by Julia Pyper
May 13, 2016

The State Bulletin offers a biweekly roundup of the most significant and novel energy policy updates.

In this edition, we look at policy developments on utility-owned distributed generation, energy storage, net metering, rate design, resource planning, third-party ownership, Clean Power Plan, SRECs and electric vehicles. See our the last edition here.


Arizona: Tucson Electric Power

The Arizona Corporation Commission (ACC) has approved Tucson Electric Power's (TEP) $57 million budget request for its 2016 renewable energy plan, including $9.4 million for utility-scale renewable energy projects and two 10-megawatt energy storage pilot projects (details below). The program will help TEP meet the state mandate for regulated utilities to expand their use of renewable energy to 15 percent of their power sales by 2025. TEP is seeking to double that goal.

The plan will raise the typical residential customer surcharge for renewable energy programs from $3.22 to $4.17 per month, the Arizona Daily Star reports. The surcharge is capped at $4.76 per month.

As part of the 2016 renewable energy proposal, TEP also sought approval to add up to 1,000 new participants in its utility-owned rooftop solar program, and to launch a utility-owned community solar program. However, the ACC rejected the proposals, citing the need for further review. TEP now plans to refile for the two programs as part of its general rate case, which will begin hearings in August.

TEP executives say the program expansions will help meet strong customer demand for utility-provided residential solar. The rooftop solar pilot, launched last year, allows customers in strategic locations to go solar for a $250 application fee, and in return receive electric service at a flat monthly rate that remains fixed for up to 25 years. Under the community solar program, TEP will offer a 10-year fixed-rate contract.

National solar installers strongly oppose utility-owned residential solar programs, viewing them as an attempt by government-backed monopolies to quash third-party competition in the booming solar market. Meanwhile, the ACC has expressed concerns over program costs.

TEP has already filed preliminary testimony for its upcoming rate case, which will address the residential solar programs as well as a proposal to raise fixed fees and lower net metering compensation (E-01933A-15-0322).


Arizona: Tucson Electric Power

On May 3, TEP received approval from the ACC to enter into long-term agreements for the construction of two 10-megawatt (5 megawatt-hour) energy storage pilot projects. The energy storage projects, filed as part of TEP’s 2016 renewable energy plan, will be used to improve service reliability by helping to maintain balance between energy demand and supply.

TEP is forecast to add an additional 800 megawatts of new renewable capacity by the end of 2030, boosting the utility’s total renewable energy portfolio to approximately 1,200 megawatts. The energy storage pilots will advance learning around how battery systems can support the expansion of solar power and other renewable energy technologies.

In its original filing, TEP planned to build one 10-megawatt energy storage system, but was ultimately able to select two competitively priced proposals. Both energy storage projects will be developed under 10-year contracts with performance agreements to protect customers and the company from financial risks associated with investing in new technologies. The projects include:

  • A 10-megawatt lithium nickel-manganese-cobalt facility at a TEP substation near Interstate 10 and West Grant Road. The system will be built by NextEra Energy Resources, based in Juno Beach, Fla., and is expected to be in operation late this year.
  • A 10-megawatt lithium titanate oxide storage facility and accompanying 2 MW solar array located at the University of Arizona Science and Technology Park southeast of Tucson. The facility will be built by Chicago-based E.ON Climate & Renewables and is expected to be completed in the first quarter of 2017.


Legislation introduced in Minnesota (SF 3473) creates a 30 percent energy storage tax credit for residential, agricultural and commercial properties beginning in 2017, according to EQ Research. The credit is limited to $5,000 for residential and $25,000 for commercial and agricultural. The bill limits the total amount of tax credits to be granted to $5 million per year and sets purchase, installation and operation deadlines for claiming reserved credits. In addition, the bill requires the Department of Commerce to issue an annual report detailing the number and amount of tax credits. The tax credit sunsets after 2021.


California regulators have opened a proceeding to consider policy changes and implementation refinements to the state’s current energy storage procurement framework (R1503011). On May 2-3, the California Independent System Operator (CAISO) and the Commission held a workshop to address station power and multiple-use applications of energy storage systems. According to Advanced Energy Economy’s Power Suite, comments on the workshop are due by May 13 and reply comments by May 20, 2016.



Solar advocates and lawmakers agreed last week to drop competing ballot initiatives on net metering, The Arizona Republic reports. Solar companies and Arizona’s largest utility, Arizona Public Service, have agreed to launch negotiations to try to settle on a mutually acceptable tariff structure going forward.

