20190614Application.pdf

}Y ROCKY MOUNTAIN
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RECEIVED
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iTILITiIS COMHISSIO}I
1407 West North Temple, Suite 330
Salt Lake City, Utah 84116
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June 14,2019
VA OVERNIGHT DELIVERY
Diane Hanian
Commission Secretary
Idaho Public Utilities Commission
472 W . Washington
Boise, ID 83702
Re:CASE NO. PAC-E-19.08
IN THE MATTER OF THE APPLICATION OF ROCKY MOUNTAIN POWER
TO CLOSE THE NET METERING PROGRAM TO NEW SERVICE &
IMPLEMENT A NET BILLING PROGRAM TO COMPENSATE CUSTOMER
GENERATORS FOR EXPORTED GENERATION
Dear Ms. Hanian:
Please find enclosed an original and nine (9) copies of Rocky Mountain Power's application in
the above referenced matter, along with direct testimony and exhibits. Enclosed is a CD
containing the application, direct testimony, exhibits, and associated work papers.
Informal inquiries may be directed to Ted Weston, Idaho Regulatory Manager at (801) 220-
2963.
Very truly yours,
"^,J
Vice President, Regulation
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Yvonne R. Hogle (#8930)
Ajay Kumar (pro hac vice)
1407 West North Temple, Suite 320
Salt Lake City, Utah 84116
Phone: [phone]
Facsimile: [phone]
RECEIVED
:l$19 -lUH lL Pl{ 2r 2lr
ii-:,iHO PUBLIC
-iTiL:Ti:S CCMMISSION
Attorneys for Roclry Mountain Power
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )ox'RocKy M0UNTAIN POWER TO ) CASE NO. PAC-E-19-08
CLOSE THE NET METERING PROGRAM )
TO NEW SERyTCE & IMPLEMENT A NET )
BILLING PROGRAM TO COMPENSATE ) APPLICATION OF
cusroMER GENERATORS FOR ) ROCKY MOUNTATN POWER
EXPORTED GENERATTON )
)
Rocky Mountain Power, a division of PacifiCorp ("Company" or "Rocky Mountain
Power"), in accordance with Idaho Code $61-502, $61-503, and RP 052, respectfully submits this
application ("Application") to the Idaho Public Utilities Commission ("Commission") for
authority to (i) close Electric Service Schedule 135 - Net Metering Service, ("Net Metering
program"), to new customer participation and cap it at the levels in place, effective at midnight
local time, December 31, 2019, (ii) require projects that apply for interconnection before
January 1,2020 to complete interconnection within a one year period of application to be eligible
to stay in the NEM program; (iii) allow existing net metering customers and those that apply for
or complete interconnection before midnight local time, on December 31, 2019, to continue to stay
in the program at the site until June l, 2029; (iv) offer a new Electric Service Schedule 136 -Net
Billing Service, ('Net Billing program" or "Schedule 136") for customers who apply to install
customer generation after January 31,2020; (v) implement an $85 application fee for customers
that apply to interconnect a customer generation system under the Net Billing program; and
(vi) recover the exported energy credits from the Net Billing program through the Company's
annual Energy Cost Adjustment Mechanism ("ECAM").
In support of its Application, the Company states as follows.
I. Background
Rocky Mountain Power is a division of PacifiCotp, dn Oregon corporation, which provides
electric service to retail customers in the states of Idaho, Wyoming, and Utah. Rocky Mountain
Power is a public utility in the state of ldaho and is subject to the Commission's jurisdiction with
respect to its prices and terms of electric service to retail customers in Idaho pursuant to Idaho
Code $61-129. Rocky Mountain Power provides retail electric service to approximately 80,000
customers in the state.
A. History of Net Metering
1. PursuanttotheCommission'sOrderl onJune 20,2003,theNetMetering program
was made available to the Company's Idaho customers through Schedule 135 with participation
capped at7l4 kilowatts, or one-tenth of one percent of the Company's 2002retail peak demand.
2. Net metering customers use the Company grid virtually all the time while offseuing
part or all of their energy requirement and are provided a credit at the retail rate for the energy they
produce and export to the grid. During periods when the custorner's generating facility is not
operating or not producing sufficient energy to meet the customer's usage, energy is delivered to
the customer from Cornpany facilities.
