Many clean energy advocates are gearing up for the United Nations' climate negotiations taking place next month in Paris. As the international talks approach, clean energy continues to be a hot topic at the state level, where discussions have been largely centered on trying to determine the true value of distributed energy resources.
Tennessee, Arizona, Georgia, New York, Maryland and other states currently have proceedings underway to assess the value of distributed energy resources (DERs). The value issue is also at the core of a solar industry lawsuit against regulators in Hawaii. Calls for a comprehensive review of solar's costs and benefits also helped win a recent court victory for solar advocates in Wisconsin.
The EPA Clean Power Plan is a key component of the United States’ climate platform, although the policy faces legal challenges from 26 states and more than a dozen industry groups. A federal court announced last week that it will not rule on the CPP until after the Paris meeting. The decision gives the Obama administration an even greater incentive to ensure that its signature energy policy is included in some sort of international climate commitment.
More details on the value-of-DERs debate and other state energy news updates are provided below. Click a region to jump to news from the South, West, Northeast or Midwest. You can find our previous state bulletin here.
Last month, Tennessee Valley Authority released its Distributed Generation-Integrated Value: A Methodology to Value DG on the Grid report. The process of developing a methodology, which began in April 2014, brought together a wide range of stakeholders, including the Solar Electric Power Association (SEPA) and the Electric Power Research Institute (EPRI).
The cost-benefit analysis took into account multiple factors that affect the utility, including avoided energy, generation deferral, transmission and distribution system impacts, line losses, and environmental impacts such as carbon emissions and coal ash. The report concludes that the value of solar generation for TVA is 7.2 cents per kilowatt-hour, which is lower than the utility’s current incentive program, which pays about 12 cents per kilowatt-hour.
The Southern Environmental Law Center complained that TVA failed to consider impacts on pollution, carbon and water use in attempting to define the value of solar.
“The good news is TVA is starting to regard solar power like the valuable resource it is,” said attorney Amanda Garcia with the Southern Environmental Law Center, in a statement. “But the report only looks at what TVA saves, not the value of solar to the Tennessee Valley as a whole. As a public power company, TVA should dig deeper and craft policies that do not shortchange customers who make the investment to put panels on their roofs.”
TVA noted, however, that the report is just a starting point. “The example value presented should be viewed as a representative sampling, not as a definitive number that is indefinitely representative of a solar PV value. Rather, the methodology itself is to be viewed as a robust analytical foundation and basis for further investigation,” the report notes.
A separate stakeholder process is expected to begin this fall to investigate solar program design, which will likely take the new methodology into account.
Regulators in Georgia are also examining issues related to the value of renewable and distributed energy resources. The proceeding (38732), which was opened in July, will inform Georgia Power’s 2016 integrated resource plan. The Georgia PSC held a workshop on the filing on October 20 and 21.
As in Tennessee, solar advocates are pushing for a broad examination of the value solar brings to the grid. “The benefits to the Company are real and occur now, and this requires an accurate accounting of the Company’s solar avoided-cost savings,” Vote Solar wrote in its comments.
Georgia Power, which offers its own unregulated rooftop solar business, argues that only known and quantifiable costs and benefits should be considered.
“[S]ome respondents asserted that the value of renewable resources should include externalities or societal costs such as health effects, job creation benefits, and avoided future environmental compliance costs. These components are inappropriate to include in an avoided-cost calculation because they are not costs being avoided by the utility,” the utility wrote in a filing on September 25.
“Including such externalities in a cost-benefit analysis ultimately leads to additional costs of procurement (i.e., Georgia Power would build or purchase renewable generation at inflated prices assuming that these externalities would offset the higher costs),” according to the utility. “Those higher costs in turn would be passed on to customers and exert upward pressure on rates. It is inappropriate to require customers to bear costs above the actual cost of service."
There are two competing solar ballots gaining support in Florida. The first initiative was introduced by Floridians for Solar Choice, a group backed by solar companies and civic groups such as the League of Women Voters. This initiative seeks to allow out-of-state solar power companies to sell solar power directly to homeowners and businesses in Florida. On October 22, the Florida Supreme Court approved the language in the Floridians for Solar Choice amendment.
The second initiative -- which would not allow for third-party participation -- is championed by the group Consumers for Smart Solar, which is backed by a mysterious group called “Let’s Preserve the American Dream,” the Miami Herald reports. Florida Power & Light, Duke Energy, Gulf Power and Tampa Electric Company have each donated at least $160,000 to Consumers for Smart Solar. A recent $200,000 donation from Let’s Preserve the American Dream is the largest donation to date.
