Arizona Corporation Commission
1200 W. Washington Street Phoenix, AZ 85007 RE: Resource Comparison Proxy Proposal for Community Solar (RCP-CS) (Docket No. E-00000A-22-0103) & (Docket No. E-01345A-21-0240) Madam Chair, Commissioners, Commission Staff, and Interested Stakeholders, The signatories to this letter — a coalition of solar and storage industry partners, including developers, subscriber acquisition and management firms, and advocacy groups — appreciate the Commission and Staff conducting the working group meetings regarding the implementation of a community solar program in Arizona. We believe that a properly constructed community solar program will provide bill savings to electric utility customers, promote electric grid resiliency, and assist Arizona in its transition to clean energy. We are committed to providing information that will assist in the Commission’s consideration of a proposal for implementation and we look forward to continued participation and discussion in the working group sessions. At the working group meetings held on August 30 & 31, 2022, the signatories made a verbal proposal on the bill credit rate for the community solar program in Arizona. As requested by one of the Commissioner’s offices, the signatories are submitting this letter with the written details of that proposal. As background, the Commission previously approved the Resource Comparison Proxy (RCP) as the compensation mechanism for rooftop solar projects in Arizona. The signatories suggest that the Commission use the current RCP rate for Arizona Public Service (APS) as the initial bill credit rate for the community solar program with two required modifications, discussed herein and summarized in Appendix A. These modifications to the administration of the RCP are required because of the unique characteristics that community solar projects bring to customers and the grid in Arizona. Hereinafter, we refer to this proposal as RCP-CS. The RCP-CS proposal below is consistent with the Commission Order that initiated this proceeding. Specifically, the Order stated that the program should be “...designed to attract long-term private sector investment” and that “[d]irect bill offsets may be considered for subscribers to produce savings in a structure substantially similar to that offered to rooftop solar customers, eliminating the need for incentives. The value proposition for subscribers should be similar to those participating in onsite generation.” The Commission did not order that the bill credit rate mechanism for community solar should be exactly the same as the existing RCP, rather the value proposition should be “substantially similar.” As such, the RCP-CS proposal recognizes the fundamental dynamics of implementing a successful community solar program in Arizona while using the existing RCP as a starting point to simplify the initial bill credit setting process. The signatories offer the RCP-CS proposal below:
The study prepared by The Brattle Group and filed by the signatories on August 26, 2022 supports this RCP-CS proposal. The Brattle analysis suggests that the value of community solar is at least, if not higher than, the current value of APS’ RCP. The Brattle analysis found the value stack of community solar to be approximately $0.09683 per kWh (compared to APS’ current RCP of $0.08465 per kWh). Therefore, the Brattle study findings support the reasonableness of locking-in the bill credit rate at the current level of the RCP during the Stability Period. Further, the Brattle study supports the removal of the component of the existing RCP that allows rates to decline by a maximum of ten percent (10%) year over year because the study shows the value of community solar increasing in the future. The signatories propose that the RCP-CS rate include a Stability Period to allow critical time for the community solar program to be implemented successfully. The Stability Period is a necessary component of the proposal as it will take time for community solar projects to be constructed and for the Commission to gain experience with the community solar program. Several steps must take place before a community solar project is placed into service, including the following:
While some of the activities mentioned above can occur in parallel, some of them are sequential. The five-year Stability Period will allow critical time for projects to come online with reasonable commercial certainty and for the Commission to gain experience with the community solar program. The Stability Period will also allow for additional time to study the value stack of community solar projects to inform future bill credit rates. It is common in other community solar programs around the country to allow for program parameters that promote predictable program ramp-up through this type of approach. Attached as Appendix A is a table that compares the existing RCP with the proposed RCP-CS, including why the changes above are necessary for a community solar program. We appreciate the opportunity to address these important questions. We look forward to continuing to engage in the working group process to develop a successful community solar program in Arizona.