3. During each billing period, a customer's generation exported to the grid is netted
against the kilowatt-hour usage taken from the Company. If the energy generated by the customer
and delivered to the Company exceeds the energy supplied by the Company to the customer during
I In the Matter of the Petition of NW Energt Coalition and Renewable Northwest Project to Establish Net Metering
Schedules for PacifiCorp, Case No. PAC-E-03-4, Order No. 29260 (June 20,2003).
t (vi) recover the exported energy credits from the Net Billing program through the Company's
annual Energy Cost Adjustment Mechanism ("ECAM").
In support of its Application, the Company states as follows.
L Background
Rocky Mountain Power is a division of PacifiCorp, an Oregon corporation, which provides
electric service to retail customers in the states of Idaho, Wyoming, and Utah. Rocky Mountain
Power is a public utility in the state of Idaho and is subject to the Commission's jurisdiction with
respect to its prices and terms of electric service to retail customers in ldaho pursuant to Idaho
Code $61-129. Rocky Mountain Power provides retail electric service to approximately 80,000
customers in the state.
A. History of Net Metering
1. Pursuantto the Commission's Orderl on June 20,2003,the Net Metering program
was made available to the Company's Idaho customers through Schedule 135 with participation
capped at714 kilowatts, or one-tenth of one percent of the Company's 2002 retail peak demand.
2. Net metering customers use the Company grid virtually all the time while offsetting
part or all of their energy requirement and are provided a credit at the retail rate for the energy they
produce and export to the grid. During periods when the customer's generating facility is not
operating or not producing sufficient energy to meet the customer's usage, energy is delivered to
the customer from Company facilities.
3. During each billing period, a customer's generation exported to the grid is netted
against the kilowatt-hour usage taken from the Company. If the energy generated by the customer
and delivered to the Company exceeds the energy supplied by the Company to the customer during
1 In the lt{atter of the Petition of NIV Energy Coalition and Renewable Northwest Project to Establish Net Metering
S c he dule s for P ac ifiC orp, Case No. PAC-E-03 -4, Order No. 29260 (Jrne 20, 2003).
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the billing period, the customer is billed for the appropriate power and other non-energy charges
and compensated for any net exported energy through a financial credit, based on the applicable
standard servi ce tariff.
4. In February 2016,the Cornpany applied to the Commission for authority to modify
Schedule 135 by raising the net metering cap from 714 kW to 2,000 kW. The Company indicated
that this would serve as a checkpoint to report back to the Commission on the Net Metering
program and the extent to which the Company and non-participants may be subsidizing net
metering customers.
5. The Commission declined to increase the overall cap on the Net Metering program
indicating that, when it approved the 714 kW cap in 2003, it found the cap should be reviewed
after it was reached and that the review should include a report regarding the required level of
subsidization by non-participants.2 The Commission also stated that the Company had not
expressed any immediate reliability concerns and that subsidization level at the time was small
albeit still growing. Based, in part, on this reasoning, the Commission found it was unnecessary to
cap overall participation "at this time"3 and removed the overall and individual participation caps
effective May 1,2016. The Company was ordered to file annual status reports with specific
information about the Company's Net Metering program and to file earlier reports "if the Company
atany time expects its net metering service will materially and negatively impact its system and/or
its customers."4
2 In the Matter of PacifiCorp d/b/a Rocky Mountain Power's Application to Modifu Electric Service Schedule 135
Net Metering Service, Case No. PAC-E- l6-07, Order No. 33 5 I I at 7 (April 29, 2016).
3 Id.4Id.,at8.I
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6. The Net Metering program and customer participation have grown significantly
since 2016. Approximately 820 customers currentlyparticipate under Schedule 135, with installed
capacity of 5.8 megawatts of electricity.
7. Since the Commission issued Order No. 33511, the Company has continued to
monitor and file annual reports on the Net Metering program summarizing the growth in both
participation and cost shifting to non-participating customers indicating the need to modify
Schedule 135. The Company believes that the subsidies embedded within the current
compensation structure in Schedule 135, and the decreasing prices of customer generation
facilities, particularly rooftop solar, will continue to encourage participation in the Net Metering
program to unsustainable levels. Based on the foregoing, the Company seeks to cap the Net
Metering program at its level at midnight local time, December 31,2019, and establish rates and
policies for new customer generators that will provide fair market value for any exported
generation that is supplied to the Company's grid.
