20200526Comments on Study Design.pdf

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Benjamin J. Otto (ISB No.8292)
710 N 6th Street
Boise,ID 83701
Ph: [phone]x12
Fax [phone]
[e-mail]
Attorney for the Idaho Conservation League
IN THE MATTER OF THE )
APPLTCATTON OF ROCKYMOUTATN )
POWER TO CLOSE THE NET )
METERING PROGRAM TO NEW )
SERVICE & IMPLEMENT A NET )
BrLrrNG PROGRAM TO )
CoMPENSATE CUSTOMER )GENERATORSFOREXPORTED )GENERATION )
PAC-E-19-08
ICL INITIAL COMMENT
BEFORE THE IDAHO PUBTIC UTILITIES COMMISSION
Pursuant to Order No. 34661 The Idaho Conservation League provides the following
comments on the study design of the costs and benefits of customer-owned distributed energy
systems in Rocky Mountain Power's Idaho service territory. As the Commission explained in this
Order, conducting a fair, credible, and comprehensive study is the foundation "to support a well-
informed decision regarding Rocky Mountain Power's net metering service offering." Order
34661 at 2.The Commission established a procedure and timeline to address the first step in this
process - the study design phase- with final comments due fuly 16,2020. Once the Commission
has reviewed the party and public comments it will issue an order outlining the scope and
procedure for the second phase ofthis process - conducting the actual study and subsequent
party and public comment opportunities. The Commission will then issue another order
approving or rejecting the study upon which changes to the net metering service could be
assessed. This procedural schedule was discussed by the parties and Commission Staff, and ICL
supports this methodical, careful evaluation of the costs and benefits of customer-owned
distributed energy systems.
ICL's comments address the following issues:
o Study the appropriate structure of net metering service
cAsENO. PAC-E-19-08
IDAHO CONSERVATION LEAGUE
INITIAL COMMENT ON STUDY
DESIGN
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May 26,2020
Use robust and verifiable data
Categories of values applied to exports
Eligibility requirements that impact value
Legacy rate treatment for existing customers
Studythe Appropriate Structure of Net Metering Service
Rocky Mountain Power's Application and Testimony requests changes to the net
metering service beginning |uly 31, 2020. These issues must be studied before the Commission
considers adopting them. RMP proposes to end participation in the current net metering service,
schedule 135, on )uly 31, 2020 and adopt a new net metering service in Schedule 136, beginning
September I,2020. This proposal would change the net metering service by moving from the
current net monthly billing arraignment to a net hourly billing arraignment, adopt four time
periods to value exports, adopt annual changes to the export values, and impose an application
fee. This proposal is premature and does not comply with the procedural order in this docket.r
ICL recommends the study design phase assess the costs and benefits of these proposals.
In particular, ICL recommends considering whether the administrative costs, as well as the costs
to providers and customers on the net metering sector, to implement these changes are justified
by any meaningful benefit. Current net metering service, according to RMP's revised Application,
involves about l.5olo of the 83,000 Idahoans the Company serves. On an exported energy basis,
which is the focus on this docket, RMP's assumed total net metering exports of l19l Mwh is
approximat ely 0.034o/o of the metered sales in Idaho.2 In terms of revenues, net metering
' Similarly, ICL does not address RMP's cost of service testimony, since this docket is about the costs and benefits
of exports and not about the cost to serve customer consumption. Cost of Service issues are addressed in general rate
cases.
2 Comparing Direct Testimony of Meredith PAC-E-19-08, Page I l, Table Z,"Energy Exported" sum of class totals
to Direct Testimony of Webb, PAC-E-20-02, Exhibit l, line 5, "Actual Idaho Load @meter" sum of monthly totals.
a
a
a
a
PAC-E-19-08
ICL INITIAL COMMENT
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May 26,2020
accounts for 0. 18o/o of Idaho revenues.3 The study design phase should include an assessment of
whether the administrative burden to the PUC Staff, parties, and the Company - a cost ultimately
born by ratepayers - is reasonable in light of the minimal overall impact of net metering service to
RMP's activities in the state. Further, the study should determine benchmarks for meaningful
impacts in terms of revenues and system loads to inform the Commission of when it is
appropriate to expend public resources to address changes to the net metering service.
