Avoided Cost Calculations and PURPA

Avoided Cost Calculations and PURPA

December 8, 2021 | Online :: Central Time

The rates for purchases from qualifying cogeneration facilities and qualifying small power production facilities under PURPA prohibit electric utilities from paying more than the “avoided cost” for such purchases. Utilities must estimate avoided energy and capacity costs for a variety of reasons, including PURPA contracts, demand side management program design, and proposal evaluations. In recent years the increase of low-cost renewables have substantially increased uncertainty in the avoided costs calculations.  Avoided cost analysis must now capture future states in ways that cannot be accommodated with traditional approaches.

This course will examine the process of how utilities have typically estimated their avoided cost in multiple contexts and recognize what is valuable in those analyses. It will explore the recent regulatory changes and provide a framework with best practices for calculating avoided cost to answer the ultimate question of what costs QFs enable utilities to avoid. 

Learning Outcomes

  • Discuss the regulatory background on avoided costs and recent rule changes
  • Review the history of PURPA and the implementation on a state-by-state basis
  • Identify what avoided cost is supposed to reflect/capture including capacity value and renewable integration costs
  • Explore how to incorporate new market dynamics in avoided cost calculations
  • Review the traditional calculation of avoided cost and the advantages/disadvantages
  • Examine the best practices for calculating avoided cost
  • Discuss utility perspectives of avoided cost calculations

Agenda

Wednesday, December 8, 2021 : Central Standard Time

8:45 – 9:00 a.m.
Log In and Welcome

12:30 – 1:15 p.m.
Lunch Break

9:00 a.m. – 5:00 p.m.
Course Timing

9:00 – 9:15 a.m. :: Overview and Introduction

Background on Avoided Costs

  • Regulatory background of avoided cost economics
  • How regulations are changing
    • The impact of the recent FERC rulings
  • FERC principles on calculating avoided cost
  • History of PURPA
  • PURPA implementation by state

What Avoided Cost Is Supposed to Reflect/Capture

  • Most common components of avoided cost
  • Value of energy from future resource
  • Capacity value
  • Renewable integration costs
    • Transmission upgrades
    • Ancillary service requirement increases

Traditional Calculation of Avoided Cost

  • Proxy Unit
  • Differential revenue requirement
  • Marginal cost to serve load
  • Competitive Solicitations

Advantages and Disadvantages of Each Approach

12:30 p.m. – 1:15 p.m. :: Lunch break

Incorporating New Market Dynamics in Avoided Cost Calculations

  • Increasing volatility and uncertainty in wholesale energy prices
  • Explosive growth of renewables
  • Influence of weather on load, renewable generation and prices
  • Changing load patterns
  • Technology changes

Best Practice for Calculating Avoided Cost

  • Connect avoided costs with resource plans
  • Defining the system operation conditions
  • Capturing market uncertainties
  • Defining ancillary services requirements

Discussion on Utility Perspectives of Avoided Cost Calculations

5:00 p.m. :: Program Adjournment

Workshop

The Anticipated Impact of Order No. 872 & 872-A on PURPA

Thursday, December 9, 2021 : Central Time

Overview

In July 2020, FERC finalized its updates to PURPA to try and preserve competition and give states more flexibility in implementing the federal rule. This new ruling allows states to set the rates paid to qualifying facilities (QFs) at a variable wholesale rate rather than a fixed cost, reducing the size of a project that is subject to such rates from 20 MW to 5 MW, and modifying the one-mile rule to prevent aggregation. Utility’s view this ruling favorably as they will have to pay QFs less for the avoided cost of power than they did under the previous rule but supporters of solar think that these updates could hurt the ability of small solar projects.

Join us for this workshop to learn more about the anticipated impact of this recent FERC ruling and how it is affecting or will affect states across the country as well as the various stakeholders. The informative presentations will provide good perspectives to consider for PURPA moving forward.

Learning Outcomes

  • Review the changes to PURPA and changes to state implementation of PURPA under consideration across the country
  • Analyze variable energy pricing and some of the legal underpinnings
  • Review an ongoing dispute in Montana regarding network upgrade costs caused by Qualified Facilities (QF’s)
  • Discuss the controversial nature of the Final Rule
  • Review potential legal challenges to FERC’s recent ruling as well as possible outcomes
  • Explore the effect of disaggregation of the 1-mile rule to 10 miles
  • Explore the presumption that facilities 10 miles apart or more are now considered separate facilities
  • Discuss PURPA reform initiatives, and whether PURPA can be better aligned with other state and federal policies

 

