Arizona Corporation Commission
1200 W. Washington Street
Phoenix, AZ 85007
 
RE: APS Rate Case, Docket No. E-01345A-22-0144
 
Chairman and Commissioners,
 
In advance of the vote on this matter on February 22nd, the Arizona Solar Energy Industries Association (AriSEIA) submits these additional comments regarding:
 
1.      Chairman O’Connor’s Proposed Amendment No. 3 and Commissioner Myers Revised Proposed Amendment No. 3
2.      Hearing Division Proposed Amendment No. 2
3.      ROO Resolution on E-32 M and E-32 L
 
        I.            Chairman O’Connor Proposed Amendment No. 3 and Commissioner Myers Revised Proposed Amendment No. 3
 
We appreciate the Chairman’s thoughtful consideration of our BYOD proposal. As we mentioned in our briefs, BYOD (or Virtual Power Plants (VPP)) are an innovative way to deploy the capacity already available with distributed batteries, paid for by individuals’ private capital, in an aggregated way, at a rate lower than the utility would pay to build new utility scale resources.[1] The batteries are aggregated together to create a capacity resource that the utility controls and only pays for when it uses it. There are no subsidies or incentives. Ratepayers pay for their own batteries and APS pays to use them only when needed. The evidence was uncontested that the cost to ratepayers of the proposed BYOD program is significantly less than the cost to ratepayers of utility-owned batteries. In fact, APS agreed that when it owns a battery, it costs ratepayers $208/kW every year for 20 years[2] while the cost of the BYOD program is only $150/kW for 5 years. Every single kW of batteries deployed via BYOD with private investment saves all ratepayers money. These savings can begin as soon as this program commences.   
 
VPPs are being deployed all over the country and have been found to save billions in capital investments over the next decade.[3] Our proposal is modeled off of a successful program already in operation and carefully modified to be useful to APS.[4]
 
Our proposal was uncontroverted in the record. Indeed, no stakeholders filed amendments to the ROO regarding the BYOD program. And the ROO cautiously adopts the proposal with a few changes as a modest, pilot program. The ROO specifically acknowledges APS expects significant load growth and the proposal’s value as a capacity resource.[5] Capacity resources like a VPP are critical tools for reliability. The ROO orders APS to file a POA as a compliance item in this docket within 90 days of the decision. A stakeholder process to develop the POA is to commence within 30 days of the decision. Staff already has the opportunity to review the POA within 60 days after it is filed and then is to file a Staff Report and Proposed Order. We have already spent more than a year on the APS rate case. We spent the entirety of 2023 writing testimony, in hearing, and briefing. It is unnecessary and not in the best interests of ratepayers, the utility, or the grid to delay a resource that is currently being squandered for another six months. APS has not filed exceptions asking for more time for the stakeholder process or to file a POA.
 
Similarly, doubling the time frame for Staff to review the POA that is the result of a year of rate case litigation and an additional three-month stakeholder process is unnecessary. Staff also did not file exceptions on this matter. The additional six months of delay included in the Chairman’s amendment was not requested by anyone and will result in ratepayers paying more for equivalent resources, as the utility has an obligation to keep the lights on and will do so with more expensive resources in the interim. It is uncontroverted that the BYOD program costs less than building the same new utility scale resources.
 
Further, the merits of our proposal were already vetted at length in the hearing and rehashing whether the pricing should be based on kWh or kW, whether there should be differences in on-peak vs. off-peak pricing, and whether any on-peak or off-peak times used for pricing should be different than those established for TOU customers would utilize extensive Staff time and resources unnecessarily.
 
Therefore, we respectfully oppose the Chairman’s Proposed Amendment No. 3 and Commissioner Myers Revised Proposed Amendment No. 3. Ratepayers and the grid will benefit and save money from thoughtful deployment of a VPP and the program as proposed is already only a pilot. A year of delay is not in the public interest and will cost ratepayers money. If the program needs tweaks, the Commission can revisit the issue at the conclusion of the pilot. If the Commission does vote to move forward with the Chairman’s Proposed Amendment No. 3, please modify the time frame to be consistent with that outlined in the ROO. An additional six (6) months of delay is unwarranted and costly.
 