ICL recommends this portion of the study address the following issues:
o Whether the cost of implementing and administering the change to net hourly
billing and frequent changes to the export credits provides a meaningful benefit to
customers.
o The ability of net metering service providers to implement net hourly billing, and
the frequent of potential changes to export values, in a manner that complies with
the Residential Solar Energy System Disclosure Act, Idaho Code $ 48-1805.
o The impact of the proposed changes to the net metering market in Idaho and the
resulting impacts on local employment, tax revenues, and ability of customers to
patriciate in the program to offset their personal energy consumption. ICL
acknowledges these are not costs include in electric service rates, but these are
measurable and meaningful impacts to RMP customers that result from these
proposed changes and must be assessed to determine if the proposals are fair, just,
and reasonable.
o The methodologies to develop appropriate benchmarks to assess when NEM
participation is of sufficient penetration that program design changes can deliver
meaningful impacts to non-participants. For example, annual changes to power
costs due to variation between forecasts and actuals can drive multiple percentage
3 Direct Testimony of Meredith, page 8, Table l; comparing sum of class NEM annual revenue to Idaho total
revenue
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ICL INITIAL COMMENT
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IN{'ay 26,2020
point changes to rates, thus justifring the costs and burdens of administering the
Energy Cost Adjustment Mechanism.
o The methodologies to facilitate customer understanding of the proposed program
changes to address issued raised in public comments thus far, and anecdotal
evidence, that RMP customers perceived these proposals as unwarranted and
unfair.
Use Robust andVerifiable Data
Rocky Mountain Power's proposals include a forecast of customer-owned generation
production, rather than the use of actual data.a Any forecast is highly dependent on the model
used and the assumptions made. To ensure a fair, credible, and comprehensive study, the study
design should consider a range of modeling options and assumptions to determine the most
accurate fit. To achieve this goal ICL recommends the following:
Because current net metering penetration is exceedingly small compared to RMP's
activities in the state, while the benefit of actual data to inform decisions is essential to building
customer confidence, ICL recommends using actual data from the expected deployment of
advanced metering infrastructure in Idaho as a core requirement for a fair and credible study.
In the meantime, ICL recommends that RMP work with PUC Staffand stakeholders to
implement a Load Research Study process akin to that used to address this exact issue in RMP's
Utah service territory. In Utah Public Service Commission Docket 17-035-61both RMP and
Vote Solar conducted Load Research Studies which provided stakeholders and the Utah PSC a
robust basis upon which to determine appropriate export values.
Where actual data is unavailable, or input assumptions are otherwise required,ICL
recommends the study use a range of inputs to ensure a robust and comprehensive assessment.
For example, one assumption could be the orientation of solar panels. Here ICL recommends
a Di Meredith at 4,3 - 3
PAC-E-19-08
ICL INITIAL COMMENT May 26,2020
4
studying at least three options - East, South, and West facing orientations. Another assumption is
the solar system size compared to the hosting customer's energy consumptions. Here, ICL
recommends working with stakeholders to develop a range of reasonable assumptions rather
than utilize a single sized system and customer load.
Categories of Values Applied to Exports
Rocky Mountain Power's proposed export value excludes categories of potential value
that could be attributed to exports and includes a cost that does not seem reasonably likely to
actually be incurred. A fair, credible, and comprehensive study of the issue requires actually
assessing the potential of customer-owned systems to deliver or commonly acknowledged
categories of avoided costs attributable to demand-side resources.
The testimony of Mr. MacNeil only addresses the values of avoided energy costs and
avoided line losses.s Arguing that exports from customer-owned systems are "non-firm," RMP
assumes no values for avoid capacity costs, avoided transmission and distribution costs, and no
value of environmental benefits, such as reduced costs to RMP for complying with pollution
controls at Company-owned generation sources. Essentially, RMP argues that exports are "non-
firm" because of the lack of contractual arraignments to ensure performance, or in other words,
the ability for RMP to know when exports will occur with some level of confidence. Instead of
just asserting that export timing is unknown, the study should assess the performance of existing
systems to determine whether a pattern of exports is in fact predictable and reliable. Then the
study should compare this data with the actual performance of resources RMP deems "firm". It is
the performance of generators that matters for reliability and cost-causation, not contractual
arraignments that merely provide compensation for under performance.
Regarding the individual categories of potential value, ICL proposes the study address the
following:
s Di MacNeil at pages 2 - 3.
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May 26,2020
Avoided Energy Costs: RMP proposes using data for a single node in the Energy Imbalance
Market to determine avoided energy costs. Because utilities must enter each transaction period in
the EIM in a "balanced" position, meaning the utility could meet all service obligations on its
own without relying on the market, ICL proposes the study assess RMP actual hourly costs and
compare this to the EIM data. ICL also proposes the study assess whether relying on EIM market
data is feasible for distributed energy systems sellers and customers in terms of assessing the value
proposition to purchasing a system to offset customer's own needs.
