By - Jon Brown

2nd Annual Residential Demand Charges for Utilities Summit
June 7-8, 2016 | Phoenix, AZ

Overview

Residential distributed generation (DG) customers have distinct, and often unpredictable, load profiles. On sunny days, they might not consume any electricity from the utility during the day, particularly at peak sun times, and in fact may be net exporters to the utility. Such customers with greater variability in their load profiles — particularly those who use a greater amount of electricity at peak system periods — place greater strain on the utility, which must quickly ramp up or ramp down its generation resources to meet the shifting demand. The economic impact of this usage pattern can be compounded in an energy market where prices might rise dramatically during periods of congestion and high demand.

The grid impacts introduced by DG have led to some utilities considering demand charge rate structures. Several, in fact, have already implemented residential demand charge rate structures, while many more are exploring the option. Though in the past demand charges have typically applied only to commercial and industrial customers, utilities are finding that applying residential demand charges provide an instrument to better align the price of electricity with the cost of delivering that electricity to customers, thereby reducing cross-subsidies embedded in today’s rates, incentivizing smarter load management, and providing fairer cost recovery to utilities.

This conference will explore the benefits and challenges of offering a residential demand charge from a wide variety of perspectives. It will cover best practices for designing the new rate, its likely impact on customer bills, expected customer response to the new rate, cost-recovery implications and more. Attendees will take away valuable knowledge about this innovative rate design option for their company and have the opportunity for quality networking with industry peers.

WHO SHOULD ATTEND

Individuals working in the following areas will benefit from attending this event:

  • Utility C-suite
  • Commissioners
  • Commission staff
  • Attorneys
  • Regulatory affairs managers
  • Pricing and load research managers
  • Customer representatives and organizations
  • Cost of service analysts
  • Financial analysts
  • Rate design, product development and customer strategy

LEARNING OUTCOMES

  • Demonstrate the optimal way for pricing power from the grid in an age of expanding  distributed generation and renewable energy sources
  • Explore the relationship between Demand Rates and Net Energy Metering (NEM)
  • Summarize the national experience with residential demand charges
  • Discuss the benefits and challenges of offering a residential demand charge
  • Examine the impact residential demand charge has on the various stakeholders
  • Discuss customer response to demand charges
  • Evaluate different utilities offering of a demand rate to its residential customer base

Agenda

Tuesday, June 7, 2016

12:30 – 1:00 p.m. :: Registration

1:00 – 1:20 p.m. :: Opening Address

Arizona Public Service (APS) was founded in 1886 and is the largest and longest-serving electric company in the state, serving 11 of Arizona’s 15 counties. In these changing times, APS recognizes new technologies and growing customer expectations are leading to rapid changes at the company and in more generally throughout the industry.  The utility’s corporate vision is to create a sustainable energy future for Arizona.  This opening segment will examine how the concept of residential demand charges support the accomplishment of that long-term APS mission.

Barbara Lockwood, Vice President, Arizona Public Service (APS)

1:20 – 2:15 p.m. :: Rate Regulation: Steering between Scylla and Charybdis (or “a rock and the hard place”)

The Honorable Branko Terzic, former state and federal regulator and utility CEO will discuss the evolution of electricity rate design from the 1890’s to present day. He’ll discuss the “coupling” of utility rates which occurred in the 1980’s and its unintended consequences today.  Have you heard of “sliding scale” or “merit rating plans” both proposed as regulatory mechanisms to encourage efficiency? Well, there have been other rate ideas too, some of which met James Bonbright’s criteria in Principles of Public Utility Rates and some which did not. Mr. Terzic will discuss how Bonbright’s guidance is still valid and useful to regulators today.

Branko Terzic, Managing Director, Berkeley Research Group

2:15 – 3:00 p.m. :: Strategies for Addressing Fixed Cost Recovery Issues

Electric and natural gas utilities face a number of issues that threaten their ability to recover fixed costs through retail rates, including customer conservation, expanding energy efficiency programs, and the proliferation of distributed generation (e.g., rooftop solar panels). In this presentation, Dr. Hansen will provide an overview of the various methods that have been used (or proposed) to address utility fixed cost recovery issues, including revenue decoupling, residential demand charges, a minimum bill provision, and solar access fees. Dr. Hansen will provide an explanation of each method, as well as its strengths and weaknesses.

