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Electric Utility and Solar Advocates in Arizona Reach Compromise Rate Settlement for Rooftop Solar

The Arizona Public Service Co. (APS) and solar industry representatives and advocates have reached a settlement on rooftop solar compensation and rate design, following years of heated policy debate.  The settlement, which the Arizona Corporation Commission (ACC) is expected to vote on this summer, required compromise from both sides on a variety of issues.

Future Rate Design

The settlement nixes APS’s request for a mandatory demand charge on all residential and small business customers.  Instead, the settlement gives new solar distributed generation customers the option to choose between a time-of-use or demand-based rate.  Under the settlement, APS would compensate solar customers with an export credit rate of 12.9 cents per kWh.  APS initially proposed to cut compensation from the retail rate, which is approximately 13 to 14 cents per kWh, to the wholesale rate, which is only 3 cents per kWh.  The export credit rate will decrease by up to 10 percent annually.  However, customers will be able to lock in their rates for 10 years, providing some long-term certainty.

Current Net Metering Customers

The settlement will preserve existing net metering benefits for distributed generation customers who file an interconnection application before the ACC issues a decision in the case.  Those customers will be grandfathered in and continue to receive the full retail rate for a period of twenty years from the date of interconnection.

Utility-Owned Generation

The settlement allows APS to invest $10 to $15 million per year in AZ Sun II, a new program for utility-owned rooftop solar for low- to moderate-income customers.  The agreement puts a moratorium on new self-build generation by APS until 2022, excepting distributed generation, microgrids, and renewable generation.

What’s Next?

The settlement moves Arizona away from retail rate net metering and towards value-based solar rate design.  While solar advocates do not believe the settlement fully recognizes the value of solar, the settlement preserves benefits for existing customers and allows the state’s solar industry to move forward with more certainty.  APS, industry representatives, and many solar advocates committed to stand by the settlement agreement and refrain from seeking to undermine it through ballot initiatives, legislation or advocacy at the ACC.




New York Staged to Begin Full Community Net Metering Program

Community net metering is relatively new to New York.  Last July, the New York Public Service Commission (PSC) issued an order establishing a “community distributed generation program” that allows multiple customers to net meter from a single solar generation facility.  Community net metering will implement principles that are part of New York’s sweeping energy policy reform efforts in the ongoing Reforming the Energy Vision (REV) proceeding.  In order to coordinate the community net metering program with the broader REV program, the PSC delayed full implementation of its community net metering program until May 1, 2016.

The goal of community net metering is to expand opportunities for participation in solar and other forms of clean distributed generation to utility customers that would not otherwise be able to access that generation directly.  Many utility customers, such as residents of multi-unit buildings, lack control over sites that can be configured into a location for a clean generation facility.

To be eligible for community net metering, a generation facility must meet the requirements for New York’s regular net metering program.  Instead of having one owner, a community net metering project is owned by 10 or more members, all of whom are located within the same load zone and within the same utility’s service territory.  Besides multiple owners, community net metering projects have a sponsor, which may be the generation facility developer, an energy service company, a municipality, a business or non-profit, or other another form of business or civic association.  The sponsor builds the generation facility, owns and operates the generation facility, and acts as the liaison between the community members and the utility.  Each member of a community net metering project owns or contracts for a proportion of the credits accumulated as a percentage of the facility’s output in excess of usage at the host site.  The project sponsor reports these percentages to the utility, and the utility is responsible for distributing the credits to the members in accordance with the sponsor’s instructions.

Due to the PSC’s desire to coordinate community net metering with the REV program, New York’s community net metering is being implemented in two phases.  Phase 1 lasts through April 30, 2016.  During this period, the PSC will permit community net metering projects only if (1) the project site is in a location that will bolster grid reliability or provide other locational benefits or (2) the project meets a threshold level of low-income customer participation.  According to the PSC, these requirements will “advance selected REV principles” above and beyond general clean energy goals.  Phase 2, beginning soon on May 1, 2016, has no such restrictions and will be open to all qualifying projects.