New York

On April 18, multiple stakeholders submitted proposals for an interim successor to net metering as part of New York’s proceeding on the value of distributed energy resources under the Reforming the Energy Vision (REV) initiative (15-E-0751). Proposals included a novel compromise deal put forward by New York utilities and three major solar sector players, as well as proposals to maintain the status quo of retail-rate net metering credits.

Stakeholders presented their net metering plans at a technical conference on May 10. Reply comments are due June 10.

Ultimately, the distributed energy resources proceeding seeks to develop a new methodology for establishing the value of distributed energy resources based on the LMP+D formula -- location-based marginal price of energy plus the distribution value.

To guide the process, the Commission issued a report by Energy+Environmental Economics (E3), Full-Value Tariff Design and Retail Rate Choices, and a white paper by Tabors Caramanis Rudkevich (TCR) on "Developing Competitive Electricity Markets and Pricing Structures."

New Hampshire

On May 2, Governor Maggie Hassan signed a bill (HB 1116) to double New Hampshire’s net metering cap from 50 megawatts to 100 megawatts. The bill enables solar customers to receive a credit for the full retail value for excess electricity they sell back to the grid. It also mandates that the New Hampshire Public Utilities Commission begin studying alternative programs to support distributed generation.

The cap increase applies to both residential and commercial solar installations. Energy Manager Today reports that 80 percent of each utility’s share of the 50 megawatts will be apportioned to distributed generation facilities below 100 kilowatts, and 20 percent to facilities above 100 kilowatts, but smaller than 1 megawatt.

“Solar and other small-scale clean energy resources are critical to New Hampshire’s growing clean energy economy, which is creating good-paying, high-quality jobs, spurring economic development and helping combat climate change,” said Governor Hassan, in a statement. “Lifting the cap on net metering is essential to the continued success of New Hampshire’s solar industry, and I am proud to sign this bipartisan bill so that our clean energy industry can continue to grow and thrive.”

If any utility reaches any cap for net metering before alternative tariffs are approved or adopted, eligible customer-generators may continue to interconnect under temporary net-metering tariffs under the same terms and conditions as net metering under the 100-megawatt cap, except that such customer-generators shall transition to alternative tariffs once they are approved.


Governor Paul LePage made good on a threat to veto a solar bill last month that would have expanded the solar market while transitioning the market off of retail-rate net metering. The Maine House of Representatives attempted to overturn the veto and failed, Renewable Energy World reports.

The proposal would have required the PUC to enter into long-term contracts for the procurement of 248 megawatts of solar energy by 2022, 118 megawatts of which would be for residential and small-business projects. For small-scale customers, the proposal would replace retail-rate net metering with a 20-year fixed-price contract for net electricity exports measured hourly. Contract prices would be set for the year and decline each year for five years, at which point the program would end.

Many energy industry stakeholders, including utilities, solar companies and consumer groups, considered the proposal to be a reasonable compromise. However, LePage believed the bill would force electric rate payers to subsidize the solar industry.


A virtual net metering bill (SB 394) is headed to the desk of Connecticut Governor Dannel Malloy, which is expected to clear a backlog of solar project applications. Current law caps virtual net metering at $10 million, apportioned to each utility based on consumer load, and divided by the three eligible customer sectors (agricultural, municipal and state), where no sector is to receive more than 40 percent of the utility-specific cap. Both United Illuminating Company and Eversource have met the virtual net metering cap for municipal customers. This bill amends the virtual net metering statutes to authorize an additional $6 million annually to municipal customer hosts, apportioned to each utility based on customer load. The funds should be used for projects that have submitted an interconnection application and a virtual net metering application on or before April 13.


Arizona: UniSource Energy Services

UniSource Energy Services filed a $22.6 million rate increase last May that the Arizona Corporation Commission is expected to rule on this summer (E-04204A-15-0142). The proposal includes a request to increase fixed charges from $10 to $15 per month, an optional demand charge for residential and small business customers, and a mandatory demand charge for solar customers. The utility is also seeking to lower the net-metering credit for rooftop solar customers to roughly half of its current value -- from the retail rate of 10.5 cents per kilowatt-hour to the utility-scale solar cost of 5.8 cents per kilowatt-hour.

Following several hearings in March, UniSource adopted the proposal from Arizona Corporation Commission (ACC) staff to impose mandatory demand charges on all customers -- not just solar customers. However, the utility dropped that position in late April following a letter issued from Doug Little, chairman of the ACC, encouraging involved parties to explore "other alternatives to mandatory three-part rates.”

UniSource is still requesting to place a mandatory demand charge on solar customers, which solar advocates say would be “devastating” to the industry in combination with the reduced net-metering credit.