Dan Hansen, Vice President, Christensen Associates Energy Consulting, LLC

3:00 – 3:30 p.m. :: Networking Break

3:30 – 4:15 p.m. :: Demand Charges: Impacts and Alternatives

Demand charges, while widely implemented for large commercial and industrial customers, make little sense for residential customers. This presentation will explore the impact of demand charges on customer incentives for energy efficiency and distributed generation, and will take a closer look at the types of customers who are likeliest to benefit from or be harmed by a demand charge. It will also provide an overview of alternatives that may have better implications for customers and state energy policy goals.

Melissa Whited, Senior Associate, Synapse Energy

4:15 – 5:00 p.m. :: Time-of-Use Rates: An Alternative to Demand Charges

This presentation will discuss time-varying rates as an alternative to residential demand charges in meeting public policy goals, including energy efficiency, and addressing utility cost recovery concerns. For example, the costs that might be recovered through a demand charge can instead be recovered in higher kWh charges during the peak demand period.  This presentation will discuss the advantages of using time-varying rates over a demand charge approach and will highlight best practices for implementing these alternative rates.

Steven Nadel, Executive Director, American Council for an Energy-Efficient Economy (ACEEE)

DAY 2 AGENDA

Wednesday, June 8, 2016

7:45 – 8:15 a.m. :: Continental Breakfast

8:15 – 9:00 a.m. :: Residential Demand Charges: An Overview

In this presentation, we will introduce the case for residential demand charges when it comes to addressing the infrastructure cost recovery and review the current experience with the residential demand charges in the U.S.  We will review various stakeholder concerns and make recommendations on specific initiatives that will help move the debate on residential demand charges while addressing the concerns of stakeholders.

Sanem Sergici, Principal, The Brattle Group

9:00 – 9:45 a.m. :: Can Residential Demand Charges Help Achieve Policy Goals?

In recent years, utility and regulator interest in demand charges for residential customers has steadily increased. Reasons behind this interest typically center on the potential for a demand charge rate to prove more effective than existing rates at achieving specific objectives, such as peak load management or improved cost recovery. As policymakers consider exploration and implementation of these rates they are compelled to ask: are residential demand charges the right tool for achieving policy goals in a given situation? Rocky Mountain Institute (RMI) recently examined residential demand charges, and other alternative mass-market rate designs, through this lens to evaluate what is shown by the industry’s experience to date. In this session, James Sherwood of RMI will present key findings from that research and discuss considerations for future efforts on residential demand charges.

James Sherwood, Senior Associate – Electricity Practice, Rocky Mountain Institute (RMI)

9:45 – 10:15 a.m. :: Networking Break

10:15 – 11:00 a.m. :: DER and Demand Charges – Oil and water or peanut butter and jelly?

Most distributed energy resources (DER) rely on a retail rate offset to drive value for the adopting customer. As rate design evolves, so too does the value proposition from the DER technology. Lon Huber of Strategen Consulting, a current participate in Arizona regulatory proceedings at the ACC, will discuss how demand charges and DER technology, particularly rooftop solar, can coexist. He will cover potential design options and the related benefits and opportunities of smart rate design. Lon will also cover the economics of solar plus storage as well as implementation strategies to ensure successful customer and industry engagement with demand charges.

Lon Huber, Director, Strategen Consulting, LLC

11:00 a.m. – 12:00 p.m. :: Panel Discussion: Residential Demand Charges – Yes or No?

The panelists will bring to bear their years of experience in utility rate design to weigh the opportunities and constraints associated with pursuing the concept of a residential demand charge. Why should utilities pursue residential demand charges or choose not to go down that path?

Moderator:

Meghan Grabel, Partner, Osborn Maledon

Panelists:

Melissa Whited, Senior Associate, Synapse Energy

Leland R. Snook, Director – Rates & Rate Strategy, Arizona Public Service (APS)

Dan Hansen, Vice President, Christensen Associates Energy Consulting, LLC

Brent Gale, SVP, Berkshire Hathaway Energy Co. (ret’d) and Principal, StrataG Consulting, Inc.

