TODAY’S STUDY: The Policy Work On Solar Now
50 States of Solar Q3 2018 Quarterly Report
October 24, 2018 (North Carolina Clean Energy Technology Center)
OVERVIEW OF Q3 2018 POLICY ACTION
In the third quarter of 2018, 45 states plus DC took a total of 157 actions related to distributed solar policy and rate design (Figure 1). Table 1 provides a summary of state actions related to DG compensation, rate design, and solar ownership during Q3 2018. Of the 157 actions catalogued, the most common were related to DG compensation rules (44), followed by residential fixed charge and minimum bill increases (42) and community solar (28).
TOP FIVE SOLAR POLICY DEVELOPMENTS OF Q3 2018
Five of the quarter’s top policy developments are highlighted below.
Kansas Corporation Commission Approves Demand Charge for Westar Residential Distributed Generation Customers
Kansas regulators approved Westar Energy’s proposed mandatory residential demand charge for distributed generation customers in late September 2018. The decision follows a 2017 Commission order finding that additional fees for customer-generators are appropriate. The approved charge is applicable to demand during system peak hours and varies seasonally.
Michigan Utilities File Net Metering Successor Implementation Proposals
Two Michigan utilities – DTE Energy and Upper Peninsula Power Company (UPPCO) – proposed new distributed generation customer tariffs as part of general rate cases filed during Q3 2018. The proposals implement a net metering successor decision made by the Public Service Commission in April, moving to a net billing structure that credits customers at either the power supply rate or locational marginal price for exported energy. Both utilities also proposed system access contributions based on the capacity of the customer’s distributed generation system.
Short-Term Net Metering Compromise Reached in South Carolina
Early in Q3 2018, Duke Energy Carolinas announced that it had reached its aggregate cap on net metering in South Carolina. New customer-generators would no longer have the option of net metering, but would be able to participate in a buy-all, sell-all program, receiving avoided cost rate compensation for production. Later in the quarter, the utility and stakeholders reached an agreement to continue offering net metering until March 2019.
New Mexico Regulators End Standby Charge for Distributed Generation Customers
In September 2018, the New Mexico Public Regulation Commission approved the Hearing Officer’s recommendation to end Xcel Energy’s standby charge for residential and small commercial customers with distributed generation. Xcel had proposed an increase in the charge as part of a general rate case, but the Hearing Officer found that the charge was not supported. The Commission plans to open a rulemaking to address standby charge issues.
Arizona Regulators Deny Tucson Electric Power and UNS Distributed Generation Rate Design Proposal, Approve Net Billing Credit Rates
In a September 2018 decision, the Arizona Corporation Commission approved initial distributed generation export credit rates for Tucson Electric Power (9.64 cents/kWh) and UNS Electric (11.5 cents/kWh), while denying the utilities’ proposed demand charge and system capacity-based charge. Regulators found that the cost of service study approach was flawed and directed the utilities to file a new study.
THE BIG PICTURE: INSIGHTS FROM Q3 2018
Resurgence in Proposals for Distributed Generation Customer Fees
Activity related to additional fees, such as demand charges, for distributed generation (DG) customers slowed during 2017 and early 2018, but is now quickly picking back up. In Q3 2018, three utilities – DTE Energy (MI), Upper Peninsula Power Company (MI), and NorthWestern Energy (MT) – proposed additional fees for DG customers, while regulators in Kansas approved Westar Energy’s proposed demand charge for residential DG customers. In West Virginia, proposed revisions to the state’s net metering rules potentially open the door to additional fees by allowing charges for the “incremental cost of interconnection” of customergenerators. In Massachusetts, a demand charge approved earlier in 2018 was overturned by legislation enacted in Q3 2018; however, the legislation only establishes new requirements for the design of demand charges, and does not disallow them.
Grid Planning and DER Compensation Efforts Converging on Locational Value
Distribution system planning and solar compensation discussions are growing closer together, as states look to grid planning processes to provide greater information on the locational value that distributed energy resources (DERs) provide. The Public Utilities Commission of Nevada approved distributed resource planning rules in Q3 2018, requiring an evaluation of the locational benefits and costs of DERs. Proposed distribution system planning rules in Missouri and Washington both consider the locational value of DERs, with Washington’s draft rules explicitly calling for tariffs and rate designs that compensate customers for the value of their DERs. The New Hampshire Public Utilities Commission is planning to conduct a distribution locational value study to inform net metering successor discussions, and Illinois’ NextGrid draft working group report addresses the use of integrated distribution planning to identify the locational value of DERs.
States and Utilities Considering Meter Cost Allocation
Several states and utilities are considering whether the customer or the utility should bear the cost of installing additional meters, such as a bidirectional meter for net metering or a separate production meter. Proposed net metering rule revisions in West Virginia would change the financial responsibility for a bidirectional meter from the utility to the customer. Meanwhile, a settlement in Duquesne Light Company’s general rate case in Pennsylvania requires the installation of production meters for new net metering customers, to be paid for by the utility. An Arizona decision approves a monthly meter fee for DG customers of Tucson Electric Power and UNS Electric, and in Maine, regulators recently determined that customers are not responsible for the cost of the production meter necessary to comply with the state’s new DG compensation rules.