In a separate matter, the Florida Supreme Court rejected a challenge by the Florida Bankers Association to the state’s property-assessed clean energy (PACE) program, Energy Manager Today reports.
On October 20, Virginia regulators held a hearing on Dominion Virginia Power’s integrated resource plan for 2016-2030 (PUE-2015-00054). As part of the plan, Dominion has proposed building a 1,453-megawatt nuclear reactor at the utility’s North Anna plant, which it argues will help with Clean Power Plant compliance. The $19 billion expansion plan will raise rates by nearly 26 percent, The Energy Collective reports.
The Commission is required to review Dominion’s plan and report to the governor and the General Assembly by December 1.
On October 16, a newly formed nonprofit called DC Public Power filed a notice to regulators expressing its intent to buy Pepco’s Washington, D.C.-based assets as an alternative to Exelon’s proposed merger. DCPP leaders say the deal will allow the merger to move forward in other states, while accruing nearly $1 billion in public benefits for D.C. residents.
Exelon, meanwhile, has filed a proposal to reopen the acquisition proceeding based on a settlement agreement backed by D.C. Mayor Muriel E. Bowser. Crain’s Chicago Business reports that Exelon could walk away from the $6.8 billion deal if it drags on much longer.
“We’ve been at this a long time,” an Exelon exec said last month. “At that point, it will be almost two years. If we can’t get it done in that time, it’s unfair to the shareholders and the employees of the companies.”
The PSC has yet to vote on DCPP's proposal or Exelon's motion for reconsideration. The case (FC1119) could continue into next year.
On October 20, the Arizona Corporation Commission approved Arizona Public Service’s request to withdraw its proposed fee increase for solar customers. The ACC also agreed to conduct a comprehensive analysis on the cost of service and value of solar between now and June 1, 2016 under the docket E-00000J-14-0023.
On October 8, 2015, APS filed a cost-of-service report that found it costs $67 per month to serve a typical residential solar customer. APS said the calculation factored in avoided-fuel costs and the amount customers typically pay on their electricity bills, but did not account for intangible benefits. Solar advocates are calling for the ACC to account for the broadest range of benefits possible.
“You can have a cost-of-service study, but you want to discuss the value as well,” said Court Rich, an attorney for The Alliance for Solar Choice, according to AZ Central. “You want to know the net.”
“Mr. Rich, you should buckle your seatbelt, because I agree with you,” said Commissioner Doug Little. “The docket on the value of solar should be as broad as we can make it. The parties should bring us the information they believe is important. We don’t have a corner on the market of good ideas.”
On October 15, the CPUC issued a Scoping Ruling for Phase III of the state’s residential rate design proceeding (R1206013). Among other things, the ruling establishes a deadline of December 23 for opening briefs on conditions for default time-of-use (TOU) rates and sets January 6 as the deadline for reply briefs. A TOU working group is expected to release a report this month, and a proposed decision on the issue is expected in February 2016.
On October 26, would-be aggregators of grid-scale distributed resources were required to submit their bids for the state’s Demand Response Auction Mechanism, or DRAM. The first-of-its-kind auction will bring distributed energy resources, aggregated into units of at least 100 kilowatts, into play as grid assets as an alternative to large, centrally controlled power plants or demand-response resources. The CPUC laid out rules for the proceeding in June. Utilities will select bids in November. (Jeff St. John digs into the details of the DRAM auction here.)
Also with respect to demand response, regulators are moving forward with a proceeding (R1309011) intended to prioritize DR as a resource to competitively bid into the CAISO market, according to Advanced Energy Economy’s regulatory tracker. Last month, Commissioner Florio and Administrative Law Judge Hymes filed proposed rulings on valuation of load modifying demand response and demand cost-effectiveness protocols after 2018. Opening comments are due Nov. 5; reply comments are due Nov. 10.
In another proceeding, California continues to work toward a successor tariff for net-metered customers (R1407002). San Diego Gas & Electric could hit the 5 percent cap as early as next summer.
Regulators are also accepting comments on PG&E’s proposed electric-vehicle charging program through November 16, with hearings to begin on February 8, 2016. The utility recently submitted a revised proposal to build up to 7,500 charging stations over three years at a rate-based cost of $222 million. PG&E is also working on a general rate case for 2017-2019 (A1509001). If approved, rates would increase by 3 percent for typical customers.