Agenda

8:45 – 9:00 a.m.
Log In

9:00 a.m. – 12:00 p.m.
Workshop Timing

PURPA Implementation Rules Being Considered by States

PURPA is a key part of the U.S. renewable energy policy framework. The law, which, broadly, requires electric utilities to purchase power from small renewable generation or cogeneration facilities owned by customers or third parties, has historically been a major factor behind the development of renewable energy. Even before Order 872’s changes, PURPA implementation on issues such as avoided cost calculation and contract terms differed across the states. With the recent FERC orders allowing states to make further PURPA implementation changes, we are sure to see further differences emerge among the states on PURPA. At the same time, other energy policy changes at the state and federal level will have implications for PURPA-based renewable energy development. This presentation will look at changes to PURPA implementation rules being taken and considered by states, as well as related policy actions that may have effects on PURPA-based development

David Sarkisian, Senior Policy analyst, NC Clean Energy Technology Center

Variable Energy Pricing Option

The desire to simultaneously contain rising electricity rates, while promoting deployment of renewable energy resources, has led to an evolution in incentives policy for distributed renewable generation. Notably, the Final Rule permits states to require variable energy rates. This presentation will share some of the legal underpinnings and arguments currently being made, as well as some of the advantages of QF variable pricing. It will also include an overview of an ongoing dispute in Montana regarding network upgrade costs caused by QFs. 

Jason Brown, Attorney, Montana Consumer Counsel

10:20 – 10:40 a.m. :: Break

Potential Legal Challenges to FERC’s Recent Ruling, and Possible Outcomes

The controversial nature of the Final Rule will more than likely lead to significant litigation the U.S. Courts of Appeals and it is there is the possibility that litigation will be brought in the U.S. District Courts. Rules carrying out PURPA on the ground must be adopted by state utility commissions and the governing boards of publicly owned utilities. This session will review possible legal challenges to the new FERC ruling as well as possible outcomes.

Kristen N. Edwards, Staff Attorney, South Dakota Public Utilities Commission

Updated One-Mile Rule

The final rule modifies and clarifies the “one-mile rule,” which determines whether multiple affiliated generating units using the same resource constitute the “same facility” located at the “same site,” and thus count toward the 80 MW size limitation for SPP QFs. Although FERC admitted that circumvention of its one-mile rule is not “an everyday occurrence,” it found that its modified regulatory text was reasonable to prevent developers from strategically siting facilities just over one mile apart. Under the previous FERC rules, such projects must be a mile apart to be considered a separate facility. This session will explore the presumption that facilities 10 miles apart or more are now considered separate facilities and the rebuttable presumption that affiliated facilities located more than one mile apart, but less than 10 miles apart are located on a separate site, and thus do not count toward the 80 MW limitation.

Brian B. Bell, Partner, Dorsey & Whitney LLP

12:00 p.m. :: Workshop Concludes

Workshop Presenters

David Sarkisian, Senior Policy analyst, NC Clean Energy Technology Center

David Sarkisian is a Senior Policy analyst at the NC Clean Energy Technology Center. For DSIRE, David manages the entries for the following states: IA, IL, KS, MI, MO, NE, NM, OK, and TX. David received his B.A. in public policy from Duke University and completed a J.D. and a master’s in environmental science degree at Indiana University in Bloomington. He is a member of the Indiana State Bar. David’s field of interest includes energy efficiency, smart grids, behavioral effects on energy use, and administrative law. He has previously worked with the Indiana Office of Utility Consumer Counselor developing smart grid policy. He has also interned with the U.S. Environmental Protection Agency (EPA), where his work included analyzing regulatory innovation projects and developing recognition-based incentive programs.


Jason Brown, Attorney, Montana Consumer Counsel

Mr. Brown is an attorney for the Montana Consumer Counsel in Helena, where he advocates for the interests of the consuming public in administrative and judicial proceedings, including in PURPA matters.  Prior to joining the Montana Consumer Counsel, Mr. Brown was an attorney for the Montana Public Service Commission for more than six years, where he advised five elected commissioners, drafted administrative orders, and represented the agency before courts and the legislature.  In 2009, he served as the Law Clerk for the 20th Judicial District Court in Lake and Sanders Counties.  He earned law and master’s degrees from the University of Montana and his bachelor’s degree from Tufts University.


Kristen N. Edwards, Staff Attorney, South Dakota Public Utilities Commission

Kristen Edwards joined the South Dakota Public Utilities Commission as a staff attorney in 2012, after beginning her legal career in private practice.  She is a native of rural Iowa and holds a bachelor’s degree in political science with an emphasis on public law from Minnesota State University, Mankato. Kristen earned her law degree from the University of South Dakota.