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Arizona Corporation Commission 1200 W. Washington Street Phoenix, AZ 85007 RE: Community Solar, Docket No. E-00000A-22-0103 and APS RES, Docket No. E-01345A-21-0240 Madam Chair, Commissioners, Commission Staff, and Interested Stakeholders, The signatories to this letter — a coalition of solar and storage industry partners, including developers, subscriber acquisition and management firms, and advocacy groups — appreciate the Commission and Staff conducting the working group meetings regarding the implementation of a community solar program in Arizona. We believe that a properly constructed community solar program will provide bill savings to electric utility customers, promote electric grid resiliency, and assist Arizona in its transition to clean energy. We are committed to docketing information that will assist in the Commission’s consideration of a proposal for implementation and we look forward to continued participation and discussion in the working group sessions. We put forward, as Attachment A, this draft program design to aid in the working group discussions and the successful adoption of a community solar program in advance of the November Open Meeting. We additionally put forward, as Attachment B, an assessment regarding the Commission’s authority to implement the community solar program and tariff outside of a rate case. Further, we appreciate the letter filed by the Chairwoman on August 23, 2022 regarding the various models of community solar her office sees as relevant to this proceeding. The undersigned stakeholders plan to file a separate response to that letter as soon as possible with answers to the questions therein that are grounded in the program proposal put forth below. We appreciate the opportunity to address these important concerns. We look forward to continuing to engage in the working group process to develop a successful community solar program in Arizona. Arizona Corporation Commission
1200 W. Washington Street Phoenix, AZ 85007 RE: Study of Community Solar Value Stack in Arizona - Community Solar (Docket No. E-00000A-22-0103), APS RES (Docket No. E-01345A-21-0240) Madam Chair, Commissioners, Commission Staff, and Interested Stakeholders, The signatories to this letter — a coalition of solar and storage industry partners, including developers, subscriber acquisition and management firms, and advocacy groups — appreciate the Commission and Staff conducting the working group meetings regarding the implementation of a community solar program in Arizona. We believe that a properly constructed community solar program will provide bill savings to electric utility customers, promote electric grid resiliency, and assist Arizona in its transition to clean energy. We are committed to docketing information that will assist in the Commission’s consideration of a proposal for implementation and we look forward to continued participation and discussion in the working group sessions. Attached to this letter is a study completed by The Brattle Group that analyzes the value stack of community solar in Arizona. The Brattle Group is a leading consulting firm that specializes in answering complex economic, finance, and regulatory questions for corporations, law firms, and governments around the world. The value stack of a community solar project represents the costs that would otherwise be borne by ratepayers but that are avoided due to the energy and grid services provided by a community solar project. The community solar value stack consists of three value streams: (1) Avoided Generation, (2) Avoided Transmission and Distribution, and (3) Avoided Emissions. The purpose of this value stack study is to provide the Commission and stakeholders with information to guide discussions on an appropriate bill credit rate and compensation mechanism for the community solar program in Arizona. Brattle will be prepared to present this material and answer questions at the working group session on August 30, 2022. We look forward to additional discussions regarding designing a final bill credit rate, tariff, and compensation mechanism for projects. Arizona Corporation Commission
1200 W. Washington Street Phoenix, AZ 85007 RE: Community Solar, Docket No. E-00000A-22-0103 Madam Chair, Commissioners, Commission Staff, and Interested Stakeholders, The signatories to this letter — a coalition of solar and storage industry partners, including developers, subscriber acquisition and management firms, and advocacy groups — appreciate the Commission and Staff conducting the working group meetings regarding the implementation of a community solar program in Arizona. We believe that a properly constructed community solar program will provide bill savings to electric utility customers, promote electric grid resiliency, and assist Arizona in its transition to clean energy. We are committed to docketing information that will assist in the Commission’s consideration