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Connecticut regulators cut UI rate hike request

Bill Dornbos, the Connecticut director of the Acadia Center, said the reduction of the fixed-rate service charge is a crucial step to protect consumers and encouraging renewable energy. The Acadia Center is a Boston-based environmental group,

“The new rate design will also help promote energy efficiency and … more closely aligning the state’s electric rate structure with its energy policy,” Dornbos said in a statement.

Read the full article from the New Haven Register here.

What do we want? Rate Reform! When do we want it? Not in this docket: Distribution Rate Reform in Rhode Island

Over a dozen parties, including Acadia Center, have intervened in a proceeding currently before the Rhode Island Public Utility Commission (Docket No. 4568). The issue at hand is a new electric rate structure proposed by National Grid.

Under legislation passed in 2014, National Grid was required to identify potential rate reforms in light of the increasing amount of distributed generation, like solar photovoltaics (PV), that will be connected to the grid. The scope of National Grid’s proposal was limited by the legislation to only one component of our electricity bills – distribution rates – and the utility could not propose reforms that would require additional expenditure, like advanced metering.  Unfortunately, these restrictions have narrowed the conversation and we are now discussing incremental change that may in fact be regressive.

Rhode Island is emerging as a leader in grid modernization efforts. It has a good foundation of existing policies and processes, which the Systems Integration Rhode Island (SIRI) working group mapped out in a recently released report.  National Grid’s DemandLink pilot in Tiverton and Little Compton and the RI Office of Energy Resources’ Solarize program are great examples of using new technology, energy efficiency, and distributed resources to avoid more costly investments in traditional infrastructure.

Now how do we capitalize on the learning to date and make the electric grid and energy system as a whole more dynamic, clean, and responsive to consumers?  How do we more accurately value and compensate distributed generation for the benefits they provide while ensuring that they pay for the services they get from the grid?  That is the conversation we should be having, but instead we are butting heads over a tiered customer charge for residential and small commercial and industrial customers and an access fee for standalone generators (National Grid’s rate reform proposal is summarized here).

Acadia Center’s concerns and arguments against the proposal are laid out in Dr. Abigail Anthony’s testimony on the tiered customer charge and access fee and her rebuttal testimony filed last week.  The gist is that:

 

Acadia Center has recommended that the Commission reject National Grid’s proposal. There needs to be a better understanding of the costs and benefits of distributed generation, and how those customers should be compensated. Evaluating the potential costs and benefits of new metering technology will also help in developing long-term rate design that actually advances the state’s energy vision.

Hearings in this proceeding get underway on January 19, 2016.

 

 


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Leslie Malone is a Senior Analyst, Climate & Energy and Canada Project Director working from Acadia Center’s Providence office. She works on distributed and large-scale renewable energy and transmission policy as well as energy efficiency and carbon pricing issues in the U.S. and Canada.

Summary of National Grid’s Distribution Rate Reform Proposal in Rhode Island

Legislation passed in 2014 required the Public Utility Commission to open a docket by July 1, 2015 to consider rate design and distribution cost allocation in light of the increasing amount of distributed generation, like solar photovoltaics (PV),that will be connected to the grid. Only reforms to distribution rates are being considered and National Grid was required to file a revenue-neutral proposal, meaning they could not propose a rate design that requires new investment in, for example, advanced metering.

National Grid submitted a proposal that includes: 1) a tiered customer charge for residential and small commercial and industrial (C&I) customers; 2) an access fee for standalone distributed generation; and, 3) a merger of the two larger industrial rate classes. Acadia Center let the US Navy and Walmart take on the rate class merger issue and focused our testimony on the first two issues.

Tiered Customer Charges

Residential and small C&I customers in Rhode Island currently pay a customer charge on their electricity bills to cover meter reading, billing, etc. Regardless of the amount of power you use in a given month that cost is always on the bill.

National Grid has proposed moving from a uniform customer charge to tiered customer charges based on monthly usage (kWh). For residential customers the customer charge would range from $5.25/month (Tier 1) to $18.00/month (Tier 4) compared to the current charge of $5.00/month. For small commercial and industrial customers the fixed customer charge would range from $10.50/month (Tier 1) to $26.00/month (Tier 4) compared to the current $10.00/month.

In practice this means that if you use more electricity in a given month (think heat wave in July) then you may be placed in a higher tier with a higher fixed customer charge. If you move up a tier then you get locked in at that higher level for the next 12 months. This obviously has implications for all customers but it is particularly worrying for customers that use electricity for heating – typically renters and low-income customers. The proposal could also penalize customers that install electric heat pumps or own electric vehicles.

Also, since this is a revenue-neutral proposal, increasing the amount of revenue collected through fixed charges leads to a corresponding decrease in the variable distribution rate, which has negative implications for energy efficiency and net metering credits by making energy savings and credits less valuable.

