Title
Draft Resolution - Approval to Amend Tariff and Business Rules - Interconnected Generation 50kW and Below - N Mack/D Thompson
Other Info
Submitted By: Audri Nelson on behalf of Markets
Department: Markets
Financial Impact and Cost/Benefit Considerations: Expenditure of Cooperative funds is not anticipated to be impacted; expenditures of staff time is not anticipated to be impacted.
Recommended rate changes are to address the under-collection from interconnected Members with Distributed Generation (DG) installations of 50 kW and below.
Discussion
The Cooperative’s Tariff and Business Rules currently defines “Distributed Generation (DG)” as an electrical generating facility located at a Member's service location, which may be connected in parallel to the Cooperative’s delivery system. In addition, the Tariff and Business Rules refers to “Interconnection” as the physical connection of a DG facility to the utility system in accordance with the requirements of the Interconnection Policy of the Cooperative.
In April 2016, the PEC Board approved Interconnect Net Metering (currently found in Sections 500.1.13 and 500.3.1 of the Tariff and Business Rules as to a Net Energy Credit and Interconnection Net Metering Rate) for distributed generation systems at 50 kW AC and below.
The Cooperative, pursuant to its Rate Policy, conducted its 2020 Cost of Service Study which determined that the Cooperative is under-collecting from current DG Members through the net metering aspect of the rate design. The under-collection mainly from the rate component of these interconnection rates that is allocated to maintain the Cooperative’s distribution/delivery system.
In December 2020, the Board of Directors approved rate design changes to the Distributed Generation Interconnection Rates in the Tariff and Business, including as to the Net Energy Credit Rate and Wholesale Energy Rate and as to Interconnect Net Metering Rate and the Interconnect Wholesale Energy Rate The proposed rates were intended to recover the actual cost to serve including the distribution/delivery system investment, as well as operations and maintenance charges while allowing interconnected Members to received accurate price signals and receive the savings from avoided costs to the Cooperative.
In response to members’ comments regarding changes to the distributed generation process and fees, at the April 2021 Board meeting, the Board directed “that no changes be made at this time to the interconnect rates, and directed PEC to hold at least three virtual town hall meetings with members for member input through the July Board meeting, and to further research other possible changes to ensure an equitable and sustainable rate, and that a final proposal be presented at the July 2021 Board meeting.”
PEC held three virtual town hall meetings with members in May, June and July 2021, met with solar installers and other stakeholders, researched other possible rate changes to ensure an equitable and sustainable rate, and received and provided significant feedback to the PEC Board of Directors.
In July 2021, the Board of Directors rescinded the previously approved Distributed Generation Interconnection Rates for DG facilities of 50 KW and below and required PEC staff to provide, as part of the 2022 Rate Plan a recommendation for updates to the current Interconnect Net Metering rate class. The recommendations must be guided by: (1) the Rate Policy objectives of the Cooperative, including equitable rates, sufficient cost recovery, sending accurate price signals, and stability in rates and (2) equity so that costs for the distribution system are paid in a just, reasonable and non-discriminatory manner by all members and with equity as to the Net Energy Credit rate (interconnect energy buy-back rate).
In August 2021, PEC released a public RFP for a Value of Solar study. The analysis, conducted by GDS and Associates, determined the direct avoided cost from energy generated by DG members with installations 50 kW and below.
PEC staff used the calculated value from the Value of Solar Study as well as the direction from the Board in Resolution #2021-312 to design the proposed rate for all members with interconnected DG.
Tariff amendments and effective dates shown below -
• Rates (charges, rate schedules, and fees), Section 500 - Effective March 1, 2022
• Language will be placed in a blue box with effective date shown in Tariff
• Section 500.1.13 - Net Energy Credit will be replaced for the Sustainable Power Credit
• Section 500.3.1 - Interconnect Net Metering Rate will be replaced by the Interconnect Rate
Body
BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE COOPERATIVE that the Cooperative approves the amendments to the Tariff and Business Rules as attached hereto with such changes, if any, as were approved by the Board, to become effective upon Board approval, unless otherwise specified in the Tariff and Business Rules; and
BE IT FURTHER RESOLVED that the Chief Executive Officer, or designee, is authorized to take all such actions as needed to implement this resolution.