of a proposal for implementation and we look forward to continued participation and discussion in the working group sessions. We were encouraged by the progress made during the Commission’s community solar working group held on August 4, 2022 and appreciate that the next meeting will be a two day working group session held on August 30 and 31. We understand that Staff is still developing the proposed agenda for the August meetings; therefore, we suggest the following topics: bill credit structure and value, eligible subscribers and low- and moderate-income (LMI) subscriber participation, program and project size, project selection, storage, and hosting capacity maps. To the extent that it is helpful to the Staff and other stakeholders, below are potential questions that could be posed for each topic at the next meeting. ● Bill credit structure and value ○ How should the bill credit be structured? ○ Would the resource comparison proxy (RCP) accurately represent the full value of community solar projects? ○ Given the bill credit structure, what is the projected value of the bill credit? ○ What should the term of the bill credit be? ● Eligible subscribers and LMI participation ○ Which customer classes should be eligible for participation in the program? ○ Should there be percentage per-project subscription targets or requirements for certain customer classes? ○ Should there be a required percentage for LMI customer subscription? ○ Should there be a maximum project capacity that “anchor tenants” can subscribe to? ● Program size and project size ○ Should there be a cap on program size? ○ If yes, how should it be constructed? (e.g., percentage of total retail sales vs. number of MW) ○ Should there be a maximum project size or only a requirement that projects connect to the distribution grid? ● Project selection ○ How should projects be selected for participation in the program? (e.g., first-come first-served vs. RFP) ○ What type of project maturity milestones should be required for eligibility in the program, and should those milestones depend on the program size (capped versus uncapped)? ● Storage ○ Should community renewables projects be limited to solar photovoltaic systems, potentially paired with storage? ● Hosting capacity maps ○ Has Arizona Public Service (APS) completed a hosting capacity study and if so, how do the results compare to what would be needed for program implementation? ○ Does APS have hosting capacity maps and if so, how are they to be used by developers? ○ Are there recommended examples of hosting capacity maps in other states? ○ What types of data should be included in hosting capacity maps and how often should they be updated? Further, as was requested at the August 4th working group meeting, we have provided as Attachment A an illustrative example of cash flows for a community solar program, sample or redacted bills as Attachment B from Minnesota and New York, and sample contracts from Nautilus and Arcadia as Attachment C. We appreciate the opportunity to address these important concerns. We look forward to continuing to engage in the working group process to develop a successful community solar program in Arizona. Respectfully, Autumn Johnson Executive Director Arizona Solar Energy Industries Association (520) 240-4757 autumn@ariseia.org Salar Naini Executive Vice President, Business Development Turning Point (480) 330-1245 snaini@tpoint-e.com Justin Biltz Director, Policy & Strategy, Community-Scale Markets Cypress Creek Renewables (330) 515-1564 justin.biltz@ccrenew.com Bret Fanshaw Arizona Program Director | West Region Director Solar United Neighbors (602) 962-0240 bfanshaw@solarunitedneighbors.org Angela Navarro Head of State Regulatory Affairs Arcadia (352) 262-8201 angela.navarro@arcadia.com Kevin Cray Mountain West Regional Director Coalition for Community Solar Access (CCSA) (303) 819-3457 kevin@communitysolaraccess.org Maria McCoy Research Associate, Energy Democracy Institute for Local Self-Reliance (612) 808-0688 maria@ilsr.org Sara Birmingham Senior Director of State Affairs Solar Energy Industries Association (415) 385-7240 sbirmingham@seia.org Joy Crossman Director of Development Soltage, LLC (201) 559-6243 jcrossman@soltage.com Kate Bowman Interior West Regulatory Director Vote Solar (703) 674-8637 kbowman@votesolar.org Landon Stevens Director of Policy Conservative Energy Network (480) 338-9767 Lstevens@conservativeenergynetwork.org Scott Risley Executive Director of Public Policy Nautilus Solar (928) 925-5972 srisley@nautilussolar.com Christopher Mejia Founder Consolidated Solar (717) 884-2204 chris@consolidatedsolar.net Arizona Corporation Commission
