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Line Siting Committee
Arizona Corporation Commission 1200 W. Washington Street Phoenix, AZ 85007-2996 RE: Obed Meadows CEC, Docket No. L-21254A-23-0184-00222 Chairman and Committee Members, The Arizona Solar Energy Industries Association (AriSEIA) submits this letter in opposition to requiring a System Impact Study (SIS) in advance of obtaining a Certificate of Environmental Compatibility (CEC). The legal briefs of the applicant, Arizona Public Service (APS), and Tucson Electric Power (TEP) all agree that such a requirement is outside the authority of the Line Siting Committee. Further, such a requirement would needlessly delay gen-tie applications. The legislature via HB 2496 and the Commission via dockets RLS-00000A-23-0251 and ALS-00000A-22-0320 and the Governor’s Office via signature of HB 2496, have all indicated that the goal of the State of Arizona is to expedite these renewable energy projects, not add additional bureaucratic hurdles and delay. The Line Siting Committee has been issuing CECs without SISs and it is not clear why that would need to change now. Testimony in this case, as well as the legal brief of APS, make clear that the absence of a SIS is not the fault of the applicant. There is a backlog of these studies, which is outside the control of renewable energy developers. Transmission Providers throughout the state of Arizona, including the state’s two largest utilities: APS and Salt River Project (SRP), are currently working through significant queue reforms to address interconnection backlogs. Proposed queue reforms will materially impact the timeline of interconnection studies, the requirements for projects to enter and stay in the interconnection queue, and the commercial expectations of projects when bidding into Request for Proposals (RFPs). Such queue reform is expected to introduce withdrawal penalties that will fundamentally change the way a project is developed, creating a new model whereby a project is incentivized to first acquire all its permits (including a CEC), obtain off-take, and then enter the interconnection queue. Having a SIS prior to filing for a CEC would be counter to the intent of queue reform, and a third-party power flow study would be expensive and redundant to already required utility interconnection studies. While the timeline around queue reform implementation is uncertain, FERC Order 2023 indicates an effective date is likely by the end of 2023 or in early 2024. AriSEIA strongly advocates that the Line Siting Committee adhere to the purpose and intent of the Line Siting statute (A.R.S. 40-360.06); its prior decisions on applications that did not have a SIS; the clear intent of the legislature, Governor’s Office, and Commission to reduce Line Siting delay; and the Federal Energy Regulatory Commission’s (FERC) queue reform process and not require a SIS prior to obtaining a CEC. A requirement to have a SIS may have unintended consequences that limit the ability for projects to reach operations in a timely manner. Sincerely, /s/ Autumn T. Johnson Executive Director AriSEIA (520) 240-4757 autumn@ariseia.org
0 Comments
Arizona Corporation Commission
1200 W. Washington Street Phoenix, AZ 85007 Re: Application of APS (Docket No. E-01345A-23-0110), TEP (Docket No. E-01933A-23-0108), and UNSE (Docket No. E-04204A-23-0109) for Approval of Revisions to Resource Comparison Proxy Chairman and Commissioners, The Arizona Solar Energy Industries Association (AriSEIA) previously filed comments in the Arizona Public Service (APS) and Tucson Electric Power (TEP) dockets in this matter on August 4th.[1] That filing covered the history of the Resource Comparison Proxy (RCP), the dramatic increase to consumers for electricity, and the economic impact of high interest rates paired with a declining RCP rate on Arizona’s solar industry. We urge you not to decrease the RCP rate as proposed by Commissioner Myers’ Proposed Amendments No. 1 in each of the above referenced dockets.[2] This Commission has stated multiple times that it supports “regulatory certainty.” On January 3, 2017 the Commission issued Order 75859 in Docket No. E-00000J-14-0023, the Commission’s Investigation of the Value and Cost of Distributed Generation. That matter stemmed from a 2013 APS filing on net metering.[3] It then created a generic docket, known as the value of solar docket, that commenced on January 27, 2014 and ran for nearly two years before an evidentiary hearing was scheduled. The evidentiary hearing ran for two months in the spring of 2016 with more than eighteen parties participating. A 4-1 decision of an entirely republican Commission was issued in January 2017, three years after the docket was opened. Commissioner Burns was the lone dissenter. Implementation of the specific RCP methodologies was then resolved in subsequent rate cases for each utility. Decision 75859 states, There were also concerns raised in regard to the possibility of dramatic changes in the export rate and resulting uncertainty. However, to allow the export rate developed using this methodology to change gradually, it will be updated annually after it is initially set in a rate case proceeding or separate rate design phase. At the time that the initial DG export rate is set, a Plan of Administration that provides the mechanism for annual modifications to that initial rate also will be adopted. The annual updates accomplished between rate cases should be formulaic exercises where the Resource Comparison Proxy Methodology and the Avoided Cost Methodology established in the rate case is updated; however the reduction to the compensation rate under the RCP methodology shall not exceed ten percent per year.