II. GOOD POLICY SUPPORTS ALLOWING NET METERING CUSTOMERS TO
REMAIN ON SCHEDULE 135 FOR A REASONABLE PERIOD
8. In Order No. 34046 in Case No. IPC-E-17-13, the Commission, stated:
[W]e are not opposed to considering the parties' legal analysis and
interpretation of Idaho Code $ 6 I -3 I 5 and related Idaho Supreme Court case
law, which prohibits rate discrimination among similarly situated
ratepayers. We find it reasonable to consider arguments related to protecting
investments already made, or other transitional periods, and other pertinent
and legally sufficient distinctions, by customers with on-site generation
systems.s
I s Id., at23-24.
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The Company believes that the Commission can consider policy concerns in its ratemaking
capacity,6 and did so when it authorized the Net Metering program with a cap in 2003.7 At the
time, the Commission acknowledged that the program's design could potentially cause net
metering customers to shift an unacceptable level of costs to non-participants with the growth of
the program, and directed the Company to monitor the program and retum to the Commission with
status reports.8 Thus, pursuant to the same authority, the Company believes the Commission may
close the Net Metering program and cap it at the levels in effect at midnight local time,
December 3l,2Ol9,e and in particular, allow current Net Metering program participants to remain
in the Net Metering program for a reasonable period, as explained below and in the direct
testimony of Company witness Ms. Joelle R. Steward.
9. First, the combination of decreasing prices in customer generator facilities and the
compensation structure of Schedule 135, which encourages customer participation, will inevitably
result in growing, unsustainable subsidies. The Company believes this reason justifies ending the
Net Metering program. For the same reason, the Company submits that its proposed new
alternative Net Billing program and service under proposed Schedule 136 must be different from
6 See e.g., In the Matler of the Application of ldaho Powerfor Authority to Increase its Rates and Charges, Case No.
U-1006-159, OrderNo. 16688 (August ll, l98l), ErrataNotice,43 P.U.R. 4th 609,623, quoting Grindttone Butte v.
Idaho Public Utilities Commission (slip opinion filed April 29, l98l) in which the ldaho supreme court found that
"'it is 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." According to the
court, such factors are to be considered in developing 'new rate designs which would be responsive to current
economic realities. It is in the public interest to make such considerations in decisions which impact upon the
consumption of energy, especially in light of the advancing 'political, economic, and environmental costs imposed
on socieQr."' See also Idaho Code $61-503 (which provides broad authority for the Commission to establish rates,
classifications, rules, or practices); Idaho Code $61-3 15 (which provides the Commission with specific authority to
determine any question offact regarding rates established by the utilities).7 ,See Order No,29260 at7.
8 Order No. 33511 at 7.
e For example, the Commission closed Schedules 7 (Security Area Lighting) and 7a (Security Area Lighting
(Residential and Farm) to new service but the Company still serves customers under those schedules.t
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its current Net Metering Service under Schedule 135. As proposed and if approved, Schedule 136
is a different program structure from existing Schedule I 3 5 .
10. Second, participation in the Net Metering program required substantial investments
or commitments by customers in their customer generation facilities. Many existing Net Metering
program participants likely purchased their customer generation facilities at a much higher cost
than a new prospective buyer could purchase today. Providing current Net Metering program
customers a period of time to transition to a new program would be reasonable and does not
disadvantage new customer generators because the Company is providing sufficient notice for the
closure of the program. In addition, the new program participants would not be harmed by the
unavailability of the existing compensation structure within Schedule 135 because these customers
would make their decision to invest in customer generation facilities based on an entirely different
compensation structure under proposed Schedule 136 that better recognizes uncertainty in the
value and compensation levels than in the current Net Metering program.
I l. In contrast, current Net Metering program participants would be harmed if they
immediately transitioned to the new program. Current net metering customers are not in the same
position as new customer generators. Therefore, requiring new customer generators to participate
in a different program from net metering customers, does not violate Idaho Code $ 61-315 and is
consistent with the Idaho Supreme Court's interpretation thereof.