1200 W. Washington Street Phoenix, AZ 85007 Re: APS Interconnection Manual, Docket E-01345A-20-0152 Madam Chair and Commissioners, This item is scheduled for the Staff Meeting on August 16, 2022, as number 11. The Arizona Solar Energy Industries Association (AriSEIA) has reviewed the Arizona Public Service (APS) Interconnection Requirements for Distributed Generation Rev. 9.0 dated May 6, 2022, and as amended in redlined versions from APS on July 20, 2022 and August 10, 2022 (the “Manual”). We have filed comments in this docket, met with APS and Commission Staff several times, and have submitted written feedback to both APS and Staff on outstanding issues. During the deliberation on the Commission’s Interconnection Rulemaking, we expressed our concern that there are many utility requirements that unnecessarily inflate cost while adding time and complexity to the process for interconnecting distributed generation systems in APS territory. Unfortunately, the July 24, 2020, Rev. 8.5 Manual shown on the APS website is the Manual currently being utilized by APS, despite numerous elements that make interconnecting distributed generation needlessly costly for consumers. In fact, in some respects, APS ignores the Commission’s Interconnection Rules. The usage of this older version of the manual is very detrimental to our member companies. This stands in stark contrast to Tucson Electric Power (TEP) who adjusted their interconnection requirements with each revision of their handbook as issues were identified and eliminated during the stakeholder process. The APS Manual revisions to date make multiple changes as a result of stakeholder engagement that address issues that continue to impact the cost, size, and schedules of projects over two and a half years after the Commission’s Interconnection Rules became effective. We respectfully request the Commission direct APS to file a revised Manual no later than August 31, 2022 and to utilize that version until a final vote by the Commission. Given the significant delay in the finalization of the Manual, we request this matter be noticed for a final vote on the October Open Meeting agenda. Thank you for considering these comments meant to improve the compliance of the APS document with the spirit and letter of the Commission’s Interconnection Rules. Respectfully, Autumn Johnson Executive Director AriSEIA 520-240-4757 autumn@ariseia.org Mark Holohan Board of Directors AriSEIA 602-339-8274 markdholohan@gmail.com AriSEIA worked with more than 10 other organizations to respond to the Arizona Corporation Commission's Staff's community solar questions. The filing addresses each question, provides examples of community solar programs in other states, and sample consumer disclosure forms. Read the letter and learn more about how community solar would work in Arizona here.
Arizona Corporation Commission
1200 W. Washington Street Phoenix, AZ 85007 Re: Application of APS for Approval of Revised Resource Comparison Proxy, Docket No. E-01345A-22-0105 Madam Chair and Commissioners, Vote Solar, Solar United Neighbors, and the Arizona Solar Energy Industries Association (AriSEIA) urge you to support Arizona families and businesses who continue to face challenging economic circumstances by delaying the proposed 10% step down of Arizona Public Service’s (APS) Resource Comparison Proxy (RCP) rate for at least one year. The RCP Plan of Administration[1] requires APS to submit an RCP export rate annually for Commission approval and specifies that the RCP “may not be reduced by more than 10% each year.”[2] The Commission has the opportunity to provide consumers looking to save money on their energy bill with relief by postponing the up to 10% step down of the RCP. After several tumultuous years, Arizona families and businesses continue to face unusual economic challenges. Over the last year, consumers have experienced the largest increase in inflation rates in 40 years and a 36% increase in energy costs.[3] At the same time, manufacturing and supply chain issues are delaying delivery of solar panels and equipment and driving up prices, resulting in the highest prices for polysilicon since 2011.[4] As noted by APS in its Application, forecasted costs for grid-scale solar increased in 2022.[5] Rooftop solar is an important tool that ratepayers can utilize to help reduce their utility bills and increase energy resiliency at their home. As a result of these unprecedented hardships, many Arizona families and businesses hoping to go solar may find that, due to their own economic circumstances or market conditions beyond their control, it will be necessary to delay installing solar. If the RCP is adjusted downward by 10%, families and businesses who must wait until next year to install solar will see a significantly reduced return on their investment for 10 years. At its current value of $0.09405 cents per kWh, the cost associated with APS’s RCP rate is already lower than other ratepayer expenditures on solar resources. For example, APS recently received approval for its 2022 REST plan which includes $20 to 30 million in annual spending on its utility-owned rooftop solar program, Solar Communities, the closest proxy for a distributed solar installation.