[4] Further, while the Commission outlined directions for calculating the RCP in Decision 75859, the Plan of Administration for each utility’s RCP rate requires the utility to submit an updated RCP calculation annually for Commission approval and specifies that the RCP “may not be reduced by more than 10% each year.”[5] The table below highlights the proposed RCP stepdown as recommended by Commission Staff versus the Myers amendments. These reductions run contrary to Decision 75859 and the Plans of Administration for each utility. As such, they do not adhere to the Commission’s own stated goal of “regulatory certainty” and also have not been noticed in accordance with A.R.S. 40-252.[6] Regulatory certainty should apply to all matters before the Commission, not only select matters. Further, it is likely a due process violation to take an RCP methodology from a multi-year process and modify it in an Open Meeting with no testimony, witnesses, or evidence and only two days’ notice, which has the potential to result in litigation. Any deviation greater than 10% from the established RCP methodology should be determined in an evidentiary hearing. AriSEIA’s previous filing highlighted the economic development importance of the solar industry to Arizona. There are more than 300 solar companies operating in Arizona. These companies employ more than 8,000 people in Arizona alone and have contributed $16.5 billion dollars to the state, with $1.5 billion invested just last year.[7] Declines in the solar industry will have ripple effects throughout the economy impacting many other high quality, blue collar jobs, such as in energy efficiency, HVAC, roofing, windows, and insulation. There is no evidence to support Commissioner Myers’ assertion that decreasing the RCP rate by 37-56% will not have a catastrophic impact on an important industry in one of the sunniest states in the country. A table reflecting an increase in DG adoption despite a 10% stepdown in prior years does not mean that increases will continue in the future with a 10% stepdown and certainly not with a stepdown 3-4 times prior decreases. Further, there is no evidence in this docket that the RCP has not dampened growth of this important industry. Because installation rates continue to creep up in TEP and UNSE’s territories does not mean they are not impacted, it simply means the industry has not completely stagnated due to burdensome regulation. APS’ DG penetration is better than TEP and UNSE’s but is still only looking at 1% growth annually since the RCP framework was adopted. Finally, AriSEIA does not agree that the RCP is a “subsidization.” The utilities pay for the power produced that benefits the grid. That power has a number of benefits that are different than utility scale solar. DG does not require new transmission; lengthy Line Siting and zoning proceedings; major land use implications that impact other industries, such as agriculture; or other major infrastructure improvements. The systems are entirely paid for by individual consumers. They are only compensated for the power they provide to the utility that benefits the entire grid, improves resiliency, and can be utilized with storage in demand response programs. If the Commission wishes to reevaluate the value of DG, an evidentiary hearing, not an open meeting, is the appropriate place to do so. Also, both the TEP and APS rate cases have also reflected numerous incidences of the utilities purchasing wholesale power above the RCP rate. Therefore, it is incorrect to assume that DG is somehow above the market rate for power. AriSEIA opposes the Myers Amendments 1 and continues to advocate for an RCP stepdown less than 10%, which is permissible under Order 75859 and the Plans of Administration. Respectfully, /s/ Autumn T. Johnson Executive Director AriSEIA (520) 240-4757 autumn@ariseia.org [1] AriSEIA, Solar United Neighbors, and Vote Solar Joint Letter, Dockets E-01345A-23-0110 and E-01933A-23-0108, filed August 4, 2023, available here https://docket.images.azcc.gov/E000029205.pdf?i=1692739207146. [2] Commissioner Myers Proposed Amendments 1, filed August 22, 2023, in Docket No. E-01933A-23-0108, available here https://docket.images.azcc.gov/E000029934.pdf; Docket No. E-01345A-23-0110, available here https://docket.images.azcc.gov/E000029933.pdf; and Docket No. E-04204A-23-0109, available here https://docket.images.azcc.gov/E000029935.pdf. [3] Arizona Public Service, In the Matter of the Application of the APS for Approval of Net Metering Cost Shift Solution, Docket No. E-01345A-13-0248, available here https://edocket.azcc.gov/search/docket-search/item-detail/18039. [4] Arizona Corporation Commission, Order 75859, Page 151, Line 24 through Page 152, Line 4 (emphasis added), Filed January 3, 2017, available here https://docket.images.azcc.gov/0000176114.pdf?i=1692725715837. [5] See Appendix H, Arizona Corporation Commission, Decision No. 76295, (Aug. 18, 2017), https://docket.images.azcc.gov/0000182160.pdf?i=1657139837798 (emphasis added). [6] Arizona Revised Statutes, 40-252, available here https://www.azleg.gov/ars/40/00252.htm. [7] Solar Energy Industries Association (SEIA), Arizona Solar Census, Q1 2023, available here https://www.seia.org/sites/default/files/2023-07/Arizona.pdf. Arizona Corporation Commission
