Title
Resolution - Consideration of Public Utility Regulatory Policies Act (PURPA) Amendments - D Thompson
Other Info
Submitted By: David Thompson
Department: Markets
Financial Impact and Cost/Benefit Considerations: None
Discussion
The PEC Board of Directors has exclusive jurisdiction to set all terms of access, conditions, and rates applicable to the services provided by the Cooperative other than as provided by Texas state law. The federal Public Utility Regulatory Policies Act of 1978 (PURPA) as amended in 2005, 2007, and 2021 also dictates that nonregulated electric utilities, which includes PEC, consider and determine whether to implement ratemaking standards as described in PURPA (16 USC Section 2621) including:
(1) Cost of service;
(2) Declining block rates;
(3) Time-of-day rates;
(4) Seasonal rates;
(5) Interruptible rates;
(6) Load management techniques;
(7) Integrated resource planning;
(8) Investment in conservation and demand management;
(9) Energy efficiency investment in power generation and supply;
(10) Consideration of effects of wholesale power purchases on utility cost of capital; effects of leveraged capital structures on the reliability of wholesale power suppliers; and assurance of adequate fuel supplies.
2005 amendments:
(11) Net metering;
(12) Fuel sources;
(13) Fossil fuel generation efficiency;
(14) Time-based metering and communications;
(15) Interconnection
2007 amendments:
(16) Integrated resource planning
(17) Rate design modifications to promote energy efficiency investments;
(18) Consideration of smart grid investments; and
(19) Smart grid information.
2021 amendments:
(20) Demand-response practices; and
(21) Electric vehicle charging programs.
The 2021 amendments are required to be considered by November 15, 2023 (16 USC 2622). Consideration of such 2021 amendments began by November 15, 2022 (16 USC 2622).
PEC adopted various Board resolutions in 2007, 2008, and 2009 as to requirements found within Section 2621 of PURPA.
In July 2007, the Board considered certain PURPA standards and determined PEC would not adopt PURPA standards pertaining to the following: 1) Net Metering Standard, 2) Fuel Sources Standard, 3) Fossil Fuel Generation Technology Standard, 4) Time-Based Metering and Communications Standard, and 5) the Interconnection Standard.
In October 2008, the Board required a public hearing to consider and determine whether to implement additional ratemaking standards addressing energy efficiency, integrated resource planning, rate design modifications to promote energy efficiency investments, consideration of smart grid investments, and access to smart grid information.
In March 2009, the Board adopted modified PURPA standards as to: 1) integrating energy efficiency resources into resource planning and making cost-effective energy efficiency a priority resource; 2) modifying rate designs to promote energy efficiency investments; 3) assessing investments in smart grid technologies before investing in non-advanced technologies; and 4) making smart grid information available to members.
In October 2019, the Cooperative formally declared its positions on the following PURPA standards during the Cooperative’s Rate Policy review:
(1) Cost of service;
(2) Declining block rates;
(3) Time-of-day rates;
(4) Seasonal rates;
(5) Interruptible rates;
(6) Load management techniques;
(7) Integrated resource planning;
(8) Investment in conservation and demand management;
(9) Energy efficiency investment in power generation and supply; and
(10) Consideration of effects of wholesale power purchases on utility cost of capital; effects of leveraged capital structures on the reliability of wholesale power suppliers and assurance of adequate fuel supplies.
In summary, the Cooperative previously considered and adopted resolutions in 2007, 2009, and 2019 as to PURPA Standards 16 USC Section 2621(d)(1), (d)(2), (d)(3), (d)(4), (d)(5), (d)(6), (d)(7), (d)(8), (d)(9), (d)(10), (d)(11), (d)(12), (d)(13), (d)(14), (d)(15), (d)(16), (d)(17), (d)(18) and (d)(19).
With respect to the 2021 PURPA amendments that are required to be considered by the Board, the two amendments are addressed as follows:
1. 16 USC Section 2621(d)(20) - Demand-response practices
(A) In general
Each electric utility shall promote the use of demand-response and demand flexibility practices by commercial, residential, and industrial consumers to reduce electricity consumption during periods of unusually high demand.
(B) Rate recovery
(i) In general
Each State regulatory authority shall consider establishing rate mechanisms allowing an electric utility with respect to which the State regulatory authority has ratemaking authority to timely recover the costs of promoting demand-response and demand flexibility practices in accordance with [16 USC Section 2621(d)(20)(A)].