     II.            Hearing Division Proposed Amendment No. 2
 
The ROO’s conclusion in this rate case is completely inconsistent with precedent and a prior Commission decision on this very same matter in the last rate case. As our exceptions outline in detail, the ROO makes a 180 degree turn on this issue. The same judge found that there was “no evidence of any specific and unique costs that DG solar customers impose on APS’s system.”[6] That decision literally eliminated a charge unique to solar customers that this rate case then reimposes with the only justification being that somehow residential solar customers are equivalent to AG-X customers and not other residential customers and should have to pay for resource adequacy (RA) via some means other than through their base rates, which was never an issue addressed in the case. Indeed, the ROO says, “[t]he evidence in the record in this matter now makes it clear that APS does not truly provide additional services and does not use additional equipment to serve DG customers.”[7]
 
Additionally, all of this is predicated on accepting a flawed site Cost of Service Study (COSS), which was thoroughly litigated in the last rate case. Assuming the Commission prioritizes regulatory certainty and having no notice of the issue, we did not resubmit all of that testimony in this case, because it was resolved in the last case. Had we known this rate case was a do over for all issues settled in prior rate cases—even those that no party raised—we would have resubmitted all the testimony again. We posit that is not an effective way to process what are already lengthy, time consuming, and complex proceedings with dozens of intervenors.
 
Furthermore, the proposed amendment suggests via a footnote that a broad provision in the Public Notice should serve as sufficient legal notice to the public that, apparently, anything can happen in the rate case including approving a solar-specific charge, even though the issue was never once mentioned during the hearing. AriSEIA is confident that courts will not agree that a catchall in a public notice is sufficient to put the public on notice that literally all possible outcomes are open for adjudication in a rate case proceeding even if no parties so much as mention an issue during the pendency of an action. Such an interpretation undermines the entire purpose of public notice in the first place and is a clear deprivation of due process.  
 
The Hearing Division Amendment incorrectly states that there is a “sizable disparity” between residential solar customers and non-solar customers that results in a subsidy to rooftop solar customers. We have extensive testimony in the 2019 rate case and this rate case refuting that characterization, which the Commission agreed with in just the last decision. Indeed, the “resolution” section in the ROO orders APS to conduct additional analyses as to the solar COSS. It is illogical to both order APS to do additional analysis in the next rate case, but also rely on the apparently incomplete analysis in this case to impose a fee the Commission just eliminated only a couple of years before. This yo-yoing of policy is not in the public interest.
 
Further, APS provides RA to all customers, and all customers pay for that RA through their base rates. That is its fundamental job as a utility. Solar customers should not be the only residential customers having to essentially pay an extra fee solely for that. Singling out solar customers is what the same judge labeled as discriminatory in the last APS rate case.[8]
 
Not only does Hearing Division Proposed Amendment No. 2 include the forgoing deficiencies, but the Commission should also be concerned with the proposed amendment’s endorsing of COSSs introduced by commercial interests that suggest residential rates as a whole should be nearly 45% higher than they are today. In this sense, the proposed amendment appears to argue that solar customers should not complain because, in reality, residential rates should be much higher anyway.
 
AriSEIA respectfully opposes Hearing Division Proposed Amendment No. 2 and is prepared to appeal the rate case decision if the solar charge is not eliminated. AriSEIA continues to recommend adoption of AriSEIA Proposed Amendment No. 1.
 
