20191113Reply Comments.pdf

ITECEIVED
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ABIGAIL R. GERMAINE
Deputy City Attomey
BOISE CIry ATTORNEY'S OFFICE
150 N. Capitol Blvd.
P.O. Box 500
Boise, ID 83701-0500
Telephone: [phone]
Facsimile: [phone]
Idaho State Bar No.: 923 1
Email : [e-mail]
Attomey for Boise City
IN THE MATTER OF THE PETITION OF
IDAHO POWER COMPANY TO STUDY
COSTS, BENEFITS, AND COMPENSATION
OF NET EXCESS ENERGY SUPPLIED BY
CUSTOMER ON-SITE GENERATION
l- ' ui;i,,,ri,Sl0i,l
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
Case No. IPC-E-18-15
BOISE CITY'S COMMENTS
REGARDING EXISTING ON-
SITE GENERATION
CUSTOMERS
COMES NOW, the city of Boise City, herein referred to as "Boise City'', by and through
its attomey ofrecord, and pursuant to Rules 202 utd 203 of the Rules of Procedure of the Idaho
Public Utility Commission (IDAPA 31.01.01.202; 31.01 .01.203) and, pursuant to that Notice of
Motion to Approve Settlement Agreement, Notice of Briefing, and Notice of Schedule, Order No.
34460, filed on October 17, 2019, hereby submits its comments related to existing on-site
generation customers:
BOISE CITY'S COMMENTS REGARDING EXISTING
ON-SITE GENERATION CUSTOMERS
- Page I
JAYME B. SULLTVAN
BOISE CITY ATTORNEY
I. INTRODUCTION
On October 19, 2018, pursuant to this Idaho Public Utility Commission's ("Commission")
Order No. 34046 in Docket No. IPC-E-17-13, Idaho Power Company (the "Company") petitioned
the Commission to open this docket ("Docket") to comprehensively study the costs and benefits
of on-site generation on the Company's electric power system. Order No. 34046 at 3 l.
Numerous parties intervened in the Docket, including Idaho Clean Energy Association,
Boise City, Sierra Club, Idaho Conservation League, Industrial Customers ofldaho Power, Idaho
Irrigation Pumpers Association, Inc. and Russell Schiermeier (herein after this group shall be
referred to as the "Parties"). Boise City havingbeen a party to Docket No. IPC-E-I7-i3 and having
a vested interest in the outcome of this Docket, both as a net metering customer itself and as the
representative of Boise City customers, intervened to be a part of the process. The Commission
instructed Commission Staff ("Staff') to coordinate with all parties and the Company regarding
the procedure of the Docket. Staff and parties then began the process of attempting to negotiate
toward a settlement. One pre-hearing conference, eight settlement conferences, various settlement
proposals, and extensive discussions took place between the parties to try and resolve the Docket.
After nearly a year and a half of negotiations, the Company, Staff and the Parties reached
a settlernent agreement ("Sett'lement Agreement") which resolved many of the issues presented in
the Docket. On October 11,2019, the Company and Staff submitted a Motion to Approve
Settlement Agreement sigred by the Parties. Although the Settlement Agreement demonstrates
extensive compromise and resolution of many issues, one issue the Parties were unable to resolve
is whether or not existing customers with on-site generation will be subject to the terms of the
BOISE CITY'S COMMENTS REGARDING EXISTING
ON-SITE GENERATION CUSTOMERS
Page 2
BOISE CITY'S COMMENTS REGARDING EXISTING
ON-SITE GENERATION CUSTOMERS
- Page 3
Settlement Agreement. To foster the settlement of many issues in this Docket, the Parties agreed
to submit the issue of treatment of existing customers to the Commission for determination. The
Parties, Company, and Staff would have the opportunity to present their position on the issue to
the Commission and ultimately the Commission would decide the issue of existing customer
treatment.
II, FACTSANDBACKGROUND
l. Current Net Meterinq Program.
In 1983, the Company established its net metering service program which established the
structure under which customers with on-site generation could off-set their own energy
consumption and transfer excess generated electricity to the Company for its use and
redistribution. See generally, I.P.U.C. Tariff No. 101 , Schedule 84 Customer Energy Production
Net Metering. The net energy metering progmm consisted of a net monthly billing cycle and a
kilowatt hour credit for excess exported energy ("NEM Program"). 1d. The net monthly billing
period meant that an on-site generation customer's energy consumption and energy exports were
netted on a monthly basis..Id. Exported energy was credited to the on-site generation customet's
account on a kilowatlhour basis, which reflected the customer's respective schedule retail rate.
