Cost of Service Allocation for Distributed Solar
The content discusses the need to establish equitable cost of service for utility revenue requirements, specifically focusing on customers with distributed solar generation. It emphasizes applying consistent cost allocation methods and ensuring that rates are fair and based on the cost of service. The goal is to determine appropriate tariffs and methods for distributed generators within general rate cases.
Download Presentation
Please find below an Image/Link to download the presentation.
The content on the website is provided AS IS for your information and personal use only. It may not be sold, licensed, or shared on other websites without obtaining consent from the author. If you encounter any issues during the download, it is possible that the publisher has removed the file from their server.
You are allowed to download the files provided on this website for personal or commercial use, subject to the condition that they are used lawfully. All files are the property of their respective owners.
The content on the website is provided AS IS for your information and personal use only. It may not be sold, licensed, or shared on other websites without obtaining consent from the author.
E N D
Presentation Transcript
Distributed Solar Cost of Service Douglas Jester, Principal 5 Lakes Energy djester@5lakesenergy.com www.5lakesenergy.com
Our Task (14) Within 1 year after the effective date of the amendatory act that added this subsection, the commission shall conduct a study on an appropriate tariff reflecting equitable cost of service for utility revenue requirements for customers who participate in a net metering program or distributed generation program under the clean and renewable energy and energy waste reduction act, 2008 PA 295, MCL 460.1001 to 460.1211. In any rate case filed after June 1, 2018, the commission shall approve such a tariff for inclusion in the rates of all customers participating in a net metering or distributed generation program under the clean and renewable energy and energy waste reduction act, 2008 PA 295, MCL 460.1001 to 460.1211.
The Cost of Service Standard Sec. 11. (1) Except as otherwise provided in this subsection, the commission shall ensure the establishment of electric rates equal to the cost of providing service to each customer class. In establishing cost of service rates, the commission shall ensure that each class, or sub-class, is assessed for its fair and equitable use of the electric grid. If the commission determines that the impact of imposing cost of service rates on customers of an electric utility would have a material impact on customer rates, the commission may approve an order that implements those rates over a suitable number of years. The commission shall ensure that the cost of providing service to each customer class is based on the allocation of production-related costs based on using the 75-0-25 method of cost allocation and transmission costs based on using the 100% demand method of cost allocation. The commission may modify this method if it determines that this method of cost allocation does not ensure that rates are equal to the cost of service.
My Fundamental Position In order to establish equitable cost of service for utility revenue requirements , the Commission must apply the same cost of service allocation methods to customers with distributed generation as for all other customers. Rates that apply to distributed generation customers must equal cost of service. We can argue about the appropriate methods to determine cost of service, in a general rate case, where all interests can be represented. In this study, we should establish a method to determine cost of service of distributed generators in context of such general rate cases.
General Method Distributed generation reduces service required from the utility by the individual customer with distributed generation and by any class or sub- class to which the customer belongs. Cost of service must credit distributed generation customers with distributed generation by the amount not allocated to the class, or sub-class, as a result of the distributed generation.
