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Net Metering 2.0 and Utility Solar Rates

Event Description and Agenda:

Net metering was a simple and appropriate rate mechanism when the solar industry was in its infancy and consumer-installed PV panels were relatively uncommon. It was simple for consumers and small business to understand the value proposition and simple for utilities to integrate the handful of customers in their service areas. But as policies and incentives enticed increasing numbers of home owners and businesses to adopt solar, the growing penetration of these resources onto the grid has resulted in some uncomfortable balancing acts among utilities, customers, regulators, solar providers and other stakeholders important to the process.

The question for utilities is no longer if solar penetration will become significant enough to revise their business model. Rather, it is how to facilitate this expanding consumer adoption and development of solar, while fairly recovering the costs associated with the grid or system adjustments required to absorb these distributed solar generation resources. The most widely-adopted remedy for addressing this economic balancing act continues to be net-metering. Though this seemingly revenue-neutral mechanism has proven to be a "winning" regulatory approach nationwide for consumer and many solar development interests, it has not necessarily been a perfect solution for utilities or all ratepayers. The consequences of allowing the consumer's meter to run "backwards" and sell energy back to the grid has brought on two gripes: 1) that the revenue of utilities and load-serving entities is being reduced, while the unrecoverable costs to service this non-traditional form of generation are multiplied, and 2) there is a growing recognition that this can cause some economic inequities among ratepayers. Alternative measures for allocating the costs and benefits equitably among the parties involved — such as, "buy all- sell all" and value of solar tariff — are now receiving greater attention. These and other alternatives have been the subject for multiple studies and vigorous debate.

The objective of this conference is to explore rate structures that facilitate meeting solar development goals for consumer adoption, while striking an optimum balance among all solar development stakeholders, including utilities and their business models. In considering these objectives, the program will bring together utilities, solar energy developers, regulators, consumer interests and other interested parties to examine the array of options for solar policy, rate recovery and incentive structures. It will also consider how various jurisdictions are working through these challenges and what the results have been or are projected to be.


Monday, January 26, 2015

12:30 - 1:00 p.m. :: Registration

Solar Rate Policy Context

1:00 - 2:00 p.m. :: Survey of "Retail Solar" Drivers, Instruments and NEM Cost Studies

  • Summary of North American solar-related measures
  • Federal policies
    • PURPA
  • States' policies
    • Sources
      • Legislature
      • PUC
    • Types
      • RPS/DG mandates
      • Economic development
      • Rate-based measures and tariffs
  • Federal and state fiscal measures
  • Bulk power electricity market system measures
  • History of net metering mechanisms
  • Evaluating the current and potential future methods, data, and tools that could be used to calculate DGPV (distributed generation photovoltaic) benefits and costs at various levels of sophistication and effort

Jason Keyes, Counsel to IREC & Partner, Keyes, Fox & Wiedman LLP

Virginia Lacy, Manager - Electricity Practice. Rocky Mountain Institute (Invited)

Lori Bird, Senior Analyst, National Renewable Energy Laboratory (NREL)

2:00 - 3:00 p.m. :: Tracking "In-Action" Proceedings

  • Recap of States involved
  • Types
  • Significance
  • Timelines

Karl Rabago, Executive Director, Pace Energy & Climate Center

3:00 - 3:15 p.m. :: Afternoon Break

3:15 - 4:15 p.m. :: Tax Implications on Solar and Rates

Tax incentives have long been used to drive public policy in renewable energy and are generally acknowledged as an important driver for solar development. The ITC is scheduled to drop from 30% to 10% in a year's time (barring legislative intervention) and, if the wind industry is an indicator, is likely to influence the number and scope of solar projects, at least in the short term. Also, the IRS was recently asked to review "Value of Solar Tariffs" with regard to tax and income liability, and there is some concern that a ruling could impact net metering structures, the de facto rate mechanism applied to most retail solar customers. This session will explore the nuances of these tax questions and possible tax strategies available to utilities based on the resolution of these questions.

  • Investment Tax Credit (ITC) reduction from 30% to 10% in 2016
    • Status of tax credit extenders
    • Proposed legislation that "levels the playing field"
    • Effect of "in service"/"construction start" dates
    • Long term effect of credit staying at 10% after 2016
  • IRS review of VOST rates on owner eligibility for ITC
    • TASC/Skadden view that FIT or "buy all-sell all" invalidates section 25D eligibility for ITC
    • Can the solar owner claim business ITC?
  • IRS review of VOST rates on owner tax liability
    • Is this gross taxable income?
  • Implications of IRS rulings on VOST & Net Metering
    • If the IRS rules in the affirmative, does net metering fall under the same rules?

Bradley Seltzer, Tax Principal, Deloitte Tax LLP

4:15 - 5:15 p.m. :: Utility / Solar Customer Business Relationship — Solar Done Right?

A range of distributed energy resource models are emerging as the price of distributed, low carbon resources continue to decline and as customers express an interest in having more control over their energy provision options. Utility ownership, customer ownership, third-party ownership and shared ownership alternatives are emerging. The nature of ownership and control affects the nature of the contractual terms. This session will leverage RAP's work on "Designing Distributed Generation Tariffs Well," "Regulatory Considerations Associated with the Expanded Adoption of Distributed Solar," (joint with NREL), and 2014 work in CA, HI and NY. Garnering the growing benefits of distributed resources requires stable contractual structures with sustainable economics. This presentation will consider three ownership alternatives plus leasing and will address how pricing, tariff design and rate design need to be aligned to render fair compensation in each scenario.