Under the NEM Program, on-site generation customers installed systems based on the then
applicable program rules and fiamework. These customers made investments and financial
determinations based on the rules, information, and requirements imposed on thern by the
Company's NEM Program structure. These rules included net monthly billing and receiving
kilowatt-hour credits for excess net energy provided to the Company at the customer's specific
schedule retail rate.
Practically, this meant that on-site generation customers designed their systems to
maximize monthly generation. When considering system configuration, customers would consider
their monthly data and consumption. This monthly billing program requirement dictated system
components such as orientation, size, and other technologies. Customers were not given an option
on billing periods and were not aware that such billing periods would change, thereby effecting
the productivity or efficiency of their systems. The Company established the monthly billing
Iiamework and the on-site generator customers were required to follow that framework and install
compatible systems.
Regarding the kilowatt-hour export credit, existing on-site generation customers
considered the financial feasibility of system installation based on the NEM Program's kilowatt-
hour credit for exports. Customers reasonably relied on the export credit structure of the program
to calculate payback periods and the overall economics of on-site generation systems. Although
customers were aware that rates for consumption could change pursuant to a general rate case,
nothing indicated to these customers that the rate for exported energy would be decoupled from
the rates for consumption or that a separate export credit rate would be established and imposed
on them. Again, customers reasonably relied on the NEM Program's configuration, requirements,
and rules to anallze the economics of system installation and make costly investments.
BOISE CTTY'S COMMENTS REGARDING EXISTING
ON.SITE GENERATION CUSTOMERS
- Page 4
2. Nerv Net Hour Billin am.
The Settlement Agreement reached by the Parties establishes a new program for on-site
generation customers. This program's structure is distinct from the NEM Program and creates an
entirely new framework for on-site generation customers who wish to offset consumption and
export excess energy to the Company's grid. This new net hourly billing program ("Net Hourly
Billing Program") will implement a new hourly net billing timeframe with different rules and
requirements than those in existence at the time the current on-site generators installed their
systems and signed up for the program. New on-site generation customers will now be billed on a
net hourly billing period, not a net monthly billing. Settlanent Agreement at 2. This means
customers' excess energy exports will be measured on an hourly basis. Id. Cunent on-site
generating customers did not have the ability to configure their systems to operate most efficiently
with the new program design. In order to make these customer's systems efficient and
economically advantageous, customers would have to redesign their systems, which in many cases,
is not financially feasible.
In addition, on-site generation customers will now be compensated for their exported
excess energy at an export credit rate. Id. at 6. This export credit rate will be lower than the current
compensation structure for existing on-site generation customers. Currently, on-site generation
customers are receiving the per kilowatt-hour credit based on the retail rate for that customer's
service schedule. Id. at 6. If required to take service under the new Net Hourly Billing Program,
this change would affect on-site generation customer's ability to offset their bills by exporting
excess generation, will extend payback periods, and will make these investments less economical.
BOISE CITY'S COMMENTS REGARDING EXISTING
ON-SITE GENERATION CUSTOMERS
- Page 5
Existing on-site generation customers had no way of reasonably anticipating the compensation
change or establishment of a decoupled export credit rate, separate and untied to the customer's
rate of consumption.
III. ARGUMENT
l. Existin On-S ration Custo will not ar Situa Nelv Netr
Hourlv Billing Customers.
Existing on-site generation customers should not be required to take service under the new
Net Hourly Billing Program established by the Settlernent Agreement because they will not be
similarly situated to new customers taking service under the new Net Hourly Billing Program.
Although it is well established that this Commission carurot discriminate between similarly
situated customers, by for example, charging different rates to those customers, this Commission
is free to distinguish between customers based on various factors. Idaho Code $ 6l-315; tdaho
State Homebuilders v. Washington Water Power, 107 Idaho 415, 419 (1984).