  III.            ROO Resolution on E-32 M and E-32 L
 
AriSEIA agrees with APS that Kroger’s proposal on E-32 M and E-32 L is not consistent with the public interest. It disproportionately and negatively impacts lower load factor customers and uniquely benefits Kroger and only Kroger and similarly situated companies. An increase in demand charges over volumetric charges is extremely punitive to customers with distributed generation whose investments in such systems rely on financial returns predicated on the original rate design. Any rate increase applied to specific customer classes should be evenly spread across the existing rate components in accordance with their relative magnitude, not distributed in a manner that dramatically increases demand charges over energy charges. Please find AriSEIA Proposed Amendment No. 4 attached.
 
Respectfully,
 
/s/ Autumn T. Johnson
Executive Director
AriSEIA 
(520) 240-4757
[email protected]


[1] Kevin Lucas in hearing test., September 1, 2023, at 00:04:31.

[2] See id. at 00:15:28; See also Direct Testimony of Kevin Lucas, Docket No. E-01345A-22-0144, January 15, 2023, at 36:5–6, available here https://docket.images.azcc.gov/E000027777.pdf?i=1708454244009 [hereinafter Lucas Direct Testimony].

[3] Ryan Hledik, Virtual Power Plants (VPPs) Could Save US Utilities $15-35 Billion in Capacity Investment Over 10 Years, Brattle (May 2, 2023), available here https://www.brattle.com/insights-events/publications/real-reliability-the-value-of-virtual-power/.

[4] See Lucas Direct Testimony at 34:13.

[5] See Recommended Opinion & Order from the Hearing Division, Docket No. E-01345A-22-0144, January 25, 2024, at 363-64, available here https://docket.images.azcc.gov/E000033297.pdf?i=1707275118683 [hereinafter APS ROO].  

[6] Order No. 78317, Docket No. E-01345A-19-0236, November 9, 2021 at 358:5-10, available here https://docket.images.azcc.gov/0000205236.pdf?i=1707254089396  [hereinafter 2019 APS Rate Case].

[7] APS ROO at 272:27-273:1 (emphasis added).

[8] Id.
​

Arizona Corporation Commission
1200 W. Washington Street
Phoenix, AZ 85007
 
Re: TEP Rate Case, Customer Storage Program Stakeholder Meeting, Docket No. E-01933A-22-0107
 
Chairman and Commissioners,
 
AriSEIA submits these comments in response to the compliance filing that TEP filed on December 7, 2023, in response to the stakeholder process they were ordered to commence regarding a Bring Your Own Device (BYOD) program (also known as Virtual Power Plant (VPP)) and revisions to the R-TECH and LGST-SP tariffs.[1] These stakeholder processes are the result of Order 79065.[2]
 
Because some of the utilities have recently been using their compliance filings as evidence in other proceedings and have also asserted that stakeholder silence is agreement, AriSEIA makes this filing to detail our numerous concerns about how TEP has so far engaged on BYOD, R-TECH, and LGST-SP. AriSEIA put forth a robust proposal to implement a BYOD program, as well as specific modifications to the R-TECH and LGST-SP in the course of the last rate case. Those proposals are the reason this stakeholder process was ordered. Further, TEP stated multiple times in the course of the last rate case proceeding that they had not had time to review the proposals. January will be one year since AriSEIA filed those proposals and TEP still seems unfamiliar with them.
 
BYOD is a win/win for AZ ratepayers and the utilities. AriSEIA’s BYOD proposal leverages private investment in distributed battery storage to provide much needed capacity to the grid at a price that is less than the cost of utility-owned, utility scale battery storage.[3] Further, any costs associated with the program are pay for performance only. There is no upfront payment, no subsidy, no cost shift.
 
At the stakeholder meeting held by TEP on November 17, 2023, TEP had no substantive content prepared, had no response to the AriSEIA proposals, had no proposals of its own, did not have the correct people at the meeting to discuss policy, nor did they articulate any plan for how to manage this process going forward. Further, despite the fact that the Order is clear as to what these stakeholder processes are meant to do, TEP was not clear in its direction to participants as to what we were even there to discuss. TEP permitted the meeting to devolve into a tangent conversation about wholly unrelated technologies or whether or not storage should even be considered, despite the fact that storage is the very reason the stakeholder process was ordered.
 