12. The Idaho Supreme Court explained in ldaho State Homebuilders v. Washington
Water Power, that "[n]ot all differences in a utility's rates and charges as between different classes
of customers constitute unlawful discrimination or preference" under that statute.l0 Rather, a
"reasonable classification of utility customers may justify the setting of different rates and charges
I 'o 690 P.2d 350,355 (tdaho 1984).
t for the different classes of customers."ll Such classifications must be "based upon factors such as
cost of service, quantity of electricity used, differences in conditions of service, or the time, nature
and pattern of the use."12 Here, good public policy exists for keeping net metering customers on
Schedule 135 for a reasonable period, while offering a new program and service under a new
schedule to new customer generators, as set forth above. This notwithstanding, the Company is
not proposing modifications to retail rates in this Application but will address those issues in its
next general rate case. The Company only proposes to implement a new export credit rate at the
conclusion of this case, as more specifically set forth in Company witness Mr. Daniel J. MacNeil's
direct testimony.
13. While the Company believes that allowing net metering customers to remain on the
Net Metering program would be in the public interest, if the Commission disagrees, the Company
recommends that all residential and Schedule 23 customer generators be subject to a Net Billing
program whose export credit price transitions over a three-year period from average retail energy
charges to the cost-based level that Company witness Mr. MacNeil supports in his direct testimony
("Alternative Transition Plan"). This Alternative Transition Plan is described in detail in the direct
testimony of Company witness Mr. Robert M. Meredith.
IIL Net Billing Program
The proposed Net Billing program will provide for the sustainable growth of renewable
customer generation in the Company's service territory by appropriately compensating customers
for exported generation that is supplied to the Company's system. At the same time, the Net Billing
program is structured to ensure that other customers not participating in the Net Billing program
are not harmed. To appropriately compensate customers for exported generation that is supplied
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to the Company's system, while ensuring that the Net Billing program costs approximate the
program benefits and therefore do not prejudice other customers, the Company designed the Net
Billing program to provide compensation based on costs that the Company would otherwise
expend to obtain electricity, as more fully described below.
A. Eligible Customers
The Net Billing program is available to Rocky Mountain Power customers that own and
operate an on-site renewable generation facility. Customers wishing to participate in the Net
Billing program must complete the Company's application for interconnection and execute an
interconnection agreement. Additionally, the customer's generation facility must satisfy the
following eligibility requirements :
o Be owned and operated by the customer;o Utilize renewable energy technology (e.g., solar, wind, etc.);o Not exceed 25 kW in size for customers taking service on Schedules l, 35, 23, and
23Aor 100 kW for other service schedules;o Be located on and connected to the customer's meter;o Be interconnected to and operate in parallel with the Company's transmission and
distribution facilities;o Be sized to primarily offset part or all of the customer's own electrical
requirements; ando Use the metering equipment required by the Company for administering this
program.
If the customers satisfy the requirements outlined in the proposed tariff attached to the
Direct Testimony of Mr. Meredith, customers may install and interconnect their generation facility
and participate in the Net Billing program.
B. Net Billing Program Structure
The program will provide export credits to customer generators for all energy exported to
the grid from their generation system. At the same time, all energy usage provided by the Company
to the customer would be billed under the standard applicable tariff. Energy generated andI
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consumed on-site will serve to offset kilowatt-hours that would otherwise have been imported
from the Company to the customer. On the Company's proposed Net Billing program, customer
generators would be paid an export credit rate that is fair, accurate, and updated annually. This
ensures that costs are not shifted to other customers and the prices paid for exported energy evolve
with their value over time. The concept of being credited at a price for energy sent to the grid and
paying the same rates as other customers for energy taken from the grid is also simple and easy for
customers to understand. Additional details on the structure of this Net Billing program are
provided in the direct testimony of Mr. Meredith.
C. Exported Credit Elements
The Company proposes to provide exported energy credits based on the costs that it would
otherwise pay for electricity. This will provide fair compensation to Net Billing program customers
for their excess generation that is supplied to the Company's electric grid, while ensuring that the
Net Billing program costs approximate program benefits. Namely, Rocky Mountain Power's
proposed Net Billing program consists of the following separate elements for which customer-
generators will receive compensation: (l) avoided energy costs; (2) avoided line losses; and
(3) integration costs. The Company also requests the ability to annually update each compensation
element no laterthan June l't by submitting an advice letterto the Commission. In addition, the
Company proposes that the exported energy credit prices be differentiated by time of export.