12:00 – 1:00 p.m. :: Group Luncheon

UTILITY CASE STUDIES

1:00 – 1:45 p.m. :: Small Generation Vs. Fair Utility Rates

Colorado requires all utilities to offer net energy metering (NEM) to small generation customers.  Since residential energy rates in regulated states are traditionally designed to return the cost of production as well as capacity and fixed costs through one kWh rate, many industry experts hold the view that crediting the full energy rate means customers are receiving more than the cost of what their generation helped the utility avoid.  In this session, the Intermountain Rural Electric Association (IREA) will share its analysis of the following:

  • Cost and revenue structures to determine if the revenue collected from distributed solar customers covers the cost of serving them
  • The relationship of excess distributed generation energy (kWh for kWh) credited to the average net-metered customer vs actual grid costs
  • Different NEM modification options, such as three-part rates, minimum bills, and increased monthly service charges as means of reducing this subsidy

Michelle McAndrew, Rates & Engineering Services Director, Intermountain Rural Electric Association (IREA)

David Stowe, Rate Analyst, Intermountain Rural Electric Association (IREA)

1:45 – 2:30 p.m. :: The Customer Generation Price Plan at Salt River Project (SRP)

In February 2015, the SRP Board approved a new Customer Generation Price Plan for residential customers who choose to produce some of their own electricity using rooftop solar or other means.  This new price plan is intended and was designed so that these rooftop solar customers — who choose to purchase less energy from SRP, but still use and rely on the electric grid around the clock — pay their share of costs to maintain and improve the grid. The purpose of the demand charge, which is included in the plan, is to provide SRP customers with the ability to manage their energy use so as to maximize their opportunity to save money. In this session, SRP will cover the genesis of the Customer Generation Price Plan and provide current results.

John Tucker, Manager – Pricing Design, Salt River Project (SRP)

2:30 – 3:00 p.m. :: Networking Break

3:00 – 3:45 p.m. :: Demand Price Information: How APS’s Customers Have Responded for More than 30 Years

Residential time-of-use demand rates have been an effective tool in encouraging APS customers to reduce their peak demand during the on-peak period. As the electric utility industry rapidly evolves, demand rates will be an increasingly important means of stimulating innovation and helping customers shape how they consume energy. An evolving grid requires a modern approach to pricing – APS’s customer experience dispels the myths surrounding residential rate reform.

Leland R. Snook, Director – Rates & Rate Strategy, Arizona Public Service (APS)

3:45 – 4:45 p.m. :: Panel Discussion: Sending the Right Pricing Information to Customers

The panelists will discuss putting the right incentives in place to encourage technology (including solar) that actually reduces cost for both the customer and utility. At the present time, energy-only price signals encourage programs and technology that focus on reducing energy, without regard to demand. Advocates of demand rates contend that they encourage technologies to address both energy reduction and demand.

Moderator:

Sanem Sergici, Senior Associate, The Brattle Group

Panelists

Cass Bielski, Manager – Rate and Regulatory Business, Edison Electric Institute (EEI)

Steven Nadel, Executive Director, American Council for an Energy-Efficient Economy (ACEEE)

David Stowe, Rate Analyst, Intermountain Rural Electric Association (IREA)

John Tucker, Manager – Pricing Design, Salt River Project (SRP)

Lon Huber, Director, Strategen Consulting, LLC

4:45 p.m. :: Conference Adjourns

PRE CONFERENCE WORKSHOP

RESIDENTIAL DEMAND CHARGES — POLICY ISSUES, PROGRAM DEVELOPMENT AND COMMISSION BUY-IN

Tuesday, June 7, 2016

8:00 – 8:30 a.m. ::  Registration and Continental Breakfast

8:30 – 11:45 a.m. :: Workshop Timing

Overview

The use of distributed generation (DG) is growing fast and has been spurred on by environmental concerns and economic considerations. As DG becomes more widespread, rate analysts and researchers are developing new rate designs, such as residential demand charges, to ensure that utilities recover their cost of service. Utilities can no longer afford to take a wait-and-see approach, nor should they assume that old rate designs will work in the future. Demand charges have been common with commercial rate structures for years, but not so with residential customers.

This workshop will dive into the necessary elements required to formulate a demand charge and how to sell it to the regulators. Policy initiatives surrounding this controversial topic will be delved into.

Learning Outcomes

  • Identify policy issues associated with demand charges and why utilities are implementing them
  • Discuss the concerns with offering demand charges
  • Identify best practices in implementing successful customer promotion, education, and retention strategies
  • Evaluate the analysis and economics that are necessary for considering a demand charge
  • Discuss the process for creating a demand charge program
  • Explain how to sell your demand charge program to the Commission

Agenda

I. Policy Issues Associated with Demand Charges
  • What is the problem/why is the utility looking at demand charges?
  • What are the possible solutions?
  • What are the concerns about demand charges
II. Developing and Creating a Demand Charge Program
  • Gathering data
  • Conduct a rate analysis
    • Load shapes — the “duck” curve
    • Peak considerations
    • Cost of service — align revenue with costs
    • Evaluation
  • Value of distributed generation (DG)
  • Considerations related to providing DG service
  • Other options
III. Selling it to the Commission, Utility Management, Consumer Advocates and Consumers
  • Strategy
  • Execution
  • Tactics
  • Briefs
  • Oral arguments

11:45 a.m. :: Workshop Adjourns

Instructors

Brent Gale, Principal and Senior Energy Consultant, StrataG Consulting, Inc.