1200 W. Washington Street Phoenix, AZ 85007 Re: Application of APS & TEP for Approval of Revisions to Resource Comparison Proxy (Dockets No. E-01345A-23-0110 & E-01933A-23-0108) Chairman and Commissioners, Vote Solar, Solar United Neighbors, and the Arizona Solar Energy Industries Association (AriSEIA) urge you to support Arizona families and businesses who wish to invest in their own energy resources by reducing the proposed step down of Arizona Public Service’s (APS) and Tucson Electric Power’s (TEP) Resource Comparison Proxy (RCP) rate for 2023. The Commission outlined directions for calculating the RCP in Decision 75859, and the Plan of Administration for each utility’s RCP rate requires the utility to submit an updated RCP calculation annually for Commission approval and specifies that the RCP “may not be reduced by more than 10% each year.”[1] The Commission has the opportunity to provide consumers looking to save money on their energy bill with relief by reducing the RCP step down less than 10%. This also provides the Commission with the opportunity to support businesses in Arizona by saving jobs. Arizona families and businesses continue to face unusual economic challenges driving up the cost of basic necessities like electricity. Over the last year, consumers experienced a 6% increase in electricity costs[2] following on the heels of a 12% increase in electricity costs the year prior, the largest 12 month increase in nearly 20 years.[3] Rooftop solar is an important tool that ratepayers can utilize to help reduce their utility bills and increase energy resiliency at their home. As interest rates continue to increase to their highest levels in decades, Arizona families and businesses who must rely on long-term financing to afford the upfront cost of a solar installation may find that going solar is no longer an affordable option. Currently, any homeowner looking to finance rooftop solar will find interest rates as high as 11.99%. This makes solar very unaffordable for any homeowner who cannot buy their system outright. Any further reductions of the RCP will reduce the number of Arizona households who are able to benefit from their private investment in solar. Additionally, further reductions to the RCP will depress solar adoption in Arizona and limit opportunities to leverage distributed energy resources for demand response purposes to benefit grid resiliency. Increasingly, customers who invest in solar choose to pair their installation with distributed battery storage. This creates an opportunity for utilities to leverage customer-sited battery storage as a “virtual power plant” that can help provide reliable power to the grid in the evening hours or during summer heat waves. As investments in solar become less affordable, the growth of other innovative distributed energy resources like battery storage will stagnate. Further, there are more than 300 solar companies operating in Arizona. These companies employ more than 8,000 people in Arizona alone and have contributed $16.5 billion dollars to the state, with $1.5 billion invested just last year.[4] Residential rooftop solar installers are reporting a nearly 20% decline in business year over year since 2022, with nearly 35% declines in revenue. This is likely to result in workforce reductions of 20%. Individual installers are considering job cuts of dozens of jobs with an average, annual pay of $62,500 a year. A decline in solar will also result in declines in the roofing industry and other energy efficiency contractors, such as HVAC, windows, and insulation. High interest rates paired with a declining export rate will exacerbate this problem, resulting in a significant impact to the state’s economy. We respectfully request that the Commission reduce the step downs proposed by APS and TEP, as included within the Staff’s proposed order, in an effort to support families and businesses and provide them with an extended opportunity to capitalize on the power of the sun to reduce their energy bills. Thank you for your consideration of this important matter. Sincerely, Autumn T. Johnson Executive Director AriSEIA autumn@ariSEIA.org Adrian Keller Arizona Program Director Solar United Neighbors (SUN) akeller@solarunitedneighbors.org Kate Bowman Interior West Regulatory Director Vote Solar kbowman@votesolar.org [1] See Appendix H, Arizona Corporation Commission, Decision No. 76295, (Aug. 18, 2017), https://docket.images.azcc.gov/0000182160.pdf?i=1657139837798 (emphasis added). [2] U.S. Bureau of Labor Statistics, Consumer Price Index Summary, (May 2023), https://www.bls.gov/news.release/cpi.nr0.htm. [3] U.S. Bureau of Labor Statistics, Consumer Prices Up 8.6 percent over year ended May 2022, TED: The Economics Daily, (June 14, 2022), https://www.bls.gov/opub/ted/2022/consumer-prices-up-8-6-percent-over-year-ended-may-2022.htm. [4] Solar Energy Industries Association (SEIA), Arizona Solar Census, Q1 2023, available here https://www.seia.org/sites/default/files/2023-07/Arizona.pdf. AriSEIA filed surrebuttal testimony today in the APS rate case at the Arizona Corporation Commission. The testimony focuses in large part on the APS response to our Bring Your Own Device/Virtual Power Plant program, revisions to rates with storage, and the solar cost of service study.