On October 12, the Hawaii PUC ruled to close the state’s net metering program to new participants and approved two new tariff options in its place. Supporters of the decision argue that Hawaii’s net metering policy was making the solar market dysfunctional and needed to come to an end. But solar companies are pushing back.
The Alliance for Solar Choice filed a lawsuit last month challenging the PUC’s recent decision. TASC asserts that the PUC acted illegally by failing to hold public hearings and failing to complete a comprehensive value-of-solar study.
"Contrary to a law passed by the Hawaii Legislature two years ago, the PUC failed to conduct a cost-benefit analysis to determine the value of solar on the grid,” said TASC's Bryan Miller. “Instead, the PUC relied upon speculation by the utility and ended net metering without notice to consumers."
The new tariff options approved by the PUC are now available to Hawaiian Electric customers. The PUC did not approve HECO’s time-of-use rate plan last month, and so the utility must refile by November 11. Phase II of Hawaii’s distributed energy resources proceeding (2014-0192) will begin with a technical conference by or before November 11.
On October 20, the Maryland Public Service Commission held a technical conference on barriers to deploying distributed energy in the state, a proceeding (PC40) that was opened on September 2. Topics discussed included a pilot community renewables program, interconnection costs, and a value framework for distributed generation. Like several other states, the PSC is examining different valuation factors to be considered when drafting new or revised compensation policies for small DG resources.
Last month, regulators in New York temporarily lifted the state’s 6 percent net-metering cap until the Public Service Commission reaches an agreement on the proper value of distributed energy resources. “Rather than engaging in another effort to arrive at the proper level of the ceiling that would anticipate perfect coordination with the implementation of [Reforming the Energy Vision], the ceilings shall be allowed to float in the interim until the calculation…affecting valuation of DERs is decided,” the commission wrote.
The commission will continue value-of-DERs discussions through the end of next year, under New York’s Reforming the Energy Vision (REV) initiative (15-E-0407). Meanwhile, all six investor-owned utilities in New York have filed tariff revisions to their net-metering policies that will become effective on November 6.
Also under REV, Con Ed announced plans to deploy 4.7 million smart meters at a cost of $1.3 billion. In addition, the state Green Bank recently invested $49 million in solar, wind and efficiency, leveraging more than $170 million for the transactions. The intent is likely to help mobilize private capital to help meet the goals established by REV.
Utilities in Massachusetts are rapidly approaching the state’s net-metering cap. The state legislature is currently addressing the issue as part of comprehensive energy bill. But state House leaders want to deal with net metering as part of a separate solar bill, which would increase the cap from 1,600 megawatts to 2,400 megawatts.
The proposal also orders the state's Department of Public Utilities to use a solar valuation study to determine a minimum bill for solar customers after the 1,600-megawatt limit is reached.
Governor Charlie Baker has proposed a slightly less aggressive plan that would raise the caps by about 450 megawatts. Energy Secretary Matthew Beaton said lifting the cap to 2,400 megawatts "might be a little more than maybe we should go before net metering is redefined,” the Berkshire Eagle reports.
Vermont quadrupled its net-metering cap last year to 15 percent of peak load. But due to strong solar growth, municipal utility Hardwick Electric has already hit the 15 percent limit, and Green Mountain Power, the state’s primary utility, is on track to hit the cap early next year. The Vermont Public Service Department is currently working on a draft proposal on supporting DER growth post-2017.
Governor Maggie Hassan and U.S. Senator Jeanne Shaheen (D-N.H.) underscored their support for the Clean Power Plan at a rally with environmental advocates and business leaders last week. Senator Kelly Ayotte (R-N.H.) also announced her support for the CPP, becoming the first Republican to back the Obama administration’s policy.
In a win for solar advocates, on October 30 the Dane County Circuit Court in Wisconsin reversed a 2014 decision to allow We Energies to impose a new fee on solar customers. The fixed charge amounted to about $25 per month for a 6-kilowatt system.
Judge Peter Anderson determined that there was a lack of evidence to support the Wisconsin Public Service Commission’s decision. The Alliance for Solar Choice, which filed the appeal with Renew Wisconsin, argued that the commission should have required an independent study of the costs and benefits of solar.
TASC recently filed suit against regulators in Hawaii for ending the state’s net-metering program. As in Wisconsin, the group argues that the commission failed to conduct a study of the costs and benefits of solar before imposing “discriminatory solar changes.”