[6] The cost of this program includes the capital cost of a rooftop solar installation, which may include recovery of the utilities’ approved rate of return, and a bill credit for participating customers. The cost of the Solar Communities program amounts to approximately $0.147 per kWh over the 20-year lifetime of a solar installation, well above the current RCP rate paid to solar customers.[7] We respectfully request that the Commission reject the step down as proposed by APS and included within the Staff’s proposed order in an effort to support families and businesses facing challenging and unprecedented economic circumstances and provide them with an extended opportunity to capitalize on the power of the sun to reduce their energy bills. An amendment to the RCP step down is attached as Attachment A below. Thank you for your consideration of this important matter. Sincerely, Autumn T. Johnson Executive Director Arizona Solar Energy Industries Association (AriSEIA) autumn@ariSEIA.org 520-240-4757 Bret Fanshaw Western Region Director Solar United Neighbors (SUN) bfanshaw@solarunitedneighbors.org 602-962-0240 Kate Bowman Interior West Regulatory Director Vote Solar kbowman@votesolar.org 703-674-8637 ATTACHMENT A JOINT STAKEHOLDER PROPOSED AMENDMENT NO. 1 Purpose: This Amendment denies the step down authorized in the Decision to give property owners an additional year to install rooftop solar systems at the current export rate. The Commission recognizes that challenging and unforeseen economic circumstances experienced in the last few months may have forced many property owners who otherwise would have installed rooftop solar systems in 2022 to put plans on hold. The Commission also recognizes that the majority, if not the entirety, of the year 2022 will likely be characterized by supply chain disruptions, exorbitant inflation, and high energy costs, presenting reasonable grounds for the Commission to consider the year 2022 an exception to the standard RCP formula. Under this proposal, the Company will still be required to file an application for the step down in 2023. Page 5, Line 10 DELETE Approve INSERT Deny Page 5, Line 11 INSERT after “herein” The Commission recognizes that much of 2022 has subjected ratepayers to unforeseen economic hardships due to supply chain disruptions from COVID-19, high energy rates due to global events, and unprecedented inflation. Therefore, it is not appropriate to decrease the RCP at this time. Page 5, Line 14 DELETE $0.08465 INSERT $0.09405 **Make all conforming changes [1] See Appendix C, APS Application, (April 29, 2022) https://docket.images.azcc.gov/E000019056.pdf?i=1657141638108. [2] See Appendix H, Arizona Corporation Commission, Decision No. 76295, (Aug. 18, 2017), https://docket.images.azcc.gov/0000182160.pdf?i=1657139837798. [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] Bloomberg News, Solar Material Price Jumps Most in 8 Months on Supply Woes, Bloomberg, (June 29, 2022), https://www.bloomberg.com/news/articles/2022-06-29/solar-panel-material-price-jumps-most-in-8-months-on-supply-woes. [5] APS Application, (April 29, 2022), page 4, lines 6 - 8, https://docket.images.azcc.gov/E000019056.pdf?i=1657141638108. [6] Arizona Corporation Commission, Decision No. 78583, (May 27, 2022), https://docket.images.azcc.gov/0000206888.pdf?i=1657141036380. [7] This estimate is based on a 6 kW system and a cost of $2.60 per watt, an 8.7% rate of return, annual production of 1,706 kWh/kW in the first year, and 0.5% annual panel degradation. AriSEIA Submits Letter to ACC Indicating Intention to Serve on the Community Solar Working Group5/25/2022 May 25, 2022
Arizona Corporation Commission 1200 W. Washington Street Phoenix, AZ 85007 Re: APS 2022 RES Implementation Plan, Docket No. E-01345A-21-0240 and Generic Community Solar Docket, E-00000A-22-0103 Madam Chair and Commissioners, Vote Solar, Solar United Neighbors (SUN), the Arizona Solar Energy Industries Association (AriSEIA), and the Institute for Local Self-Reliance (ILSR) appreciate the opportunity to respond to the discussion preceding the passage of Commissioner Tovar’s 3rd Revised Amendment #1 during the May 18, 2022 Open Meeting. Our organizations thank the Commissioners for their support of this amendment and we look forward to participating in the community solar working group. We seek to offer clarification regarding the work of our organizations and intent of the national petition mentioned during the Open Meeting. We believe that the decision to remove our organizations from the amendment is based on a misunderstanding of our support for a petition to the Federal Trade Commission (FTC).