Prior to joining StrataG Consulting, Inc., Brent Gale held various executive positions with Berkshire Hathaway Energy Co., its predecessor and affiliates, including Senior Vice President –  Legislation, Regulation & Strategy and Vice President – General Counsel.  During his career, his responsibilities included domestic utility acquisitions, U.S. regulatory and legislative policy, strategic planning, regulatory relations, government affairs, rate design, rate cases and legislative drafting.  He has personally litigated or had ultimate responsibility for results in hundreds of rate cases, regulatory proceedings and associated appeals in 10 states. Mr. Gale has testified before regulators and state legislatures in several states.

He has a demonstrated record of developing and advocating innovative regulatory and legislative strategies and programs that benefit both consumers and utilities.  Among other accomplishments, he developed and administered the MidAmerican Energy Company alternative ratemaking plan approved by Iowa regulators in 1998.  The Iowa plan enabled the utility to eliminate adjustment mechanisms and avoid rate increases until 2012, while enjoying reasonable returns and sharing the benefits of efficiency gains with customers.  A similar rate-making plan was incorporated in the 1997 Illinois retail access statute, upon which he also worked.  In addition, Mr. Gale drafted and testified in support of legislation allowing state regulators to determine the prudence of, and rate-making treatment applicable to, utility investments in electric supply alternatives prior to utilities and their customers incurring significant sunk costs. The legislation was first enacted in Iowa, and variations have been adopted in other states including Idaho where he proposed language and testified in support.  Mr. Gale also successfully led the team that secured regulatory approvals from six states in ten months for the acquisition of PacifiCorp by the predecessor of Berkshire Hathaway Energy Co.

Cass Bielski, Manager – Rate and Regulatory Business, Edison Electric Institute (EEI)

Casimir Bielski has worked at EEI for the past 30 years. In his position as Manager, Rates and Regulatory Business, he analyzes electric utilities, particularly rate and regulatory aspects of the business, largely from a financial perspective. He also manages a group of electric utility executives in the rate and regulatory area and another group in the load forecasting area. In addition, he conducts programs and training to serve these groups.  Mr. Bielski focuses much of his attention on conducting analytical work.  He attended George Washington University where he received his BS in Mechanical Engineering and Vanderbilt University where he earned his BA in English.

Location

Hyatt Regency Phoenix
122 N. Second Street
Phoenix, AZ 85004

To reserve your room, please call 1-888-421-1442
Please indicate that you are with the EUCI group to receive the group rate.

ROOM RATE:

The room rate is $139.00 single or double plus applicable taxes.

Speakers

Lon Huber, Director, Strategen Consulting, LLC

Barbara Lockwood, Vice President, Arizona Public Service (APS)

Branko Terzic, Managing Director, Berkeley Research Group

Brent Gale, Principal and Senior Energy Consultant, StrataG Consulting, Inc.

Brent Gale, SVP, Berkshire Hathaway Energy Co. (ret’d) and Principal, StrataG Consulting, Inc.

Cass Bielski, Manager – Rate and Regulatory Business, Edison Electric Institute (EEI)

Dan Hansen, Vice President, Christensen Associates Energy Consulting, LLC

David Stowe, Rate Analyst, Intermountain Rural Electric Association (IREA)

James Sherwood, Senior Associate – Electricity Practice, Rocky Mountain Institute (RMI)

John Tucker, Manager – Pricing Design, Salt River Project (SRP)

Leland R. Snook, Director – Rates & Rate Strategy, Arizona Public Service (APS)

Lon Huber, Director, Strategen Consulting, LLC

Meghan Grabel, Partner, Osborn Maledon

Melissa Whited, Senior Associate, Synapse Energy

Michelle McAndrew, Rates & Engineering Services Director, Intermountain Rural Electric Association (IREA)

Sanem Sergici, Principal, The Brattle Group

Steven Nadel, Executive Director, American Council for an Energy-Efficient Economy (ACEEE)

Register

Event Standard RateAttendees
Proceedings package US $ 395.00

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