Before the Arizona Corporation Commission
Commissioners Jim O'Connor – CHAIR Lea Márquez Peterson Anna Tovar Kevin Thompson Nick Myers IN THE MATTER OF THE APPLICATION OF ARIZONA PUBLIC SERVICE COMPANY FOR A HEARING TO DETERMINE THE FAIR VALUE OF THE UTILITY PROPERTY OF THE COMPANY FOR RATEMAKING PURPOSES, TO FIX A JUST AND REASONABLE RATE OF RETURN THEREON, AND TO APPROVE RATE SCHEDULES DESIGNED TO DEVELOP SUCH RETURN DOCKET NO. E-01345A-22-0144 SIERRA CLUB, ARIZONA SOLAR ENERGY INDUSTRIES ASSOCIATION (ARISEIA), AND SOLAR ENERGY INDUSTRIES ASSOCIATION (SEIA) JOINDER IN OPPOSITION TO ARIZONA FREE ENTERPRISE CLUB’S MOTION FOR LEAVE TO INTERVENE AND OPPOSITION TO THE MOTION TO RECONSIDER Sierra Club, AriSEIA, and SEIA join in Arizona Public Service’s (APS) opposition to the Motion for Leave to Intervene filed by the Arizona Free Enterprise Club (AFEC), which was filed on June 23, 2023. We also oppose AFEC’s Motion to Reconsider filed July 7, 2023. The Notice of Intent to File a Rate Case was filed on June 1, 2022. APS’ application was filed on October 28, 2022. A Procedural Order setting the intervention deadline as February 16, 2023, was filed on December 2, 2022. On December 8, 2022, the intervention deadline was moved to March 3, 2023. Direct testimony on the revenue requirement was due on June 5, 2023 and direct testimony on rate design was due on June 15, 2023. By that time, approximately 34 entities had been granted intervention in this matter, public comment sessions have been held, and significant media attention has been applied to this proceeding. Additionally, the hearing is already scheduled to run for 5 weeks. AFEC filed for intervention 16 weeks after the intervention deadline, 3 weeks after the revenue requirement testimony filing deadline, and more than a week after the rate design testimony filing deadline. To grant intervention now would prejudice other parties because we will not have adequate time to review and respond to the interests AFEC purports to have in this proceeding without delaying the hearing. Further, discovery is well underway. Allowing intervention at this point creates the potential for voluminous and burdensome discovery requests to any other party in the proceeding only 5 weeks before the discovery deadline. Finally, and most concerning, there is a substantial risk that AFEC’s interests could increase the duration of the hearing, thereby increasing costs to ratepayers, the Commission, and all of the other parties. This is especially concerning to nonprofit organizations with finite resources as additional hearing days can dramatically increase the cost to intervene. AFEC says they “do not intend to provide testimony or cross examine witnesses, our intention with intervention is for the ability to present evidence to support our perspective and ensure the interests of ratepayers are adequately represented.”[1] This fundamentally misunderstands the nature of rate cases. A party cannot introduce “evidence” absent a witness, because due process requires the person sponsoring an exhibit to be cross-examined. If AFEC solely wants to present public comment, they do not need to be an intervenor in the case. Further, there are multiple parties already in the case who represent the interests of ratepayers, such as RUCO and Wildfire. AFEC has not provided any information as to how they are better suited to represent ratepayers than the organizations whose primary function is to do so or how they can possibly “present evidence” without delaying or prolonging the proceeding. AFEC had the same opportunity as all of the other parties to timely intervene in this proceeding. For these reasons, we ask that AFEC’s Motion to Reconsider be denied. RESPECTFULLY SUBMITTED this 7th day of July 2023. By /s/ Patrick Woolsey Louisa Eberle - AZ Bar No. 035973 Patrick Woolsey (Pro Hac Vice) Nihal Shrinath (Pro Hac Vice) Attorneys for Sierra Club By /s/ Autumn Johnson Autumn Johnson (035811) Attorney for AriSEIA and SEIA [1] Arizona Free Enterprise Club Motion to Reconsider, Docket No. E-01345A-22-0144, Filed July 7, 2023, P.3, L. 15-18. AriSEIA filed direct testimony on rate design today in the APS rate case. The testimony covered a BYOD/VPP program proposal, a recommendation to disallow cost recovery for APS' uncompetitive microgrid program, rate design changes to several commercial storage rates, a change to how demand charges work for commercial customers installing EV chargers, a robust critique of APS' solar cost of service study, and community solar.
