Academic journal article Energy Law Journal

Report of the State Commission Practice Committee

Academic journal article Energy Law Journal

Report of the State Commission Practice Committee

Article excerpt

This report summarizes significant state developments in the utility industry from July 2016 through June 2017.·

I. Alabama

A. Alabama Public Service Commission (PSC) Approves New Rate Contract for Purchased Energy

In 2017, the Alabama PSC approved the Alabama Power Company (Alabama Power) Rate Contract for Purchased Energy (CPE) at its March meeting.1 The new rate established, among other things, the avoided costs to be paid to qualified facilities (QF) greater than 100 kilowatts (kW) in accordance with the Public Utility Regulatory Policies Act of 1978 (PURPA).2 According to Alabama Power, Alabama has experienced an increase in customer interest in cogeneration, decreasing equipment costs for photovoltaic solar, and Alabama Power had a significant response to its 2016 request for proposals for renewable generation and environmentally specialized resources.3 Considering these developments, Alabama Power requested Rate CPE to "promote . . . orderly and efficient implementation" while complying with PURPA.4 Now, under Rate CPE, QFs greater than 100 kW will follow a similar model as Rate Purchase of Alternative Energy (PAE).5 Consistent with PURPA, a QF can either sell to Alabama Power at its projected avoided cost or at its actual avoided cost at the time of delivery.6

To lessen the administrative burden associated with approving numerous purchased energy contracts, Rate CPE includes two standard contracts that will serve to expedite the evaluation process.7 Both form contracts have a term that is "evergreen" in nature.8 This means that each QF, at its discretion, has the right to renew its contract for an additional annual term, subject to the updated avoided cost rate, as long as PURPA is not repealed and the QF is not in default.9 Additionally, whenever a contract under Rate CPE is executed, the contract is required to be submitted to Alabama PSC staff for review.10 Unless the staff finds some material difference between the applicable standard contract approved under Rate CPE and the executed contract, no separate Alabama PSC approval is necessary.11

II. Arizona

A. Value of Solar Proceeding/ Export Rate for Distributed Generation

The Arizona Corporation Commission (Arizona CC) approved a new compensation scheme for rooftop solar generated exported energy.12 This approval came after almost three years of investigation into and multiple evidentiary hearings on (1) the cost to serve residential customers with distributed generation (DG), (2) the value of DG to both customers and the utility, and (3) the appropriate method for determining an export rate for DG.13 The Arizona CC set aside net metering for a more market-based export rate, and instituted a gradual transition away from the full retail net metering model towards a compensation method intended to better reflect the actual value of DG, calculated either by a five-year avoided cost methodology or a resource comparison proxy (RCP) methodology.14 In the spirit of gradualism, until the avoided cost methodology can be implemented, the transition process will use the RCP, a five year rolling weighted average of a utility's solar PPAs and utility-owned solar generating resources.15 The RCP is intended to include "avoided transmission, distribution capacity, and line loss[]" benefits, however.16 Finally, in the same Order, the Arizona CC provided for grandfathering for rooftop distributed generation customers who submit a new distributed generation interconnection application before the effective date of the decision that sets a new value for exported DG to be compensated under the existing net metering regime.17

B. Arizona Corporation Commission Heard Rate Cases for the Three Major IOUs under its Jurisdiction, but Declined to Institute Mandatory Three-Part Demand Rates

In response to requests from UNS Electric, Inc. (UNSE), Tucson Electric Power Company (TEP), and Arizona Public Service Electric Company (APS) to require that all rooftop solar customers be placed on a three-part demand rate, the Arizona CC approved optional three-part demand rates, additional time-of-use rate options, and increases to basic service charges (BSC) that attempt to provide customers with the incentive to choose time-of-use (TOU) rates (with or without a demand component) over traditional two-part volumetric rates. …

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