pswer Gompany.
IDAIIO POW€R CCMPANY'S RESPONSE IOTHE FIRST
PROSUCTION RTOUEST OTTHE COMMIS$ION STAFF -S