Support for Arizona Public Service (APS) and Tucson Electric Power (TEP)’s Request for an Extension of Integrated Resource Plan (IRP) Filing Deadline
The Joint Signatories, all members of APS and/or TEP’s IRP Advisory Council, write to support APS and TEP’s request to extend the deadline for filing their IRPs from August 1st, 2023, to November 1st, 2023, contingent on timely access to the modeling software and training. The APS and TEP Resource Planning Advisory Councils (RPAC) comprise a diverse group of stakeholders and community representatives the RPACs have been providing input to APS and TEP on their next IRP on behalf of residential and business customers, local governments, public schools, the limited-income community, and the solar and environmental community, among others. We have been meeting monthly since the spring of 2021 for APS, and the fall of 2022 for TEP, to share perspectives and provide input to help both utilities chart a long-term integrated resource plan that maintains reliable, affordable electric service through a balanced, flexible resource mix, which also advances sustainable outcomes. Meetings have addressed topics vital to developing a comprehensive, integrated resource plan, such as load forecasting, existing resource fleet and transmission systems, technology options and costs, and environmental impacts. During these meetings, stakeholders have been invited to listen, offer feedback, and pose questions. Participants have also been encouraged to present their own views. All meeting materials, agendas, and summaries are publicly available on APS and TEP’s RPAC websites. Also, pursuant to the Commission’s Decision 78499, APS and TEP are preparing to provide access to modeling licenses for RPAC members so that they will have the ability to conduct their own modeling analysis to better inform and provide feedback to the final IRP scenarios. However, APS and TEP have not yet provided RPAC members with the model licenses or data necessary to start the modeling efforts. Because the three months remaining before the August 1st deadline is not enough time to give this process the due diligence it deserves, a three-month extension to November 1st, 2023, is justified. This new engagement model provides value to the Commission, APS, TEP, and other stakeholders by:
Because this is the first time this kind of advisory structure with modeling access has been implemented, ensuring that all RPAC participants have a solid understanding of various complex energy issues is essential. As such, many of the RPAC’s initial meetings have focused on education and information sharing. While these educational sessions have been valuable and necessary, the RPAC members have yet to receive the modeling licenses or modeling data and have not begun reviewing and providing input on the dozens of modeled IRP portfolios that APS and TEP produce. Approving APS and TEP’s request to extend the deadline for the filing of their IRPs from August 1st, 2023, to November 1st, 2023, and providing RPAC members access to the modeling license no later than May 2023, would enable the completion of this vital work. This deadline extension should be contingent on the utilities timely providing license access and training. The extension should require APS and TEP to provide access to the model and the requisite training within 30 calendar days of the decision. Thank you for considering our comments, and we encourage the Commission to discuss this matter during the May Contingency Open Meeting date on May 11th. Arizona Corporation Commission
1200 W. Washington Street Phoenix, AZ 85007-2996 RE: Resource Planning and Procurement in 2021, 2022, and 2023 (Docket No. E-99999A-22-0046) and In the Matter of Resource Planning and Procurement in 2019, 2020, and 2021 (Docket No. E-00000V-19-0034) Chairman O’Connor and Commissioners, At the February 2022 Open Meeting, scheduled for February 8th and 9th, 2022, the Commission voted to acknowledge the 2020 Integrated Resource Plans (IRPs) of Tucson Electric Power (TEP) and Arizona Public Service (APS).[1] In addition to acknowledging the IRPs, the Commission placed numerous other requirements on the utilities, including a requirement to provide stakeholders and Commission Staff with the requisite tools to meaningfully participate in the subsequent modeling process. IT IS FURTHER ORDERED that Arizona Public Service Company, Tucson Electric Power Company, and UNS Electric, Inc. shall in future Integrated Resource Plans negotiate a project-based licensing fee that permits up to 12 Resource Planning Advisory Council members and Staff the ability to perform their own modeling runs in the same software package as these load serving entities, and to provide all necessary data and support to fully utilize the models. The load serving entities shall absorb the cost of the licensing fees.[2] To date, nearly 15 months after this vote, neither utility has complied with the Order. Stakeholders have been requesting access since Q4 2022. Stakeholders are still waiting on Nondisclosure Agreements (NDAs) from TEP and were told by APS that training on the software would occur in April 2023. Only the utilities have the ability to execute NDAs, provide the licenses and data, and conduct the requisite training. Without these tools, stakeholders are unable to meaningfully participate in the manner desired by Order 78499. We ask the Commission to direct both TEP and APS to provide all of the above mentioned tools no later than May 31, 2023. Additionally, because of this lengthy delay, we ask for the IRP filing deadline to be extended past August 1, 2023. That is simply not enough time to conduct modeling and provide meaningful feedback on the results. Finally, we ask that the Commission take this issue up as soon as possible, at either the May 2nd Open Meeting or the May 11th Contingency Meeting, because the June Open Meeting is too close to the IRP deadline to permit resolution of these issues with sufficient time to carry out the analysis envisioned in the Commission’s Order. Respectfully, Autumn T. Johnson Executive Director Arizona Solar Energy Industries Association (AriSEIA) 520-240-4757 autumn@ariseia.org [1] Open Meeting Notice, Docketed February 3, 2022, Agenda Item 26, available here: https://docket.images.azcc.gov/0000205866.pdf?i=1682712327380. [2] Decision No. 78499, Docketed March 2, 2022, Page 14, Lines 9-14, available here: https://docket.images.azcc.gov/0000206081.pdf?i=1682710289643. Arizona Corporation Commission