Brian Bell, Partner, Dorsey & Whitney LLP

Mr. Bell’s energy practice has always focused on serving investor-owned utilities. He has recently added to this experience, helping electric cooperatives advance their interests before state and federal regulatory bodies. Brian’s natural resources practice involves helping senior mining companies with project permitting, investments, and acquisitions. His environmental practice touches on both the energy and natural resources industry, but he also supports real estate and food and agriculture clients in environmental enforcement and transactional matters. Brian currently serves on the Minnesota Board of Law Examiners. He graduated magna cum laude from the University of Minnesota Law School and received his B.A. in Political Science from the University as well. After he graduated from law school, Brian had a judicial clerkship with the Honorable Alan C. Page. He has an admission to the U.S. District Court for the District of Minnesota.

Instructor

Dr. Brandon Mauch, PhD, Senior Energy Analyst, Ascend Analytics

Brandon Mauch is a Senior Energy Analyst at Ascend Analytics. He provides modeling expertise and support in the integrated resource planning activities, energy markets, regulation and utility demand side management.  Dr. Mauch works in Ascend’s consulting group providing resources planning and regulatory support.  Prior to joining Ascend, Brandon was a Senior Program Manager for CLEAResult Consulting where he managed utility energy efficiency and demand response programs for Midwestern utilities.  Before that, he was a Utility Regulation Engineer for the Iowa Utilities Board where he worked on regional energy policy issues, resource planning and rate cases for Iowa’s investor-owned utilities.  Brandon holds a Ph.D in Engineering and Public Policy from Carnegie Mellon University where his research focused on wind power forecasting and risk assessment of wind forecasts. He also holds a master’s degree in Mechanical Engineering from the University of Wisconsin and a bachelor’s degree in Mechanical Engineering from the University of Kansas. 

Online Delivery

We will be using Microsoft Teams to facilitate your participation in the upcoming event. You do not need to have an existing Teams account in order to participate in the broadcast – the course will play in your browser and you will have the option of using a microphone to speak with the room and ask questions, or type any questions in via the chat window and our on-site representative will relay your question to the instructor.

  • IMPORTANT NOTE: After November 30 you will not be able to join a Teams meeting using Internet Explorer 11. Microsoft recommends downloading and installing the Teams app if possible. You may also use the Edge browser or Chrome.
  • You will receive a meeting invitation will include a link to join the meeting.
  • Separate meeting invitations will be sent for the morning and afternoon sessions of the course.
    • You will need to join the appropriate meeting at the appropriate time.
  • If you are using a microphone, please ensure that it is muted until such time as you need to ask a question.
  • The remote meeting connection will be open approximately 30 minutes before the start of the course. We encourage you to connect as early as possible in case you experience any unforeseen problems.

Register

Please Note: This event is being conducted entirely online. All attendees will connect and attend from their computer, one connection per purchase. For details please see our FAQ

If you are unable to attend at the scheduled date and time, we make recordings available to all registrants for three business days after the event

Event Standard RateAttendees
Single Connection - Avoided Cost Calculations and PURPAUS $ 795.00
Pack of 5 connectionsUS $ 3,180.00
Pack of 10 ConnectionsUS $ 5,565.00
Pack of 20 ConnectionsUS $ 9,540.00
Call us at 303.770.8800 if you have any specific questions on the volume discounts
* all other discounts do not apply to license packs

This event has the following workshops:

The Anticipated Impact of Order No. 872 & 872-A on PURPAUS $ 495.00
Pack of 5 ConnectionsUS $ 1980.00
Pack of 10 ConnectionsUS $ 3465.00
Pack of 20 ConnectionsUS $ 5940.00

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Take advantage of these discounts!

  • Attend the Course and workshop and pay US $ 1,195.00 per attendee (save US $ 95.00 each)

Cancellation Policy

Your registration may be transferred to a member of your organization up to 24 hours in advance of the event. Cancellations must be received on or before November 05, 2021 in order to be refunded and will be subject to a US $195.00 processing fee per registrant. No refunds will be made after this date. Cancellations received after this date will create a credit of the tuition (less processing fee) good toward any other EUCI event. This credit will be good for six months from the cancellation date. In the event of non-attendance, all registration fees will be forfeited. In case of conference cancellation, EUCIs liability is limited to refund of the event registration fee only. For more information regarding administrative policies, such as complaints and refunds, please contact our offices at 303-770-8800

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EUCI has been accredited as an Authorized Provider by the International Association for Continuing Education and Training (IACET).  In obtaining this accreditation, EUCI has demonstrated that it  complies with the ANSI/IACET Standard which is recognized internationally as a standard of good practice. As a result of their Authorized Provider status, EUCI is authorized to offer IACET CEUs for its programs that qualify under the ANSI/IACET Standard.

EUCI is authorized by IACET to offer 0.7 CEUs for this event and 0.3 CEUs for the workshop

Requirements For Successful Completion Of Program

Participants must sign in/out each day and be in attendance for the entirety of the conference to be eligible for continuing education credit.

Instructional Methods

PowerPoint presentations and case studies will be used in program.

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