ORIGINAL REPORTING: A Manual For Distributed Resource Value Sparks Debate
NARUC rate design manual reignites debate over cost shift, value of solar; A new guidebook for state regulators runs into familiar contentions among utilities and the solar sector
Herman K. Trabish, August 4, 2016 (Utility Dive)
Editor’s Note: Since this story ran, the debate about the perceived cost shift caused by distributed resources has shifted to many of rate design questions raised in the manual the story describes.
Traditional utility and regulatory models are under pressure from the growth of distributed energy resources (DER), reports the Manual on Distributed Energy Resources Compensation, commissioned by the National Association of Regulatory Utility Commissioners (NARUC). New investments, new ways of allowing utilities to recover their costs, and new understandings of customer demand will be necessary to meet the challenge. It brought renewed attention to the question of the percieved cost shift (or cross-subsidy) from customers with distributed generation (DG) to those without. Utilities say customers with rooftop solar and other DG often do not pay their fair share for grid upkeep, while solar companies say their systems provide grid benefits utilities do not recognize.
Confronted with that question, general agreement on the approach of the NARUC manual turned to disagreement. DER are “turning the traditional model upside down by trending away from large, centralized generation connected to the interstate bulk transmission system to building and integrating new resources at the distribution level,” the manual begins. It defines DER as any resource "sited close to customers that can provide all or some of their immediate power needs and can also be used by the system to either reduce demand (such as energy efficiency) or increase supply to satisfy the energy or ancillary service needs of the distribution grid." The debates sparked by the economic pressures DER puts on utilities and their rate structures are some of “the most divisive issues facing regulators today,” the manual notes… click here for more