Avoided Capacity Costs Rather than assuming this value is zero, ICL proposes the study
assess options currently utilize in other contexts, such as demand-side resources and assessing
utility scale generation, to determine avoided capacity costs.
Avoided Transmission and Distribution Cosfs: Like other demand-side measures,
customer-owned distributed energy systems have the potential to avoid the utility need to expand
the transmission and distribution system. Recognizing the category spans a wide range of
avoidable resources, ICL recommends the study design assess avoided transmission and
distribution capacity using distinct methods. For transmission, FERC tariffs can inform the
potential value. For distribution costs, RMP should provide forecasts of expected distribution
system needs at sufficient granularity to allow for determination of location specific avoided costs
potentials. Only by looking location specific can the study assess the full value of the unique
nature of distributed energy systems.
Avoided Enuironmental Benefits To the extent customer-owned distributed energF
systems displace generation from fossil fuels, environmental benefits accrue to all RMP
customers. One category of benefits is reduced compliance costs for company-owned fossil
resources. Another benefit is reduced public health spending in Idaho due to improved air
quality. The U.S. Environmental Protection Agenry published a new method to quantifr these
PAC-E-19-08
ICL INITIAL COMMENT
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benefits in a per-kilowatt hour basis broken-out by resource type and region.6 ICL recommends
the study design incorporate these peer-reviewed methodologies.
Other Benefits That Aise with Scale: Recognizing that today distributed energy systems are
a small component of RMP's service in ldaho, as the penetration increases additional value
categories could arise. One area is in the benefit of customer-owned clean energy systems to
impact costs the Company incurs to generate from fuel-based resources or serve load through
market purchases. The study design should include an assessment of the penetration levels at
which customer-owned systems can influence wholesale market prices and fuel hedging practices.
Local Economic Benefits: While not directly an issue reflected in customer utility rates,
investments customers make in distributed energy systems can have local economic benefits such
as job creation and tax revenues. Undervaluing these benefits could suppress local investments, a
particular concern as Idaho faces one of the worst economic climates in history. To ensure a
comprehensive assessment, the study design should include consideration of these values. For
example, to assess job creation, the study could calculate the number or hours and number of
employees in the local communities based on various levels of market growth. For tax revenues,
the study could assess the sales taxes and other fees that flow to local communities at various
levels of market growth. This information will inform whether the net metering service offering
has the potential to provide additional benefits to communities in Idaho beyond the narrow
focus on utility rates and rules.
Integration Costs: Rocky Mountain Power proposes to impose an integration costs on
customer-owned generation exports on the theory the Company must hold reserves to address
this issue. As described above, current customer-owned generation exports account for 0.034o/o of
6 U.S. EPA, Estimoting the Health Bene/its per-Kilowatt Hour of Energ Efficienqt anf, psrewable Energt,
published March, 2020. Available at: lrttps:iiu'u'rv.epa.soristatelocalenersyieqfrnatinq-health-benefits-kilowatt-
ho ur-enersv-ef'flljqE]/:4!d:! tlglvable-engICy
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the metered sales in Idaho.T And, as RMP explains, this resource only uses the secondary
transmission system and does not avoid even losses at higher levels of the system. Instead of using
an integration cost developed for utility-scale solar systems, ICL recommends the study should
assess the level of penetration at which customer-owned distributed energy in Idaho is large
enough to impact system operations at a level equivalent to other operational concerns like
normal variations in customers loads and generation assets.
Eligibility Requirements That Impact Value
One area of net metering service program design that is not premature to consider is the
eligibility requirements that could impact the costs and benefits to the system. Currently,
Schedule 135 allows for residential systems up to 25 kilowatts and commercial systems up to 100
kilowatts without regard to the customer's needs for self-service. ICL recommends the study
design consider whether adjusting the eligibility caps based on a percentage of customer energy
usage can address the allegations ofcost-causation and the need to expend public resources to
value a small amount of exports. ICL recommends the study assess whether placing eligibility
caps set at 100o/o and l25o/o of customer loads is a more cost-effective way to address this entire
issue. We recommend 100o/o to comply with the Commission prior orders defining net metering
service as a program to enable customers to meet their own needs. We recommend l25o/o to
account for potential increases in customer needs due to a trend towards electrification of heating
and transportation.
A second area that can impact the value customer-owned generation brings to the system
is the requirements for smart inverters and settings that help improve power quality and visibility
of systems to the utility. ICL recommends the study assess the benefits of requiring smart
inverters and the appropriate settings that maximize benefits to the utility and customer-owner.