Access Fee

National Grid has proposed a monthly access fee for all “stand-alone distributed generation,” defined as generation connected to the distribution system that does not have on-site load. In other words, virtual or community net metering projects.

The access fee is $5.00 per kW-month for projects connected to the distribution system at primary voltage and $7.25 per kW-month for projects connected at the secondary voltage level. These fees are adjusted by a technology-specific “capacity availability factor” of 40% for solar, 30% for wind, 10% for hydro, and 40% for anaerobic digestion.

Ultimately, the access fee proposal discourages stand-alone distributed generation by imposing additional hurdles on municipalities and farms. It also fails to take into account the benefits of distributed resources.

National Grid has made a similar tiered customer charge and access fee proposal in Massachusetts. In both these states we should be encouraging more innovative analysis and reforms that have the potential to advance a clean energy future.

 

 


LDM_pic_update_2014

Leslie Malone is a Senior Analyst, Climate & Energy and Canada Project Director working from Acadia Center’s Providence office. She works on distributed and large-scale renewable energy and transmission policy as well as energy efficiency and carbon pricing issues in the U.S. and Canada.

Lawmakers Limit What Utilities Can Recover In Monthly Fee

…In a statement, William E. Dornbos, Connecticut director of the Acadia Center, an environment and clean energy advocate, said: “The General Assembly has returned the fixed charge to something much closer to its historical purpose — only covering the costs of giving customers access to the grid, such as the cost of the meter and billing. By limiting the scope of the fixed charge with a statutory definition, this week’s legislative action should lead to a reduced fixed charge that will give consumers more control over their electricity costs”… (This article is available only with a subscription to the Hartford Courant)

Why We Need to Cap Fixed Charges in Connecticut: To Protect Consumers and Support Energy Efficiency & Local Clean Power

Vision

To advance a clean energy future, we need a modern power grid with full consumer control over energy generation, consumption, and costs. This modern power grid should enable consumers to make beneficial energy decisions. This can mean many things:  installing rooftop solar; participating in demand response; weatherizing and investing in high-efficiency appliances; comparing apartments based on energy cost data; or, choosing to make no changes at all. Yet, Connecticut utilities continue to increase already high fixed charges, which hurt consumers by increasing the amount that must be paid regardless of energy use and, in so doing, interfering with the objectives of a modern power grid.

Problem

A fixed charge is an automatic monthly fee that applies regardless of how much electricity the consumer actually uses. Consumers must pay it to obtain access to electricity.  High fixed charges discourage consumers from investing in energy efficiency and local clean power, such as residential solar. These charges also fall hardest on those consumers who use the least amount of electricity – typically, those on low incomes, seniors, efficient users, or households with solar PV arrays.
Historically, a reasonable fixed charge for residential customers has been in the $5 to $10 range. Yet, the residential fixed charges of Eversource Energy (in Connecticut) and United Illuminating are, respectively, the highest and the second highest in New England for any major electric utility. Eversource’s is now $19.25 per month, a twenty percent increase over the previous amount. UI’s is now $17.25 per month. Further, both utilities can be expected to seek additional increases in their next rate cases (2016 or 2017). In its most recent rate case, Eversource proposed a residential fixed charge of $25.50, while asserting that its analysis showed it was actually entitled to a $34.96 charge.

Solution

Connecticut’s General Assembly can solve the problem of ever-increasing and excessive fixed charges by placing a reasonable cap on fixed charge amounts for residential and small business customers. California successfully capped residential fixed charges at $10 in 2013. By lowering and capping fixed charges right now, we can give all consumers, including the most vulnerable, a real chance to benefit economically from the rapid advances in technology that are already modernizing the power grid. Connecticut needs a permanent solution to both protect consumers and to steer regulators towards electricity rate designs better aligned with key public policy goals.

Connecticut lawmakers want cap on utilities’ rising fixed-rate charges

Having seen regulators approve in December an increase in Eversource Energy’s fixed-rate charge to its customers, some lawmakers are now proposing a cap on future increases.

Senate Bill 570 has been introduced by state Senate President Martin M. Looney and 10 other lawmakers. Although the language of the bill doesn’t mention a specific number, a few lawmakers talked about a cap of $10 per month, which is similar to one proposed in California.

Looney, D-New Haven, said in testimony before the legislature’s Energy and Technology Committee Tuesday that fixed-rate charges are “inherently regressive.”

Relationship between utilities, government needs to change, experts say

As Connecticut lawmakers begin to consider a slew of energy-related bills, they spent time Monday listening to advice from New York State’s “energy czar” and other experts about how the relationship between the utility industry and government needs to be overhauled…

…Amid discussion of increased utility infrastructure spending and use of technology, Abigail Anthony, director of the grid modernization initiative for the Acadia Center as well as the regional environmental group’s Rhode Island director, urged lawmakers not to lose sight of the consumer in the process.

“Our grid is not advanced if it does not protect consumers.” Anthony said. “It should be about creating healthier and better communities.”