(ii) Nonregulated electric utilities
A nonregulated electric utility may establish rate mechanisms for the timely recovery of the costs of promoting demand-response and demand flexibility practices in accordance with [16 USC Section 2621(d)(20)(A)].
• The Cooperative has considered and determined it is appropriate to continue with already implemented programs that promote demand response practices in the standard established in PURPA (16 USC Section 2621(d)(20). The PEC Board previously established several programs that are in alignment with the Cooperative’s objectives of equitable rates, accurate price signals, stability, and cost recovery. Examples include the implemented Time of Use Rates in February 2018, and the adopted demand-based rates for transmission costs for the Large Power Rate Class in 2021. Additionally, the Cooperative adopted solely demand-based rates for distribution costs for the Large Power Rate Class in 2021. The Cooperative also promotes demand response through its Power Rush Hour program that started in 2011 as “Beat the Peak” and was rebranded to “Power Rush Hour” in 2017.
2. 16 USC Section 2621(d)(21) - Electric vehicle charging programs
Each State shall consider measures to promote greater electrification of the transportation sector, including the establishment of rates that-
(A)promote affordable and equitable electric vehicle charging options for residential, commercial, and public electric vehicle charging infrastructure;
(B)improve the customer experience associated with electric vehicle charging, including by reducing charging times for light-, medium-, and heavy-duty vehicles;
(C)accelerate third-party investment in electric vehicle charging for light-, medium-, and heavy-duty vehicles; and
(D)appropriately recover the marginal costs of delivering electricity to electric vehicles and electric vehicle charging infrastructure.
As stated previously, PEC’s obligation to consider this standard arises from 16 USC 2621(a) which requires “. . . each nonregulated electric utility [to] consider each standard established by subsection (d) and make a determination concerning whether or not it is appropriate to implement such standard to carry out the purposes of this chapter.”
16 USC 2621(d)(21), however, directs each “State” to consider this standard pertaining to electric vehicle charging programs rather than “nonregulated electric utilities.” PEC has considered section (d)(21) and determined that because this standard is addressed to the State, and not nonregulated electric utilities, it is not appropriate for PEC to implement 16 USC 2621(d)(21)
With respect to the consideration of these PURPA amendments, the Cooperative posted notice with respect to its Board meetings in which this topic was to be discussed. The Cooperative provides members the opportunity to express their views in person at open meetings held each month. Furthermore, members are encouraged to submit comments on all rate related matters to staff or the Board of Directors. This does not preclude PEC from adopting programs in the future that are beneficial to the membership.
Body
now, therefore, be it RESOLVED BY THE BOARD OF DIRECTORS OF PEDERNALES ELECTRIC COOPERATIVE, INC. that the Cooperative acknowledges that it has considered all components of PURPA, as amended (including, 16 USC Sections 2621(d)(20) and (d)(21);
BE IT FURTHER RESOLVED BY THE BOARD OF DIRECTORS OF THE COOPERATIVE after provision of notice and consideration at an open meeting, consistent with the requirements of 16 USC Section 2621, 2622, and 2631, the Cooperative has considered and determined it is appropriate to implement or not implement the following PURPA standards:
• The Cooperative has considered and determined it is appropriate to continue with already implemented programs that promote demand response practices in the standard established in PURPA (16 U.S.C. § 2621(d)(20)) as it is in alignment with the Cooperative’s objectives of equitable rates, accurate price signals, stability, and cost recovery.
• The Cooperative has considered and determined it is appropriate not to implement the electric vehicle charging programs standard established in PURPA 16 USC § 2621(d)(21) as the State is directed to consider measures to promote greater electrification of the transportation sector.
BE IT FURTHER RESOLVED BY THE BOARD OF DIRECTORS OF THE COOPERATIVE, the Cooperative reserves the right to re-consider the adoption and implementation of any of these federal standards if it deems it beneficial and in alignment with the Cooperative’s objectives, its Rate Policy or any other Board-approved Policy; and
BE IT FURTHER RESOLVED BY THE BOARD OF DIRECTORS OF THE COOPERATIVE, that the CEO, or designee, is authorized to take all such other actions necessary to implement this resolution.