Consumers Energy U-18322 COSS Allocator Schedule Allocator Units Cost of Service per Unit RS Allocated Cost ($1000s) Allocator Description 100 Energy @ Generation kWh $ 0.0111 $ 148,039 103 Energy On-Peak @ Generation Summer kWh $ 0.0239 $ 59,807 104 Energy Off-Peak @ Generation Summer kWh $ 0.0237 $ 52,056 105 Energy On-Peak @ Generation Non-Summer kWh $ 0.0283 $ 126,858 106 Energy Off-Peak @ Generation Non-Summer kWh $ 0.0264 $ 110,744 107 Energy Critical On-Peak @ Gen kWh $ 0.0568 $ 27,183 120 12CP Dmd @ Generation kW $ 6.4325 $ 181,211 121 4CP Dmd @ Generation kW $ 45.2347 $ 522,376 122 Class Peak @ Subtransmission kW $ 7.7564 $ 27,723 124 Class Peak @ Subtransmission Exc Dedicated kW $ 11.6687 $ 41,707 127 Classpeak @ Transmission kW $ 6.4448 $ 23,035 141 Production Revenue $1000s $ 5.7828 $ 6,966 142 Distribution Revenue $1000s $ 5.9258 $ 4,043 150 Billed Sales kWh $ 0.0004 $ 4,564 160 Number Of Customers # $ 52.5424 $ 83,490 170 Weighted Customer Weighted $ 0.5258 $ 60,865 224 4CP Dmd @ Gen Jurisdictional kW $ 0.0587 $ 677 226 12CP Demand @ Subtrans kW $ 0.0031 $ 87 230 Classpeak @ Primary kW $ 34.5463 $ 123,477 231 Classpeak @ Secondary kW $ 33.9557 $ 121,366 235 Classpeak @ Single Phase kW $ 47.7822 $ 170,786 253 Billed Sales - Primary kWh $ (0.0002) $ (1,970) 260 Customers - Residential # $ 45.4282 $ 72,279 261 Customers - Drops # $ 46.4958 $ - 263 Customers - NonPID # $ 11.7642 $ 18,693 264 Customers - NonMunicipal # $ 20.7581 $ 32,985
Solar Cases Azimuth (degrees) Tilt2(degrees) Scenario Scenario Description Array Type % ELCC A Fixed panels Tilted at latitude (approximately) South Fixed open rack 43 180 50% B Fixed panels Tilted at latitude (approximately) Southwest Fixed open rack 43 225 62% C Fixed panels Tilted at latitude (approximately) West Fixed open rack 43 270 63% D Single axis-tracking Horizontal 1 Axis Tracking 0 180 62% E Single axis-tracking Tilted at latitude (polar aligned) 1 Axis Tracking 43 180 61% F Dual-axis tracking 2 Axis Tracking 43 180 65%
Residential Customer with Net Zero Solar Energy Cost Allocators
Residential Customer with Net Zero Solar - Contributions on Peak
Residential Customer with Net Zero Solar Contribution to RS Class Peak
Residential Customer with Net Zero Solar Cost of Service
Residential Customer with Net Zero Solar Annual Bill Savings per Nameplate System kW
Residential Customer with Net Zero Solar Breakeven* Cost per Nameplate System kW *Assumes secured loan and 30% tax credit
Residential Customer with Net Zero Solar Inflow-Outflow Elements NZ Solar A NZ Solar B NZ Solar D Inflow Outflow Inflow Outflow Inflow Outflow Energy @ Generation 5208.3 (5,208.3) 5179.4 (5,179.4) 5047.0 (5,047.0) Energy On-Peak @ Generation Summer 615.1 (1,545.5) 573.3 (1,607.6) 506.8 (1,791.1) Energy Off-Peak @ Generation Summer 1055.9 (546.3) 1040.5 (564.7) 1003.9 (633.2) Energy On-Peak @ Generation Non-Summer 1367.8 (2,345.7) 1384.9 (2,265.1) 1358.6 (1,969.6) Energy Off-Peak @ Generation Non-Summer 2169.5 (770.7) 2180.7 (742.0) 2177.7 (653.0) Energy Critical On-Peak @ Gen 18.7 (437.6) 15.9 (667.3) 20.6 (513.3) 12CP Dmd @ Generation 9.3 (9.8) 9.2 (8.3) 9.4 (9.4) 4CP Dmd @ Generation 2.3 (6.0) 2.2 (6.3) 2.4 (4.9) Classpeak @ Subtransmission 1.9 - 1.8 - 1.9 - Cost of Service $ 790.29 $ (544.92) $ 776.12 $ (564.66) $ 798.33 $ (490.87) If rate design is based on charges for inflow and credits for outflow, then these bill elements should match the cost of service for inflow and outflow so that pricing signals are accurate and rate design scales to solar system size relative to customer consumption. Inflow includes monthly customer access charge.
Concerning Other Classes Solar Contribution to Energy, 12CP, 4CP change only by line-loss factors when considering other classes Solar Contribution to Class Peak changes between classes because class peaks occur at different times: RS: HE 6pm 07-28-2015 GS: HE 3pm 07-17-2015 GPD3: HE 2pm 09-02-2015 GPD2: HE 11am 07-29-2015 GPD1: HE 8am 07-31-2015 Timing of class peak, hence solar contribution on class peak may change from year-to-year. We will need to use multi-year averages. Based on 2015, solar will have greater value for GS (secondary commercial customers), GPD3 and GPD2 (non-transmission industrial customers), than for RS (residential) because solar better matches respective Class Peaks.