The Idaho Supreme Court has held, "a utility is forbidden to treat a customer preferentially
tkough its rates and charges or to maintain unreasonable differences in its rates and charges as
between classes of service." Homebuilders, 107 ldaho at 419. However, the Court has also been
clear that, "[n]ot all differences in utility's rates and charges as between different classes of
customers constitutes unlawful discrimination under the strictures of I.C. $ 6l-315." Id.
Specifically applicable to the facts here, the Court has found, 'Justification for rate discrimination
as between customers within a schedule and as between customers in ditTerent schedules." Id. at
420 (citing Grindstone Butte Mutual Canal Co. v. Idaho Public Utility Commission, 102 Idaho
175 (1981).
BOIS| CITY'S CON,IMITNTS REGARDING EXISTINC
ON-SITE CENERATION CUSTOMERS
Page 6
BOISE CITY'S COMMENTS REGARDING EXISTING
ON-SITE GENERATION CUSTOMERS
- Page 7
In drawing distinctions between customers, the Commission can look at a wide range of
factors. Agricultural Products Corp. v. Utah Power & Light Co.,98 Idaho 23,30-31 (1976). "A
reasonable classification ofutility customers may justify the setting of ditTerent rates and charges
for dift'erent classes of customers." Homebuilders, 107 Idaho at 420. In determining these
classifications and exercising its authority under Idaho Code $ 6l-315, the Commission has the
broad power to make factual determinations on reasonable distinctions. Application oJ Boise Water
Corp. to Revise and Increase Rates Chargedfor l|'ater Service, 128 Idaho 534,537 (1996).
In this circumstance, as discussed above, existing on-site generation customers will be
distinct from new on-site generation customers. Existing customers were required to install
systems in congruency with the Company's current NEM Program. These customers have systems
configured in accordance with a net monthly billing program and under an expectation of a
kilowatt-hour credit. Their size, orientation, and technologies all align with the requirements of
the existing program. Now, if required to take service under the new Net Hourly Billing Program,
their systems will no longer align with the program they were designed after.
On the other hand, new customers' systems will be distinct from existing customers. New
customers taking service under the new Net Hourly Billing Program will be able to configure their
systems consistent with the components of the new program. These systems will look distinctly
different based on the operational nature of the new program. New customers will orient and
customize their systerns to ma.rimize hourly net metering. Existing austomers did not have this
opportunity. The Commission should acknowledge this distinction among existing and new
customers and permit existing customers to remain on the current net metering program because
thesc customers will not be similarly situated to new net hourly billing customers and will bc
disadvantaged if they are required to take service under the Net Hourly Billing Program
2. Allowins Existing Customers to Take Service Under the Current NEM Program
BOISE CITY'S COMMENTS REGARDING EXISTINC
ON.SITE GENERATION CUSTOMERS
Page 8
Would be Just and Reasonable.
This Commission has the authority to determine charges, rules, and regulations that are just
and reasonable. Idaho Code $ 6l -502. Furthermore, the Commission is not required to make these
charges and rules the same for all customers. "The Commission is not required to create equality
ofrates among classes of the utility's customers if the rates set are reasonable." Grindstone Butte
Mutual Canal Company y ldaho Pou'er Co.,98 Idaho 860, 866 (1978).
Just like this Commission cannot treat similarly situated customers differently, so would
treating distinctly different customers the same be unjust and unreasonable. These existing
customers have different and distinct systems from those which will be installed by new customers
under the Net Hourly Billing Program. "A discrimination as to rates is not unlawful where based
upon a reasonable classification corresponding lo actual dffirences in the situation of the
customers for the fumishing of the service. . . ." Utah-Idaho Sugar Co. v. Intermountain Gas Co.,
100 Idaho 368,377 (emphasis added) (quoting 64 Am.Jur.2d, Public Utilities s 117 (1972)).
Existing and new customers demonstrate actual differences in their situations and systerns based
on the Company's programs frameworks. Current on-site generation customers purchased and
installed systerns based on the program rules and regulations in place at the time they installed
their systems. These existing customer's systems present actual differences from those that will be
installed by fulure Net Hourly Billing Program customers. It would be unjust and unreasonable to
treat existing customers, with systems designed under the currant NEM Program the same as new
customers under the new Net Hourly Billing Program.
ln addition to the Commission's responsibility to establish fair and reasonable charges,
rules, and regulations, the Commission is also permitted to perform legislative functions and in
doing so, can make policy determinations. Building Contractors Ass'n of Southwestern ldaho v.