Differentiating the price of exported energy better reflects the costs and benefits of distributed
energy resources and encourages customers to build and operate their systems in ways that are the
most beneficial to the power grid. Each of the proposed compensation elements are summarized
below and described in greater detail in the direct testimony of Mr. MacNeil:
o Avoided Energy Cost: When electricity is exported to the grid, the Company can
reduce the output of its generation resources or reduce the volume of its marketI
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purchases. The resulting reduction in fuel expense and purchased power cost is the
avoided energy cost.
o Avoided Line Losses: Line losses are the difference between the total generation
injected into the grid, and the total metered volume at customer sites. As a result, a
kilowatt-hour produced by a generator is not equivalent to a kilowatt-hour delivered
to a customer. The Company's avoided energy costs are typically measured based
on generation and market purchases at transmission voltages, while the metered
volumes for residential generation exports are measured at the secondary voltage
level. It is appropriate to adjust avoided energy costs to account for the resulting
avoided line losses.
o Integration Cost: The Company uses flexible resources to accommodate
fluctuations in the balance of its system attributable to load, wind, solar, and other
resources that are not under the Company's control. Integration costs represent the
cost of holding reserves with flexible resources to reliably maintain the load and
resource balance.
ry. CorrespondenceorCommunications
Correspondence and communications regarding this Application should be addressed to:
Ted Weston
Idaho Regulatory Affairs Manager
Rocky Mountain Power
1407 West North Temple, Suite 330
Salt Lake city, Utah 841l6
Telephone: (80 l) 220-29 63
Email : ted.weston@pacifi corp.com
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t Yvonne R. Hogle
Assistant General Counsel
Rocky Mountain Power
1407 WestNorth Temple, Suite 320
Salt Lake City, Utah 84116
Telephone: [phone]
Email : yvonne.ho [e-mail]
In addition, Rocky Mountain Power requests that all data requests regarding this
Application be sent in Microsoft Word to the following:
By email (prefened): [e-mail]
By regular mail:Data Request Response Center
PacifiCorp
825 Multnomah, Suite 2000
Portland, Oregon 97232
Informal questions may be directed to Ted Weston, Idaho Regulatory Affairs Manager at
(80r)220-2e63.
REOUEST FOR RELIEF
Electric Service Schedule No. 136 - Net Billing is designed to provide for the growth of
renewable distributed generation in the Company's service territory by appropriately
compensating customers for exported generation that is supplied to Rocky Mountain Power's
system. At the same time ensuring that the Company's other customers who are not participating
in the Net Billing program are not harmed. The Net Billing program is designed to provide
compensation based on costs that the Company would otherwise expend to obtain electricity.
WHEREFORE, Rocky Mountain Power respectfully requests that the Commission issue
an order that authorizes the Company to: (i) close Electric Service Schedule 135 to new customer
participation and cap it at the levels in place, effective at midnight local time, December 31,2019,
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(ii) allow existing net metering customers and those that apply for or complete interconnection
before January 1,2020, to continue to stay on the program at the site until June 1,2029; (iii) offer,
as an alternative, its proposed Net Billing program to new customer generators through Schedule
136 forthose who apply for interconnection starting February 1,2020; (iv) implement an $85
application fee for customers that apply to interconnect a customer generation system under the
Net Billing program that will reflect the one-time cost to the Company associated with processing
and reviewing customer generation interconnection requests; (v) require projects that apply for
interconnection before January 1,2020 to complete interconnection within a one year period of
application to be eligible to stay in the Net Metering program and (vi) recover the exported energy
credits from the Net Billing program through the Company's annual ECAM.
DATED this 14ft day of June,2019.
Respectfully submitted,
ROCKY
R. Hogle
1407 West North Temple, Suite 320
Salt Lake city, utah 84116
Telephone No. [phone]
Facsimile No. [phone]
E-mail : [e-mail]
aj av.kumar@pacifi corp. com
Attorneysfor Rocky Mountain Power
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