1200 W. Washington Street Phoenix, AZ 85007 Re: Support for Approval of Revisions to Rate Schedule E-32 L SP, Docket No. E-01345A-22-0281 Chairman O’Connor and Commissioners, Vote Solar and the Arizona Solar Energy Industries Association (AriSEIA) are supportive of the Arizona Public Service (APS) Company’s Application for the approval of revisions to rate schedule E-32 L SP and encourage the Commission to approve this rate. APS’ proposed revisions are pursuant to Decision No. 78317 (November 9, 2021), which directed APS to engage in a collaborative with interested stakeholders to explore possible improvements to E-32 L SP (Large General Service Storage Pilot).[1] Following a series of collaborative meetings that took place from February to October 2022, APS has proposed revenue-neutral design changes that improve upon the Large General Service Storage Pilot rate. The Large General Service Storage Pilot rate is a pilot rate available to large commercial customers who choose to adopt energy storage systems. The purpose of E-32 L SP is to promote the economic dispatch of customer-sited energy storage systems in a manner that aligns with high peak load. To date, no customers have chosen to take service on E-32 L SP. APS’ revisions to the rate include higher energy charges during all hours and months of the year, and significantly higher energy charges during summer on-peak periods between 4:00 and 9:00 PM. Demand charges have been reduced commensurately, resulting in a rate design that is overall revenue-neutral. APS’ revisions address a flaw in the current E-32 L SP by increasing the emphasis on volumetric energy rates. As a result, the revised Large General Service Storage Pilot will provide greater investment certainty for commercial customers. Demand charges present operational challenges for customers seeking to reduce their energy bills because they are calculated based on the customers’ highest 15-minute period of energy usage throughout the month. A customer who proactively dispatches their energy storage system during all but a single 15-minute period of the month will pay a demand charge equal to what they would have paid had they not adopted energy storage at all. Demand charges can penalize customers who adopt energy efficient technology, especially new and unfamiliar technology, because it is challenging to forecast savings and there is significant risk that small changes in operation of the energy storage system could threaten forecasted savings. In contrast, emphasis on volumetric rates gives customers the opportunity to save money on their utility bill in a manner that is proportional to the benefit they are providing through dispatch of energy storage during times of peak load. APS’ proposed revisions - particularly the increases in the summer on-peak energy rate from 6.5 cents per kilowatt-hour to 17.6 cents per kilowatt-hour - maintains a strong price differential that will encourage the dispatch of customer-sited storage during periods of high load in the summer. We recommend one additional change to the E-32 L SP tariff. While the current tariff defines the on-peak period as 4:00 to 7:00 PM on weekdays, the revised tariff re-defines the on-peak period as 4:00 to 9:00 PM every day. We recommend narrowing the on-peak window to weekdays, as this better aligns with the hours when APS is most likely to experience high customer load and normal hours of business operations. The Commission could direct APS to evaluate this change as part of their current rate case in Docket No. E-01345A-22-0144. We do not wish this evaluation to delay approval of the revised tariff at the May 2 Open Meeting. Arizona is poised to lead on the adoption of distributed battery storage through the development of rates that encourage economically efficient adoption of customer-sited batteries. Increased adoption of customer-sited batteries gives utilities an additional tool to flexibly and cost-effectively meet their customers’ energy needs and can provide significant cost and grid resilience benefits for all ratepayers. We appreciate APS’ efforts to work with stakeholders to improve the E-32 L SP tariff. We urge the Commission to approve APS’ Application today and consider whether changes to the on-peak hours are warranted through evaluation as part of APS’ rate case. Thank you for your consideration of this important matter. Respectfully, Kate Bowman Interior West Regulatory Director Vote Solar kbowman@votesolar.org 703-674-8637 Autumn Johnson Executive Director AriSEIA autumn@ariseia.org 520-240-4757 [1] Decision No. 78317, November 9, 2021, page 441 lines 15 - 21. Arizona Corporation Commission 1200 W. Washington Street Phoenix, AZ 85007 RE: Community Solar Policy Statement, Docket No. E-00000A-22-0103, Exceptions to Staff’s Proposed Order filed February 24, 2023 Chairman and Commissioners, The signatories to this letter — a coalition of solar and storage industry partners, including developers, subscriber acquisition and management firms, and nonprofit advocacy groups — have been participating in the Commission’s effort to develop a community solar program since May 2022, nearly a year ago. Our coalition has worked together, and in consultation with other stakeholders, to submit numerous filings that detail national best practices for community solar programs and recommendations for tailoring a community solar program to Arizona. To inform development of an Arizona-specific program, we have also provided a study from Brattle Group regarding the value of distributed community solar projects in APS’ service territory and a study completed by ASU that highlights the quantitative economic benefits of a community solar program in Arizona. We are supportive of the Commission’s effort to make community solar available to Arizonans and appreciate the opportunity to provide information and recommendations to support this goal. The policy statement and proposed order filed by Commission Staff on February 24, 2023 is misaligned with the common understanding and implementation of community solar across the country. Staff’s memorandum and proposed order fails to address or incorporate any of the feedback and recommendations provided by our coalition throughout the seven month working group process or in our stakeholder comments filed January 27, 2023. Staff’s memorandum includes many shortcomings and, if implemented, would not result in a community solar program, would not spur development of any community solar projects in the state, and would not expand the benefits of solar to families and businesses that currently cannot access