  • Build-own-operate
  • Utility-led community solar
  • Utility-private partnerships
  • Investment in 3rd party leasing companies

Eran Mahrer, Director, First Solar, Inc.

Terang Kim, Project Manager -Strategic Planning, Southern California Edison (SCE)


Tuesday, January 27, 2015

7:30 - 8:00 a.m. :: Continental Breakfast

8:00 - 9:30 a.m. :: Integrating Solar into the Grid Without Losing Your Ass(ets)

  • Hard lessons learned in the real-world laboratory
    • Germany
    • Hawaii
    • Sacramento
    • San Diego
  • Elements of solar costs to utilities and recovery
  • Improving the grid in conjunction with solar
  • Recovery as part of grid stability mandate
  • Role of storage on rates and recovery
  • Utility-designated solar zones (SZs)
  • Relationship to customer equity

Barbara Lockwood, General Manager of Energy Innovation, APS

The Hon. Tim Echols, Commissioner, GA Public Utilities Commission

Joseph Daniel, Associate, Synapse Energy Economics

9:30 - 9:45 a.m. :: Morning Break

Solar Rate Perspectives

9:45 - 10:30 a.m. :: The Customer Perspective

  • "Blended Rates"
  •  "Solar Friendly Rates"
  • TR08 option "R"

Michael Ware, Vice President Solar Service, Ecomotion

10:30 - 11:15 a.m. :: The Utility Perspective

  • Utility economies and effects on rates
  • MUNIs
  • IOUs
  • Merchant producers
  • Retail electricity service provider

Bruce Chapman, Senior Economist, Christensen & Associates

11:15 a.m. - 12:00 p.m. :: The Solar Advocates Perspective

  • Community solar
  • Solar-Friendly rate design
  • Solar advocates experience

Susannah Churchill, Regional Director - West Coast, Vote Solar

12:00 - 1:00 p.m. :: Group Luncheon

Solar Utility Rate Implementation Case Studies

1:00 - 1:45 p.m. :: Same Analysis / Different Results — Weighing Nevada and California

Doesn't it stand to reason that if the same company conducts two studies using more or less the same analysis that it will come up with comparable conclusions and recommendations? Yet, that's not what happened when E3 was asked to conduct separate net energy metering impact evaluation studies of cost-benefit causes and effects — applying the same methodology — for both the California and Nevada Public Utilities Commissions. This case study will assess why similar studies resulted in very different implementation path recommendations for the two states.

Jenya Kahn-Lang, Senior Associate, Energy + Environmental Economics (E3)

1:45 - 2:30 p.m. :: Similar Markets / Different Approaches — Austin Energy and CPS Energy

Two municipal utilities, separated by a mere 80 miles and operating under the same state regulatory regime, came up with two very different ways of pricing their customers' solar development. This presentation will compare and contrast the approaches taken by the two utilities and why they are pursuing different pricing solutions.

Danielle Murray, Solar Manager, Austin Energy

2:30 - 2:45 p.m. :: Afternoon Break

2:45 - 3:30 p.m. :: Same Company / Different Approaches — Xcel Energy in MN and CO

Investor owned utility, Xcel Energy, operates in a number of states. I In a couple of those states there are similar net metering regulations, yet Xcel found that two very different approaches were needed in the solar program rate structures proposed for implementation. This case study will review those different approaches to rate design, and why the company has proceeded in that manner.

Beth Chacon, Environmental Policy Manager, Xcel Energy

3:30 - 4:15 p.m. :: Changing the NEM Paradigm — We Energies

Wisconsin's largest utility has had a net energy metering rate program in effect for many years. Recently, though, it has developed a new approach now under review in a pending rate case that would incorporate the following three components:

  • Proposals for customer-owned generation
  • Time-of-Use (TOU) rates
  • Facilities charges/cost of grid services

This segment will examine how the company assessed its need for an adjustment to its legacy pricing structure and why it selected the components it is proposing for adoption by the WPSC.

Eric Rogers, Regulatory Affairs Team Leader, We Energies

4:15 - 5:00 p.m. :: The Future-Casting of Net Metering and Rates

What does the future hold for NEM, VOST and other solar rate mechanisms? The panel will discuss trends and possible outcomes while interacting with the attendees for their viewpoints.

  • Net Metering 2.0 and beyond
  • Final destination or waypoint?
  • SEPA's 51st State
  • Envisioning the utilities, rates and regulations of the future
  • Innovative rate-making options to prevent cross-subsidization and keep utilities whole:
    • Value of solar tariffs vs. solar net metering
    • Demand charges for utilities with smart meters
    • Minimum bills (as opposed to higher fixed charges)
    • Decoupling
    • Performance incentive mechanisms (being discussed in Hawaii, NY, UK)

Joseph Daniel, Associate, Synapse Energy Economics, Inc.

James Fine, Senior Economist, Environmental Defense Fund

Susannah Churchill, Regional Director - West Coast, Vote Solar

Jenya Kahn-Lang, Associate, Energy + Environmental Economics (E3)

Julia Hamm, President & CEO, Solar Electric Power Association (SEPA)

5:00 p.m. :: Conference Adjourns


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