[1] We joined the petition because it seeks to protect consumers from financial scandals and antitrust violations by utilities. The petition does not question or limit the Commission’s authority to regulate utilities in the state, nor does our support for it implicate the good faith efforts our groups have undertaken to build consensus among the solar industry, the utility, and advocates regarding a community solar program in Arizona. We would be happy to meet with any Commissioners interested in the petition to explain its substance and intent in greater detail. AriSEIA, SUN and Vote Solar all have an established record of engagement at the Commission, where we are committed to working in good faith to support a transition to clean energy in Arizona. Similarly, ILSR maintains a positive record of engagement on regulatory issues around the country. We hope that this letter serves to clarify our commitment to advancing community solar in Arizona through the collaborative process approved by the Commission. We look forward to working with all stakeholders involved in the working group and to the Commission’s consideration of the recommendations that result from the working group in November. Respectfully, Autumn T. Johnson Executive Director Arizona Solar Energy Industries Association (AriSEIA) autumn@ariseia.org Bret Fanshaw Arizona Program Director & West Region Director Solar United Neighbors (SUN) bfanshaw@solarunitedneighbors.org Kate Bowman Interior West Regulatory Director Vote Solar kate@votesolar.org John Farrell Co-Director of ILSR & Director, Energy Democracy Initiative Institute for Local Self-Reliance (ILSR) jfarrell@ilsr.org [1] FTC Legal Petition and Press Release, available here https://biologicaldiversity.org/w/news/press-releases/egal-petition-seeks-federal-trade-commission-investigation-of-energy-utility-abuses-2022-05-18/. May 13, 2022 Arizona Corporation Commission 1200 W. Washington Street Phoenix, AZ 85007 RE: Community Solar Support in Docket No. E-01345A-21-0240 Madam Chair and Commissioners, The Arizona Solar Energy Industries Association (AriSEIA) very much supports the Commission in an effort to move forward with community solar. Community solar provides a unique opportunity for residential and small business customers to participate in the clean energy transition when they otherwise would not be able to. Community solar is a useful opportunity for those that cannot utilize rooftop solar for practical or financial reasons to be able to join together in projects that are at strategically valuable locations, still close to distribution opportunities. It also provides a way to utilize otherwise underutilized brownfield and agricultural sites. AriSEIA has many member companies that are very interested in investing in Arizona. Community solar provides another avenue for the solar industry to encourage job creation and economic growth in our state. As noted by the Coalition for Community Solar Access (CCSA), several university studies have been conducted that reflect the job and revenue opportunities for states that adopt community solar policies.[1] Failure to act allows other states, including some of our neighbors, to seize those opportunities from us, including New Mexico, Colorado, and California. Arizona should be a leader in solar in the nation. We encourage the Commission to signal to the industry that Arizona very much wants those jobs and investment dollars. We are eager to participate in the working group and feel confident that collaboration with other organizations, consumer advocates, Staff, and the utility will contribute to a better outcome. While there may not be consensus today on what the outcome of the group should be, Commissioner Kennedy’s Proposed Amendment No. 1 is an especially important step towards creating a thoughtful and workable program.[2] AriSEIA encourages the Commission to utilize the working group to explore all of these numerous benefits, as well as utilize the lessons learned from other states that have already adopted community solar policies. All of the details need not be fleshed out today, as that is the very purpose of the working group. AriSEIA is aware that there are presently two different avenues put forward as to how to commence with community solar in Arizona. We do not feel these opportunities are incompatible with each other. We fully support moving forward with a working group in the Arizona Public Service (APS) Renewable Energy Standard and Tariff (REST) docket, as well as utilizing the new docket for fact finding and programs in other service territories if a REST docket is unavailable. We urge the Commission to move forward with a working group in this docket at the May Open Meeting and recommend that a final vote on the outcome of the working group be scheduled for the October Open Meeting. Respectfully, /s/ Autumn T. Johnson Executive Director AriSEIA (520) 240-4757 autumn@ariseia.org [1] Coalition for Community Solar Access, May 13, 2022 Letter, available here https://docket.images.azcc.gov/E000019242.pdf. [2] Commissioner Kennedy Proposed Amendment No. 1, available here https://docket.images.azcc.gov/E000018712.pdf?i=1652155834150. BEFORE THE ARIZONA CORPORATION COMMISSION