“Hawaii will be reversed for the same reason that Wisconsin was reversed today -- trying to bail out utilities from rooftop solar competition without conducting a study of the costs and benefits of solar,” said Amy Heart, spokesperson for TASC.
We Energies maintains that sufficient information was provided for the Commission to include a demand charge on customer generation, and it is now reviewing its options, according to an emailed statement.
“It should be noted that the judge did not remand or vacate any other portion of the Commission’s order and other than the demand charge, the new tariffs for customer-owned generation will go into effect as planned January 1,” the statement reads. In addition to the solar fee, the 2014 decision approved an overall rate increase and lowered compensation for net-metered solar systems.
Another Wisconsin utility, Wisconsin Public Service Corp., is currently seeking to raise monthly fixed charges on residential customers to $25 a month, after winning regulatory approval to nearly double fixed charges to $19 a month last year.
Xcel Energy filed a revised tariff for Minnesota’s Community Solar Garden Program last month, which clarifies how the utility will treat co-located community solar projects. The filing relates to a regulatory decision in June that limited co-located community solar projects in Minnesota to 5 megawatts, segmented into 1-megawatt parcels.
There are roughly 1,500 megawatts of shared solar projects currently in the queue in Minnesota. Due to procedural delays, Xcel has connected only one project under the program to date. Meanwhile, some solar companies plan to appeal the recently imposed limits.
Separately, the Minnesota PUC issued a notice last month under a new proceeding (15-755) asking all investor-owned, municipal and cooperative utilities to report whether or not they apply fees to distributed generation customers that are not applied to other customers, or if the utility has applied such a charge within the past five years. The PUC has also requested information whether or not utilities plan to institute charges. Utility responses are due December 11.
Minnesota also has an ongoing proceeding on utility grid modernization (15-556), and will hold the third of three stakeholder meetings on the subject on November 20. The PUC is expected to issue a recommendations report in 2016.
The Missouri Division of Energy has published a comprehensive state energy plan that includes a suite of recommendations such as:
- Improving marketing efforts and technical assistance for Missouri’s PACE program
- Strengthening Missouri’s RPS to require 20 percent renewables by 2025, and establishing voluntary RPS goals for non-IOUs
- Raising the cap for net-metered systems to 500 kilowatts, and requiring annual (rather than monthly) netting
- Facilitating the incorporation of additional distributed renewables into the grid
- Preserving private-property rights for solar property and its use
- Encouraging the development of microgrids by adopting standard interconnection procedures for microgrids and establishing favorable microgrid tariff structures
- Enacting legislation to accelerate grid modernization and improve resilience
- Recommending tax policies to create stronger incentives for wind energy and to maximize supply chain development for renewables equipment
- Establishing on-bill financing programs (for energy efficiency projects) for IOU customers
According to Advanced Energy Economy, applications to intervene are due by November 4, 2015, and a prehearing conference is scheduled for November 10, 2015. The tariffs will not be effective until September 14, 2016.
Separately, Empire District Electric Company has filed for a general rate increase with the Missouri PSC (ER-2016-0023), MarketWatch reports. The utility is seeking a 7.3 percent annual base-rate increase, which would increase the average residential customer's bill by $12 a month. Empire said the increase is needed to pay for increased transmission, maintenance, and administrative expenses, as well as the state’s mandated solar rebate program.
Last week, the Iowa Utilities Board filed a document reaffirming its support for net metering and growing the state’s nascent DG market.
"Given the current status of DG development and net metering in Iowa, additional information is required before any permanent policy or rule changes are made," the decision reads. "One option would be to conduct a study on DG in Iowa, including quantification of costs and benefits. However, it appears such a study would be premature because of the relatively low DG penetration levels in Iowa. Another option, and the best one for Iowa, is for the utilities to conduct pilot projects exploring various aspects of net metering or other DG issues that could be used to inform future policy or rule changes."
Eagle Point Solar recently opened a proceeding (FCU-2015-0009) in Iowa challenging Interstate Power & Light's net metering tariff. According to the installer, the tariff makes it virtually impossible for commercial and industrial customers to install solar systems, Midwest Energy News reports. Comments were filed on October 23 and no further schedule has been set.
Iowa’s Utilities Board is also holding a comprehensive proceeding on distributed generation, including net metering and interconnection issues. The board opened a workshop on interconnection rules in September, with comments due November 6 and reply comments due December 1.
Policy developments are tracked in partnership with EQ Research, which offers in-depth subscription services covering regulatory developments, legislation and general rate cases in all 50 U.S. states.