Idaho Public Utilities Com'n, 151 Idaho 10, l5 (2011). "Absent a legislative pronounaement to
the contrary, we find it within the Commission's jurisdictional province to consider in its rate
making capacity all relevant criteria including energy conservation and concomitant concepts of
optimum use and resource allocation." Grindstone Butte Mut. Canal Co. v. Idaho Public Utilities
Commission, 102 Idaho 175, 181 (1981). The Commission should make a policy determination
that allowing these existing customers to continue under the current NEM program is just and
reasonable considering their investments and contribution to the Company's system and energy
consen'ation.
Customers who purchased and installed on-site generation systems should not be required
to follow new rules and regulations now that the Company chooses to implement a new program.
Ifexisting customers are subject to the new net hourly billing timeframe and the export credit rate
proposed in the Net Hourly Billing Program, these customers will be unjustly harmed by abiding
by the program requirements in effect at the time they installed their systems. When these existing
customers installed their systems and signed up for the net metering program, there was nothing
within their power they could have done to anticipate or plan for how the Company may want to
change or modify the program. Therefore, these customers had no ability to mitigate or plan for
BOISE CITY'S COMMENTS REGARDINC EXISTING
ON.SITE GENERATION CUSTOMERS
Page 9
such changes and were instead required to follow the guidelines ofthe program that the Company
had implemented and established.
If required to operate under this new Net Hourly Billing program, existing on-site
generation customers will suft'er unfairly from reasonably relfng on a certain understanding based
on the current construct of the NEM Program. As discussed above, the Commission has the ability
to treat these customers differently based on the a ctual dffirence in the situations of these existing
versus new customers. These customers made financial investments based on their understanding
ofhow the program would operate. Although customers are aware that rates may change, nothing
alerted these customers to the possibility that their export credit rate would be unbundled fiom the
retail rate ofconsumption or that the program would be changed to a net hourly billing framework.
Allowing these existing customers to remain on the existing net metering program would be just
and reasonable because these customers made investments in their system and are distinctly
situated fiom those customers who will take service under the new Net Hourly Billing Program.
IV. CONCLUSION
Boise City respectfully requests that this Commission issue an Order allowing existing on-
site generation customers to remain under the current NEM Program. Existing customers should
not be not required to take service under the new Net Hourly Billing program established by the
Settlement Agreement because doing so would be unjust and unreasonable based on existing
customers installing systerns under the current NEM Program requirements.
BOISE CITY'S COMMENTS REGARDING EXISTING
ON.SITE GENERATION CUSTOMERS
Page l0
DATED tUs I 3 aay of November 2019.
Gennaine
Depu City Attomey
BOISE CITY'S COMMENTS REGARDING EXISTING
ON.SITE CENERATION CUSTOMERS
-Pagell
CERTIFICATE OF SERVICE
I hereby certify that I have on this l3 day of Novernber 2019, served the foregoing
documents on all parties ofcounsel as follows:
Diane Hanian
Commission Secretary
Idaho Public Utilities Commission
I1331 W. Chinden Blvd., Building 8
Suite 201-A
Boise, ID 83714
di ane.hol t(r7',nuc. i dahcr goV
Edward Jewell
Deputy Attomey General
Idaho Public Utilities Commission
I 133 I W. Chinden Blvd., Building 8
Suite 201-A
Boise, ID 83714
edrvard. i ewcl l(zDpuc. idalio. gov
tr U.S. MailEI Personal Deliverytr Facsimiletr Electronic Meanstr Other:
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Benjamin J. Otto
Idaho Conservation League
710 N. 6th Street
Boise, ID 83702
BOISE CITY'S COMMENTS REGARDING EXISTING
ON-SITE GENERATION CUSTOMERS
- Page 12
Lisa Nordstrom
Regulatory Dockets
Idaho Power Company
PO Box 70
Boise, ID 83707
I no rd st rom a._i i dahopo wcr. co m
doeku@:dqLo-pswsrcar!