7 Comparing Direct Testimony of Meredith, Table 2,Page I l, "Energy Exported" sum of class totals to Direct
Testimony of Webb, PAC-E-20-02, Exhibit 1, line 5, "Actual Idaho Load @metef', sum of monthly totals.
PAC-E-19-08 8
ICL INITIAL COMMENT May 26,2020
Legacy Rate Treatment for Existing Customers
The Commission in Order 34661requested comment on RMP proposal to allow existing
customer to remain on the current net metering tarifffor ten years, with an eligibility cutoffof
)uly 31, 2020. Order No. 34661 at 5.lCL recommends the Commission apply the legacy rate
poliry developed in Orders Nos. 34509 and34546,with one important change. The key elements
of this policy are: (1) eligibility for legary treatment is applied to the system location rather than a
specific customer; (2) system owners may maintain system components in a manner that may
increase capacity by op to 10olo and maintain legacy treatment (3) legary treatment lasts for 25
years from the date of Commission order. Regarding the eligibility date, ICL recommends the
Commission reject RMP arbitrary Iuly 31,2020 date. As Order No. 34661 makes clear, this phase
of the proceeding is about the design of a study of the costs and benefits of distributed energy
systems. The second phase of this process is a review of the study output "to support a well-
informed decision regarding Rocky Mountain Power's net metering service offering." Order
34661 at 2.Determining eligibility date now prejudges the outcome of that study, which could
find the current net metering program remains fair, just and reasonable compared to alternative
proposals. Further, the impact of determining eligibility without a successor program in place is
now evident - it has a strong market chilling impact, which results in real economic consequence
for distributed energy system providers and vast uncertainty for Idahoans seeking to invest their
own dollars in a program to offset their own energy usage. Because net metering service in RMP's
territory is exceedingly small today, ICL recommends the Commission defer a decision on legary
rate eligibility until a successor program is designed.
Conclusion
ICL supports the Commission's methodical, fact-based approach to addressing net
metering service in RMP's Idaho service territory. We recommend the Commission:
PAC-E-19-08
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o Deem premature RMP's proposals to change the net metering schedules on |uly 31,2020,
o Design the study to assess the relative benefits of administering a complex net hourly
billing system with annual updates for an exceedingly small part of RMP's activities in
Idaho,
o Require this use of actual verifiable data through the development of a Load Research
Study,
o Require the use of a range of assumptions when necessary to ensure comprehensive
assessment
o Study all potential categories of value using industry best practices,
o Include the impacts to the net metering market and local economies that result from the
size of customer-owned generation market sector,
o Consider eligibility requirements that impact value, such as system size criteria and the
use of smart inverter technology, and
. Apply legacy rate treatment akin to the policy in Order 34546 and defer a determination
of eligibility until a successor net metering program is developed.
As contemplated in the procedural schedule in this docket, ICL's initial comments may be
revised and expanded based on the upcoming public workshop and comment opportunities. For
now, we respectfully submit these Initial Comments for your consideration.
DATED this 26th day of May 2020.
Respectfully submitted,
/s/Benjamin I. Otto
Idaho Conservation League
PAC-E-19-08
ICL INITIAL COMMENT
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May 26,2020
CERTIFICATE OF SERYICE
I certifr that on the 26th day of May 2020,I delivered true and correct copies of the foregoing
INITIAL COMMENTS to the following via the service method noted:
Electronic Mail only (Order No 34602)
Idaho Public Utiliies Commission
Diane Hanian
Commission Secretary
Idaho Public Utilities Commission
secretary@puc. idaho. gov
Edward Iewell
Deputy Attorney General
Idaho Public Utilities Commission
edward.jewell@puc. idaho. gov
Rocky Mountain Power
EmilyWegener
Ted Weston
Rocky Mountain Power
Emily.wegener@pacifi corp.com
ted.weston@pacifi corp.com
datarequest@pacificorp. com
Adam Lowney
McDowell Rackner Gibson PC
[e-mail]
Idaho Irrigation Pump ers Association
Eric L. Olsen
ECHO HAWK & OLSEN, PLLC
[e-mail]
AnthonyYankel
[e-mail]
Idaho Clean Energy Association
Preston N. Carter
Givens Pursley LLP
prestoncarter@ givenspursley.com
kendrah@givenspursley. com
/s/ Beniamin I. Otto
-
Idaho Conservation League
PAC-E-19-08
CERTIFICATE OF SERVICE
ll
IN4ay 26,2020