AriSEIA makes the following recommendations to the Commission and TEP:
 
1.      TEP should have the correct personnel at the stakeholder meetings to discuss policy and regulatory issues;
2.    The AriSEIA proposals on BYOD, R-TECH, and LGST-SP should be the basis on which the process unfolds. TEP should come to the meetings prepared to suggest components of these programs they can or cannot support;
3.     R-TECH and LGST-SP are separate issues and while they are to be discussed concurrently with BYOD, need not be discussed simultaneously;
4.     TEP needs to provide a capable facilitator of the meetings and process, either internal or external;
5.    If TEP wishes to host additional stakeholder meetings on unrelated topics or technologies, it can do so, but these processes should remain consistent with and adherent to the Order and the issues discussed in the last rate case; and
6.   TEP needs to articulate a process and timeline for this work. We suggest monthly meetings of one hour, which should be scheduled in advance with a stakeholder list, like TEP does for its other “collaborative” meetings.
 
AriSEIA’s proposal on all three matters can be found in Kevin Lucas’ direct testimony, filed on January 27, 2023, starting at page 314.[4] An excerpt of that testimony is attached herein.
 
/s/ Autumn T. Johnson
Executive Director
AriSEIA 
(520) 240-4757
[email protected]

[1] TEP, Notice of Filing-Tucson Electric Power Company’s Customer Storage Program Stakeholder Meeting Summary, Dec. 7, 2023, Docket. No. E-01933A-22-0107, available here https://docket.images.azcc.gov/E000032546.pdf.

[2] ACC, Opinion and Order No. 79065, Pg. 149, Lines 11-27, Aug. 25, 2023, Docket No. E-01933A-22-0107, available here https://docket.images.azcc.gov/0000209684.pdf?i=1701984045033.

[3] Kevin Lucas in APS rate case, hearing test., Sept. 1, 2023, Docket No. E-01345A-22-0144, 00:04:31 (this is also applicable in the TEP rate case).

[4] AriSEIA, Direct Testimony of Kevin Lucas, Jan. 27, 2023, Docket No. E-01933A-22-0107, available here https://docket.images.azcc.gov/E000023835.pdf?i=1701984045030. 

AriSEIA filed its final brief in the APS rate case today. The brief addresses false and misleading statements in APS' opening brief related to VPP, microgrids, community solar, E-32L SP, and its solar cost of service study. You can read the brief at the link above. A decision is expected in Q1.

AriSEIA filed its opening brief today in the ongoing APS rate case. ​AriSEIA and SEIA's primary objectives in this rate case are to establish a Bring Your Own Device ("BYOD") program to leverage private investment in behind the meter batteries to lower costs for all ratepayers, stop APS' expansion into customer-sited microgrids, revise the battery-supporting E-32 and R-TECH tariffs, establish new and recalculate existing EV tariffs and demand charges, reject APS' solar cost of service study, and reconsider the Commission's community solar policy statement.

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.

AriSEIA filed exceptions and four proposed amendments today to modify components of the Arizona Corporation Commission's (ACC) Recommended Opinion and Order in the Tucson Electric Power (TEP) rate case. We filed amendments seeking to implement a Bring Your Own Device/Virtual Power Plant (VPP) program, implement design changes to several rate tariffs, refund an over-collection on solar customers, and create an affirmative duty on the utilities to notify the ACC to changes in approved fees. A vote is expected on August 8th.

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. 

AriSEIA filed a reply brief today in the Tucson Electric Power (TEP) rate case focusing on mechanisms to improve the use of storage for residential and commercial customers to benefit the grid widely. TEP has ignored and attempted to delay any such programs throughout the proceeding and for several years prior to the case.