Massachusetts DPU Adopts Procedures for Relaxing Eligibility for Net Metering Renewable Energy Facilities

by William Friedman

The Massachusetts Department of Public Utilities (DPU) recently issued an order giving greater flexibility to renewable energy projects seeking to qualify for Massachusetts’ net metering program. Net metering allows the owner of a renewable energy project (such as wind or solar) to receive a retail credit for at least a portion of electricity it generates and feeds back into the grid. In a previous order, the DPU defined the terms facility and unit in order to provide guidance as to which projects can qualify for net metering in Massachusetts.  

The recent order confers on the DPU and local distribution companies flexibility to relax certain eligibility requirements for net metering.  In a previous order, the DPU made eligibility contingent on the generating facility being located on a single parcel of land, with a single point of interconnection, behind a single meter.  While these eligibility criteria offer clear, easily verifiable parameters for net metering projects, they can also inhibit the development of certain net metering projects, such as large public net metering facilities up to 10 MW, which may be safer and more reliable and efficient if interconnected to the electric grid at multiple points.

The DPU’s recent order declines to grant any blanket exemptions from the eligibility criteria, but it does allow individual exceptions to be granted when required for optimal interconnection.  A petition for an exception to the single parcel rule may now be filed with the DPU, and an exception to the single meter or single point of interconnection may now be sought from the local distribution company.  The DPU explained that local distribution companies are best situated to determine what constitutes optimal interconnection on their distribution system.  The order directs the distribution companies to apply a consistent standard in granting exceptions, but it declines to establish additional documentation requirements that must be submitted to the distribution companies. 

Along with their new authority to grant exceptions, the distribution companies have the responsibility to ensure that net metering services are provided only to eligible customers.  The DPU is requiring distribution companies to develop a means of evaluating all customers’ and facilities’ eligibility for net metering services at an early stage of project design.  The distribution companies must submit a joint proposal addressing how they will evaluate eligibility for net metering services and when they will communicate with customers about eligibility.




Massachusetts Net Metering Projects Face Suboptimal Interconnection Designs

by William M. Friedman

Massachusetts’ net metering program went into full effect in February, but the Massachusetts Department of Public Utilities (DPU) may have inadvertently stymied the program’s growth by issuing an order that prohibits or impedes optimal interconnection of larger projects. The Massachusetts DPU is now considering reversing course.

Under the Massachusetts’ net metering program, local utilities provide billing credit to customers with interconnected renewable energy projects that feed power into the grid. The customer that hosts the project can either use the credit against its own account or assign the credit to another account with the same utility. The amount of interconnected and net metered generation permitted under the program is subject to two separate caps, one for private entities and one for municipalities and other governmental entities. Each cap is at 3 percent of the utility’s highest historical peak load, but the rules that apply to each cap differ slightly.

A net metering facility under the private cap may have a generating capacity up to 2 MW, while a facility under the public cap may have a generating capacity up to 10 MW (each municipality may not exceed 10 MW for all of its departments or subdivisions combined), but is limited to 2 MW per unit. Last year, the Massachusetts DPU issued guidance defining a “unit” as a single turbine for wind facilities, a single piece of generating equipment (e.g., an engine or turbine) for agricultural net metering facilities, or a single inverter for solar net metering facilities. 

The Massachusetts DPU defined “facility” for both the public and private caps as “energy generating equipment associated with a single parcel of land, interconnected with the electric distribution system at a single point, behind a single meter.” This three-part test, however, poses problems for larger capacity projects, particularly those under the public cap, which can potentially have a capacity of up to 10 MW. For larger projects, the distribution company that performs the System Impact Study and designs the interconnect might conclude that a design using multiple points of interconnection is best for safety, electrical reliability and electrical efficiency. While a design with two points of interconnection and two meters might be more appropriate, a facility with more than one point of interconnection will not qualify for net metering credit. The Massachusetts DPU’s definition thereby encourages suboptimal interconnection configurations.

The Massachusetts DPU has recognized the problem its definition caused and is currently considering a fix. In October 2012, the Massachusetts DPU sought comments on whether to allow an exception on the basis of optimizing facility interconnection and how such an exception might work. In response, the local distribution companies tepidly supported an exception to the DPU’s three-part test, emphasizing a clear and workable definition of “facility,” while other commenters were more enthusiastic about an exception. There is no set timeline for the Massachusetts DPU to make a final decision on whether to grant an exception. Since the definitional order was issued, a number of petitions have been filed seeking exemptions from various aspects of the DPU’s rule, and some petitions have [...]

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