rooftop solar. The Commission should reject the Staff proposal. We recommend the Commission either adopt our attached amendment or direct that the five issues of location, structure, LMI carve out, use of an all-source RFP, and must-take requirements be resolved via an evidentiary hearing. If the will of the Commission is to do neither, we ask that you vote no on the Staff’s Recommended Opinion and Order. For reference, a list of our previous filings can be found below: - Response[1] to July 7 Staff Memorandum and July 20, 2022 letter filed by RUCO; - Draft Program Proposal;[2] - The Brattle Group study[3] on the value of DG resources in APS territory; - Response[4] to Commissioner Marquez Peterson’s August 23, 2022 Letter; - Bill Credit Rate Proposal;[5] - Response[6] to APS Program Proposal; - Economic Impact Study conducted by Arizona State University;[7] - Exceptions and Proposed Amendment[8] to Staff’s Recommended Opinion and Order; and - Response to Staff’s request for comment on the forthcoming policy statement filed on January 27, 2023.[9] Decision 78784[10] directed Utilities Division Staff to work with stakeholders to provide a recommendation to the Commission regarding five elements of community solar program design: “(1) Location of the community solar program; (2) Structure of the program; (3) The percentage of carve out for low to moderate income customers; (4) Whether the program should be included in an all-source Request for Proposal; (5) Must take provision.”[11] Despite clear Commission direction, Staff’s memorandum and proposed order does not address or incorporate feedback filed by stakeholders. Additionally, Staff’s memorandum and proposed order includes several provisions that stakeholders have repeatedly demonstrated are not characteristic of other community solar programs and would not lead to a successful or robust program in Arizona. It also includes, without explanation, recommendations that were not discussed or recommended during the duration of the working group process. As a result, Staff’s order leaves the Commission without workable guidance on how to proceed with a meaningful program that benefits Arizona communities. (1) Structure of the Program Staff recommends that participation in a community solar program be optional for regulated electric utility companies. This is not a recommendation that was raised or discussed during the course of the working group process. This recommendation deviates from all traditional, third-party, community solar programs across the country, and will not result in a successful program in Arizona. Decision 78784 tasks the Commission with “adopting a statewide policy” for community solar.[12] Per the language within the Decision itself, a statewide community solar program should apply to all Commission-regulated investor-owned utilities (IOUs) in the state: Arizona Public Service (APS), Tucson Electric Power (TEP), and UNS Electric (UNS). An opt-in program for regulated utilities would result in inconsistent access to community solar across the state, depending on a customer’s utility service territory. Furthermore, the state’s investor-owned utilities have already announced their opposition to such a program, no matter how much their customers may want or benefit from it. We recognize that circumstances may differ for cooperative utilities and recommend that they should be permitted to opt-in to the program. Additionally, Staff recommends that the bill credit for energy exported from community solar programs not exceed avoided cost. The bill credit rate was specifically identified in Decision No. 78784 as an item to be addressed in the evidentiary hearing,[13] not the policy statement. It is premature to determine the bill credit rate at this time, and in isolation from other important program details which have not yet been determined. Regardless, the proposed bill credit would be by far the lowest in the country and would not result in the development of any community solar projects. Finally, Staff recommends that “[a] participating regulated electric utility company may offer community solar itself or via partnership with a third party.” It is unclear whether Staff is recommending that the regulated electric utility will use a third-party to administer the program or whether this statement is related to community solar project ownership. Community solar projects should be owned by competitive third-party entities in order to benefit Arizona customers through the use of private capital to develop projects. There are several important components that define the “structure” of a community solar program and are not addressed in Staff’s memorandum and proposed order, including transaction and crediting structure, program size, permitted resources, procurement structure, project maturity requirements, ownership, bill credit term, guaranteed savings, eligible subscribers, the treatment of unsubscribed energy, and all elements of consumer protection other than how the program interfaces with the utility disconnect moratorium. These components were discussed at length in our last filing on January 27, 2023.[14] (2) Location of the Community Solar Program Staff recommends that “[c]ommunity solar energy should be generated within a participating regulated electric utility company's service territory.”[15] We agree, and further recommended that individual community solar projects be connected to that utility’s distribution system. (3) Percentage Carve-Out for Low-Income Customers The joint signatories have previously recommended a low- and moderate-income (LMI) carve out of 20%, based on the models we have seen created in other markets. However, we can support an LMI carve-out of thirty (30) percent, as recommended by Wildfire. This aligns with neighboring states, such as New Mexico, which have recently opened third-party community solar programs. Staff recommends that the remaining project capacity not reserved for low- and moderate-income customers be “limited to non-profit (including faith-based organizations), schools, municipalities, extra small commercial, and small commercial customer classes.” This definition excludes residential customers. Decision No. 78583 clearly states that participating customers should include residential and low-income customers.