COMMISSIONERS Lea Márquez Peterson – Chairwoman Sandra Kennedy Justin Olson Anna Tovar Jim O’Connor 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-19-0236 Arizona Solar Energy Industries Association (AriSEIA) Comments on Arizona Public Service (APS) Efforts to Comply with Order Relating to Rate Schedule E-32 L Storage Pilot in Decision No. 78317 We appreciate the Commission’s decision to include AriSEIA/SEIA in collaborative discussions with APS on the rate design elements and intended success of the E-32 L Storage Pilot (SP) plan.[1] Background The E-32 L SP tariff was established in December 2017 as a result of APS’ previous rate case with the intention to evaluate the opportunity of large-scale, behind-the-meter energy storage solutions as a value-added benefit to the grid while allowing for high demand (as determined by 15-minute interval kilowatt readings) customers to benefit from peak shaving.[2] Due to several issues, including poor rate tariff mechanics and imbalanced Cost of Service (COS) formulas (notably with lower per-kW rates than the non-pilot, base E-32 L rate tariff), the pilot program offering did not facilitate subscription from any customers. Decision No. 78318 and Current Status AriSEIA/SEIA offered testimony that the E-32 L SP rate schedule required re-evaluation. The Commission ordered APS to do the following:
Subsequent to the order, APS filed its revised rate tariff on December 1, 2021, and held its first stakeholder engagement meeting on February 23, 2022. AriSEIA/SEIA maintains that while APS is complying with the letter of the order, the spirit of the decision is being left to stakeholders to enforce. Key Issues on Proposed E-32 L SP Rate Plan and Discussion It is AriSEIA’s understanding that the intent of this pilot program is to facilitate adoption of energy storage for APS’ large commercial customer class up to 35 megawatts (MW) of installed capacity, and to that end, we submit the following feedback for consideration:
Due to the nature of variability between customer load profiles (predictability of peaks depending on facility type), the economics of energy storage vary significantly from project-to-project. Furthermore, the value proposition (i.e., return on investment), depends on whether or not a customer can monetize federal tax incentives directly. Although pending federal legislation includes a change which provides tax credits to ‘storage only’ projects, the current Internal Revenue Code only allows energy storage customers to claim available tax incentives when the storage systems are charged by solar energy (at least 75%) throughout the operational year.[6] Given that many APS E-32 L customers are tax-exempt and the fact that this tariff is unlikely to support solar projects in conjunction (i.e. tax credits will not be available), we believe it is critical that the tariff be designed in a way that provides sufficient economic incentive to pursue pilot projects for all interested customers. Conclusion Energy storage systems represent significant investments and require a precise and reliable method for return on investment. We submit that the spirit of the Order requires that APS demonstrate a thoughtful and comprehensive approach to the design of the E-32 L SP rate tariff, and we recommend an approach that leverages optionality and increased on-peak vs. off-peak differentials. As it stands, it is AriSEIA’s position that the current E-32 L SP rate plan will not facilitate any adoption toward the cap of 35 MW without substantial changes, and we recommend the Commission direct APS to issue revised rate tariff options that will provide further opportunities for customer adoption. We thank the Commission and its staff for the opportunity to submit these comments. Respectfully submitted this 6th day of May, 2022. /s/ Autumn T. Johnson Executive Director Arizona Solar Energy Industries Association (AriSEIA) autumn@ariseia.org 520-240-4757 /s/ John Mitman Board President Arizona Solar Energy Industries Association (AriSEIA) john@ariseia.org 480-251-2934 [1] See APS 2019 Rate Case, Docket No. E-01345A-19-0236, Decision No. 78317, available here https://docket.images.azcc.gov/0000205236.pdf?i=1650001754509. [2] See APS 2017 Rate Case, Docket No. E-01345A-16-0036, available here https://edocket.azcc.gov/search/docket-search/item-detail/19348. [3] National Renewable Energy Laboratory, Identifying Potential Markets for Behind-the-Meter Battery Energy Storage: A Survey of U.S. Demand Charges, available here https://www.nrel.gov/docs/fy17osti/68963.pdf. [4] Southern California Edison, Schedule TOU-8 Time-of-Use - General Service – Large (Option E), available here https://www.sce.com/regulatory/tariff-books/rates-pricing-choices and included as Attachment A. [5] National Renewable Energy Laboratory, Storage Futures Study, available here https://www.nrel.gov/analysis/storage-futures.html. [6] National Renewable Energy Laboratory, Federal Tax Incentives for Energy Storage Systems, available here https://www.nrel.gov/docs/fy18osti/70384.pdf. |
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