Chairman Little also took issue with UniSource’s net-metering proposal, under which customers would be compensated initially at the utility-scale rate for solar of 5.8 cents per kilowatt-hour, but that amount would be adjusted on an annual basis. Solar installers expressed concerns that this would make the solar market “unpredictable,” because there would be no way to accurately forecast the credit. To remedy this, Little recommended fixing the price for an initial term of 10 to 15 years, with the possible adjustment to remain in place for another 5 to 10 years.

Intervenors in the UniSource case have begun holding settlement talks, at Little’s recommendation, to try to reach a settlement agreement on some of the issues raised. Arizona Public Service and SolarCity have launched separate talks to reach common ground on an alternative to net metering.

Illinois: ComEd

Commonwealth Edison has proposed to implement residential demand charges as part of sweeping energy legislation introduced on May 5 (SB1585, Sec. 9-105). In 2015, 13 utilities proposed introducing demand charges on solar customers. A small but growing number of utilities are now exploring universal demand charges for all residential customers.

This isn’t the first time ComEd has sought to implement demand charges. The utility backed legislation last year that would move residential customers onto demand-based rates by 2018. However, lawmakers declined to act on the bill.


Illinois: Exelon

Exelon and subsidiary Commonwealth Edison have proposed state legislation (SB 1585) that seeks an income guarantee for two of the company’s struggling nuclear power plants -- Clinton in central Illinois and Quad Cities on the Mississippi River. Exelon Executive Vice President Joseph Dominguez told reporters the two plants combined have already lost $800 million over the past six years, and will lose “well over $100 million” in 2017 if present trends continue, Crain’s Chicago Business reports.

Without assistance, Exelon executives have said both plants will be shuttered. The closures would represent the loss of $1.2 billion in economic activity and 4,200 direct and indirect jobs, Exelon CEO Christopher Crane said on the company’s first-quarter earnings call, RTO Insider reports.

Last year, Exelon proposed a revenue-boosting plan that would have added a $2 per month surcharge to the average household served by Commonwealth Edison and Ameren Illinois, creating more than $300 million of additional annual revenue to cover the costs of its nuclear plants. Legislators declined to act on the proposal.

The new bill, dubbed the Next Generation Energy Plan, maintains some elements of the earlier bill. Exelon did not disclose how much the two nuclear power plants would receive under the bill, but said it had addressed stakeholder concerns “by requiring full review of plants’ costs by state regulators and by ensuring that only those plants that can demonstrate that revenues are insufficient to cover their costs and operating risk will be entitled to receive compensation,” according to a press release. The plan also includes:

  • Nearly doubling energy-efficiency programs, creating $4.1 billion in energy savings, or the equivalent of taking 18 million cars off the road
  • Provide for $1 billion of funding for low-income assistance, mostly through energy efficiency
  • Jump-start solar energy development in Illinois with rebates and more than $140 million in new funding for solar development
  • Reduce monthly fixed charges by 50 percent, and allow Exelon utilities to implement residential demand charges


On March 31, Ohio regulators approved controversial income guarantee proposals for both FirstEnergy and American Electric Power. The plans allow FirstEnergy and AEP to buy electricity from their affiliated power plants via eight-year power-purchase agreements (PPAs). The utilities argue the decision was necessary to keep their uncompetitive power plants operational and would save consumers money in the long term.

On April 28, the Federal Energy Regulatory Commission (FERC) rescinded waivers issued to First Energy (order) and AEP (order) that allowed them to enter into PPAs for their own generating plants. The decision blocks approval of the income guarantee arrangements until FERC has conducted a review to ensure that the utilities are not violating market rules and holding customers captive to paying higher rates, The Columbus Dispatch reports.

The plans approved by regulators in March were the product of months of negotiations between utilities and multiple stakeholders. Both utilities agreed to undertake grid modernization initiatives. FirstEnergy agreed to remove barriers for distributed generation, invest in AMI and reactivate all suspended energy efficiency programs in 2017, among other commitments. As part of a major settlement with the Sierra Club, AEP pledged to develop 500 megawatts of wind and 400 megawatts of solar over the next five years.

Following FERC’s rejection, AEP asked Ohio regulators throw out the previously approved plan and approve a portion of what the utility asked for instead, Columbus Business First reports. The utility is now requesting that regulators approve a PPA for just 440 megawatts of power controlled by AEP, down from the previous total of more than 3,100 megawatts. AEP still plans to pursue 900 megawatts of renewable energy as part of its proposal, but with caveats.

FirstEnergy has also filed to withdraw its controversial PPA plan and submit a new one. Regulators approved the utility's request for a rehearing, and approved rehearing requests from opponants of the plan, RTO Insider reports. FirstEnergy's new proposal scraps the PPA, but continues to ask for a retail rate stability rider to support the utility's aging power plants. The rider fee charged to customers would be based on projected wholesale market costs, rather than the price of the PPAs.