[16] A recommendation that non-LMI residential customers be excluded from the program was never raised during the course of the working group process. Even residential customers who are not low-income cannot access rooftop solar if they are renters, live in a condo, or face other technical barriers to installing solar. A statewide community solar program should include all residential customers. (4) Whether the Program Should be part of an RFP Staff recommends use of a request for proposal (RFP) model for a community solar program in Arizona, without providing any details about how such a process could work. As discussed in our prior filings, states that use an RFP process for selecting community solar projects do so in order to select projects based on the benefits they deliver to participants and communities, not cost alone. Community solar programs need not rely on a price-based RFP procurement format to control project and/or program costs because project compensation is wholly determined by the value of Commission-approved bill credits paid to subscribers. (5) Must-take provision Staff states that a “must take requirement is not appropriate for Arizona’s community solar and storage program,” implying that utilities should be able to curtail community solar projects for any reason. Consistent with the precedent set in programs around the country, the signatories recommend against routine curtailment of power produced by community solar projects. There should be, of course, permissible instances during which the utility can curtail community solar production for emergency safety or reliability purposes. Like rooftop solar, community solar project subscribers derive value from their subscription in the form of bill credits only when power is produced and exported to the grid. Decision No. 78583 states, “Direct bill offsets may be considered for subscribers to produce savings in a structure substantially similar to that offered to rooftop solar customers.”[17] If a utility curtails community solar projects on a routine basis, it would unreasonably deny bill credits and savings to subscribers who sign up for the program and substantially differ from the structure through which rooftop solar customers experience savings.[18] Additionally, without predictable certainty regarding if and when projects will be producing energy, it will be impossible to secure financing to develop and build community solar facilities. The signatories are not aware of any community solar program anywhere else in the country that currently allows for routine curtailment by the utility. Utilities have stated that curtailment of community solar projects is necessary because negatively priced power is available, at times, on the market. In such instances, it is economic for utilities to curtail the highest-cost marginal resource in exchange for cheaper or negatively priced power on the market. Customers benefit when utilities curtail resources with high fuel costs or significant pollution impacts in exchange for cleaner, more affordable resources like solar. IOUs in Arizona do not curtail rooftop solar production, and yet they are able to appropriately manage the totality of resources on their system in order to provide cost-effective and reliable power to customers. We have recommended that a community solar program include a specific annual capacity allotment, and that utilities account for community solar project capacity in their long-term resource planning processes. This will make it easy for utilities to predict the amount of community solar resources that will be available to them and plan their operations and future resource procurement accordingly. We have attached a proposed amendment below as Attachment A. [1] Response to Staff Memorandum, filed in Docket No. E-00000A-22-0103 on July 29, 2022. See: https://docket.images.azcc.gov/E000020412.pdf?i=1673898931456. [2] Draft Program Proposal, filed in Docket No. E-00000A-22-0103 on August 26, 2022. See: https://docket.images.azcc.gov/E000020811.pdf?i=1673359840801. [3] Study of Community Solar Value Stack in Arizona, conducted by The Brattle Group, filed in Docket No. E-00000A-22-0103 on August 26, 2022. See: https://docket.images.azcc.gov/E000020793.pdf?i=1674487120887. [4] Response to Chairwoman Marquez Peterson’s Letter, filed in Docket No. E-00000A-22-0103 on September 9, 2022. See: https://docket.images.azcc.gov/E000021024.pdf?i=1674487120887. [5] Resource Comparison Proxy for Community Solar, filed in Docket No. E-00000A-22-0103 on September 9, 2022. See: https://docket.images.azcc.gov/E000021023.pdf?i=1674487120887. [6] Response to APS Program Proposal, filed in Docket No. E-00000A-22-0103 on October 7, 2022. See: https://docket.images.azcc.gov/E000021583.pdf?i=1673359840801. [7] The Potential Economic and Fiscal Impacts of Community Solar in Arizona, filed in Docket No. E-00000A-22-0103 on November 2, 2022. See: https://docket.images.azcc.gov/E000022238.pdf?i=1674487120887. [8] The Solar Coalition’s Amendment and Proposed Exceptions to Staff’s Memorandum and Proposed Order, filed in Docket No. E-00000A-22-0103 on November 4, 2022. See: https://docket.images.azcc.gov/E000022223.pdf?i=1674662938969. [9] Response to Staff Request for Comment on the Community Solar Policy Statement, filed in Docket No. E-00000A-22-0103 on January 27, 2023. See: https://docket.images.azcc.gov/E000023855.pdf?i=1677286561482. [10] Decision 78784 filed in Docket No. E-00000A-22-0103 on November 21, 2022. See https://docket.images.azcc.gov/0000208038.pdf?i=1673898931456. [11] Decision 78784 at pg. 11. [12] Decision 78784 at pg. 11. [13] Decision 78784 at pg. 11, Line 23. [14] Response to Staff Request for Comment on the Community Solar Policy Statement, filed in Docket No. E-00000A-22-0103 on January 27, 2023. See: https://docket.images.azcc.gov/E000023855.pdf?i=1677286561482. [15] Staff Memorandum and Proposed Order, filed in Docket No. E-00000A-22-0103 on February 24, 2023, Attachment A. [16] Decision No. 78583 filed in Docket No. E-01345A-21-0240 on May 27, 2022 at Page 11. See https://docket.images.azcc.gov/0000206888.pdf?i=1677813967352. [17] Decision No. 78583, May 27, 2022, Page 11. [18] Response to APS Proposal, Item 7. |
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The Arizona Solar Energy Industries Association (AriSEIA) is a 501(c)(6) non-profit trade association representing the solar, storage, and electrification industry, solar-friendly businesses, and others interested in advancing complementary technologies in Arizona. The group's focus is on education, professionalism and promotion of public policies that support deployment of solar, storage, and electrification technologies and renewable energy job growth and creation. |
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