Timothy E. Tatum
Connie Aschenbrenner
Idaho Power Company
PO Box 70
Boise, ID 83707
ttatum (ritidahopou,er. com
caschenbrenncr(ai idahonora'er.com
botto(oidalroconservation.o
Idahydro
c/o C. Tom Arkoosh
ARKOOSH LAW OFFICES
802 W. Bannock St., Suite LP 103
PO Box 2900
Boise, ID 83701
to m. ark oo s h (d arkoo sh. corn
eri n. cec i I fa) arkoo s h. co m
Idaho Irrigation Pumpers Assn.
c/o Eric L- Olsen
ECHO HAWK & OLSEN PLLC
PO Box 6119
Pocatello, ID 83205
elo(@echo [rarvk.cor.r.r
Ted Weston
Yvonne R. Hogle
Rocky Mountain Power
1407 West North Temple, Suite 330
Salt Lake City, UT 84116
ted. lvcston(rr.,paci ticom.com
yvonne.hoglc n ac i fl ooro. conr
Briana Kober
Vote Solar
358 S. 700 E., Suite 8206
Salt Lake City, UT 84102
briana(rl,votcsolar.or
Other:
U.S. Mail
Personal Delivery
Facsimilc
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Other:
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David Bender
Al Luna
Nick Thorpe
Earthjustice
3916 Nakoma Road
BOISE CITY'S COMMENTS RECARDING EXISTING
ON.SITE GENERATION CUSTOMERS
- Page l3
Idaho Irrigation Pumpers Assn.
cio Anthony Yankel
12700 Lake Ave., Unit 2505
Lakewood, OH 44107
tony(4yankel.net
Madison, WI 53711
dbontler(itcarth lLlsttce.ol.g
aluna(Oeartl.ri ustice.org
n tlr o ro c(rit eafthiusticc.org
Idaho Sierra Club
c/o Kelsey Jae Nunez
KELSEY JAE NUNEZ LLC
920 N. Clover Dr.
Boise, ID 83703
tr U.S. Mailtr Personal Deliverytr FacsimileEl Electronic Meanstr Other:
kclsev(likclse vlaenuncz.col'n
tr U.S. MailD Personal Deliverytr FacsimileE Electronic MeansO Other:
Preston N. Carter
GTVENS PURSLEY LLP
Attorneys for Idaho Clean Energy Assn.
601 W. Bannock St.
Boise, ID 83702
tr U.S. MailO Personal Deliverytr Facsimile
E Electronic Meanstr Other:
Drestoncarter(asi vcnsnurslev.com
Northwest Energy Coalition
c/o F. Diego Rivas
I l0l 8th Ave.
Helena, MT 59601
tr U.S. Mailtr Personal Deliverytr Facsimile
E Electronic MeansO Other:di nwener 0
Northwest Energy Coalition
c/o Benjamin J. Otto
Idaho Conservation League
710 N. 6th Street
Boise, ID 83702
hotto(riridalioconservation.or
O U.S. Mailtr Personal Deliverytr FacsimileB Electronic MeansO Other:
BOISE CITY'S COMMENTS REGARDING EXISTING
ON-SITE CENERATION CUSTOMERS
- Page 14
Zack Waterman
Mike Heckler
Idaho Sierra Club
503 W. Franklin St.
Boise, ID 83702
zack. w atennan(rosi erraclub.orq
michael.p.hcckler@r grnail.com
Jim Swier
Micron Technology, Inc.
8000 South Federal Way
Boise, ID 83707
iswicr(irmicron.com
Austin Rueschioff
Thorvald A. Nelson
HOLLAND & HART, LLP
555 Seventeenth Street, Suite 3200
Denver, CO 80202
darueschho ff(iuhollandhart. cour
hrelson(lihollandhart.com
Peter J. Richardson
Industrial Customers of Idaho Power
RICHARDSON ADAMS, PLLC
515 N. 27th Street
PO BOX 7218
Boise, ID 83702
petcr(rirrichardsonadams.com
tr U.S. Mailtr Personal DcliveryO Facsimiletr Electronic MeansO Other:
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BOISE CITY'S COMMENTS REGARDING EXISTING
ON.SITE GENERATION CUSTOMERS
- Page 15
. Germaine
D City Attomey
Dr. Don Reading
6070 Hill Road
Boise, ID 83703
drsadi n g(r2r m i nd sp ri nq. co m
Russell Schiermeier
29393 Davis Road
Bruneau, ID 83604
buvhav(4 gnrail.com
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