The Department of Energy and Environmental Protection (DEEP) has opened a new Comprehensive Energy Strategy (CES) proceeding, according to EQ Research. The CES must be updated every three years and examines future energy needs in the state, while identifying opportunities to reduce costs, ensure reliable power availability, and mitigate public health and environmental impacts of energy use.

The CES reviews and incorporates an assessment and plan for future energy needs, the findings of IRPs, the Conservation Load Management Plan, the clean energy investment plan utilized by the CT Green Bank, and the Energy Assurance Plan. The CES plans for future energy demand related to electricity, heating, cooling and transportation, and provides legislative and administrative recommendations.

A public scoping meeting is scheduled for May 24 for the DEEP to deliver a presentation and receive stakeholder comments. The presentation will cover securing cleaner, cheaper, more reliable energy options in the buildings and industrial processes sector, electricity supply sector, and transportation sector. The objective of the scoping meeting is to provide an overview of, and seek public input on, the expected structure, schedule and topics for the CES, and key research questions for the CES.

Written comments are due June 14. After reviewing the comments received, DEEP will prepare and release a draft CES for public comment (by the end of summer or early fall 2016). A 60-day comment period will follow, including public hearings and technical meetings.



Last fall, the Texas Public Utility Commission opened a rulemaking that will address whether a third party can sign an interconnection agreement with an electric utility for the operation of on-site distributed generation, or if only end-use customers can sign such agreements (45078). According to Advanced Energy Economy’s Power Suite, regulatory staff will file a proposal for publication at the Commission’s open meeting on May 19, 2016. The proposal is intended for adoption at a September 2016 open meeting.


A national poll conducted by the Program for Public Consultation at the University of Maryland's School of Public Policy found that 7 in 10 voters have heard "just a little or nothing at all" about the Obama administration's Clean Power Plan, ClimateWire reports.


On May 6, Governor Sam Brownback signed SB 318, which suspends “all state agency activities, studies, and investigations that are in furtherance of the preparation” for the Clean Power Plan (CPP), The Wichita Eagle reports. Kansas is one of 24 states suing to block implementation of the CPP, which sets a national goal to reduce carbon emissions 32 percent below 2005 levels by 2030. In February, the U.S. Supreme Court issued a stay on the rule until the U.S. Court of Appeals for the District of Columbia Circuit makes a final ruling on the plan, which is expected later this year. The Kansas law suspends work on a state compliance plan until the stay is lifted.


New Jersey

Round 4 of the New Jersey SREC-II program has been released and is seeking to finance 32 megawatts of new solar projects. Winning bidders with a 10-year fixed price SREC Purchase Agreement. The program is open for eligible PV projects within the Atlantic City Electric Company (ACE), Jersey Central Power & Light Company (JCP&L), and Rockland Electric Company (RECO) service territories. (PSEG  operates a separate solar loan program.) Consolidated bid applications are due July 8.



In January 2015, Kansas City Power & Light announced plans to build a network of 1,000 electric-vehicle charging stations across its service territory -- one of the nation’s largest electric-vehicle charging installations led by a utility.

KCP&L received acclaim for its environmental leadership, for providing enhanced services to customers, and for fostering economic development in the region. Kansas City is the largest auto manufacturing center in the United States outside of Detroit. KCP&L’s Clean Charge Network is intended to help cement the region’s leadership as an automotive center by attracting new businesses and talent.

For these reasons, KCP&L filed with regulatory commissions in Kansas and Missouri to recuperate costs for the EV program through the rate base. The utility has also made the argument that increasing throughput on the electrical system with EV charging helps to cover the fixed costs of running the electrical grid, which benefits all consumers.

Last September, the Kansas Corporation Commission opened a docket to examine KCP&L’s Clean Charge Network proposal and investigate issues related to electric-vehicle charging stations (16-KCPE-160-MIS). Commissioners have already expressed concerns over rate-basing the costs for a product that not all customers benefit from.

According to AEE’s Power Suite, the docket will address several questions, including: “Are EV charging services a public utility function? Is potential subsidization of EV charging stations by non-EV charging station users lawful? Should a regulated utility be allowed to enter a potentially competitive marketplace? What is the impact of EV charging stations on customers and the distribution system? What pricing alternatives should be considered for EV charging stations?”

Staff and intervenor testimony are due by June 6, with rebuttal testimony due June 16. Settlement discussions and hearings are to be held in June, and briefs will be filed by staff, KCP&L and other intervenors over the course of the summer with a commission order due by September 13, 2016.


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.