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HomeMy WebLinkAboutMemo - Mail Packet - 10/15/2019 - Memorandum From Lisa Rosintoski, John Phelan, Randy Reuscher Re: Solar Export 2020 Rate Proposal And Letter From The Colorado Solar And Storage AssociationUtilities electric · stormwater · wastewater · water 222 Laporte Avenue PO Box 580 Fort Collins, CO 80522 970.212.2900 utilities@fcgov.com fcgov.com/utilities M E M O R A N D U M DATE: October 9, 2019 TO: Mayor Troxell and Councilmembers FROM: Lisa Rosintoski, Deputy Director Utilities Customer Connections John Phelan, Energy Services Senior Manager Randy Reuscher, Utilities Lead Rate Analyst THROUGH: Darin Atteberry, City Manager Jeff Mihelich, Deputy City Manager Kevin R. Gertig, Utilities Executive Director Lance Smith, Deputy Director Utilities Finance RE: Solar Export 2020 Rate Proposal and Letter from the Colorado Solar and Storage Association The purpose of this memo is to provide additional detail regarding the proposed 2020 solar export rates and respond to the letter received from the Colorado Solar and Storage Association (COSSA) on Tuesday, October 8 (attached). Bottom line Staff recommends moving forward with the proposed solar export pricing for 2020. The approach is aligned with developing sustainable, market-based pricing structures which incorporate wholesale and distribution level costs and benefits. The time-based credit values can be adjusted as needed through rate structure and value adjustments in future years. Proposed 2020 Solar Rate Residential solar customers currently receive full retail credit rate for solar energy which they generate and consume within their home and for solar energy generated in excess of what their home is consuming (net export). Retail electricity rates include approximately 2.2 cents per kWh related to the cost of service for operations and maintenance of the distribution system. While Fort Collins remains in the early phases of solar adoption, it’s important to recognize that the current financial structures are not sustainable for equitable support of distribution system operations and maintenance if continued indefinitely. Staff is recommending that the distribution facilities portion of the residential solar credit rate for net excess generation remain at the current amount for 2020. This proposed change in approach does not affect the customer value for self-consumed solar energy. DocuSign Envelope ID: CC3B1C2D-43BF-4649-928D-5C87B1954D12 10/9/2019 10/9/2019 10/9/2019 10/10/2019 10/10/2019 10/10/2019 10/10/2019 Taking into account this proposed treatment of the distribution facilities rate component and the impact of wholesale rate structure changes to time of day pricing, the table below shows the percentage change in solar export credits between 2019 and 2020 for each of the time of day rate periods. Note that one period shows a substantial increase in the export rate, while three show low to moderate decreases. Solar Export Credit Rates Time of Day Period 2019 2020 Percent change Distribution facility credit component $0.0217 $0.0217 0% Summer On-peak credit $0.2272 $0.2400 +5.6% Off-peak credit $0.0654 $0.0631 -3.5% Non summer On-peak credit $0.2041 $0.2032 -0.5% Off-peak credit $0.0636 $0.0631 -0.8% COSSA Letter The letter from COSSA has several key points, which are summarized below along with a response from Utilities and/or City staff.  The proposed rate violates state law o Staff response: The requirements at CRS 40-2-124 do not apply to FC Utilities. Under CRS 40-1-103 and Art. XXV of the Colorado Constitution, the City is exempt from all requirements in CRS Title Articles 1-7 because Fort Collins is a home rule city. o The referenced state law is also outdated relative to Fort Collins Utilities’ metering and billing systems. With Advanced Metering and Time of Day pricing, all net electricity generated or consumed is resolved on a fifteen minute basis with billing resolved on a monthly basis as a credit or charge to the customer’s Utilities account.  The proposed rate has not been studied. o Staff has worked with the Energy Board since late 2016 on this topic. In 2019, the Board has had a work session and discussion agenda item regarding the evolution of solar and net metering pricing. In particular, the focus of these discussions has been the 2030 100% renewable goals and on creating gradual solutions in support of Utilities distribution financial needs while acknowledging that additional factors play a role in overall valuation of solar (e.g. wholesale pricing, electricity markets, localized risks and benefits, carbon reductions).  Solar is providing a $1M benefit from Platte River. o The 2020 wholesale pricing structure change implemented by Platte River Power Authority is expected to have a beneficial impact to Fort Collins of approximately $1M due to the community electricity load shape and changes in how the wholesale costs are allocated between the cities. This load shape has been impacted by building and land use codes, efficiency programs, demand response programs and local solar and further system benefit may be realized from the recent transition of residential customers to time- of-day (TOD) electric pricing. The ~$1M in lower costs for Fort Collins cannot be wholly attributed to any one factor. DocuSign Envelope ID: CC3B1C2D-43BF-4649-928D-5C87B1954D12  Negatively impacting solar project customer economics. o The proposed 2020 change will have a small negative impact on existing and prospective solar customers. Based on a typical solar customers electricity use and solar generation, the proposed pricing change would reduce the annual solar credits for these customers by $6, or $0.50 per month. Customers reduced consumption bills from solar production continue to receive the full distribution value, estimated at $9 per month. Note also that Fort Collins still provides solar incentives up to $1500 for homeowners with projects delivered through a Participating Solar Contractor network. Outreach Staff met via a phone conference with the COSSA president on August 15 and with COSSA members and board members on September 5 to discuss the rationale and details of the proposed solar pricing changes. COSSA did send a letter to staff in advance of the Energy Board meeting on September 12 which was unfortunately not included in the board’s materials due to an email error. Attachments  COSSA letter to Fort Collins City Council, October 8 Cc: Tim McCollough, Deputy Director Utilities Light & Power Operations DocuSign Envelope ID: CC3B1C2D-43BF-4649-928D-5C87B1954D12 1536 Wynkoop St #104 Denver, CO 80202 October 8, 2019 Fort Collins City Council 300 Laporte Ave Fort Collins, CO 80521 Dear Fort Collins City Councilmembers, Today, we are writing to request that you please delay any decisions about the export value of residential solar production by a year for additional study. We have multiple concerns that hasty action will adversely impact Fort Collins’ citizens and stated 100% renewable energy policy goals. First, we believe that the proposed changes to the value of the net export of a residential system would be against state law. CRS 40-2-124(7)(b) reads as follows (emphasis added): (b) Each municipally owned utility shall allow a customer-generator's retail electricity consumption to be offset by the electricity generated from eligible energy resources on the customer-generator's side of the meter that are interconnected with the facilities of the municipally owned utility, subject to the following: (I) Monthly excess generation. If a customer-generator generates electricity in excess of the customer-generator's monthly consumption, all such excess energy, expressed in kilowatt- hours, shall be carried forward from month to month and credited at a ratio of one to one against the customer-generator's energy consumption, expressed in kilowatt-hours, in subsequent months. The proposed rate for exported solar would no longer be at a ratio of one to one. Secondly, no study has been done to decide if the current export rate is the correct one. Residential solar offers value often not captured in the retail rate. Such values can be localized resilience of the grid, a deferral of upgrades to the distribution system, or, on aggregate, even the ability to change the load shape of the entire system. In fact, it is our understanding that Fort Collins Utilities recently received a one-time credit of more than $1 million dollars from Platte River Power Authority because behind-the- meter solar has significantly changed the load profile of the system. These net benefits to all citizens of Fort Collins should be considered when deciding the value of solar energy. DocuSign Envelope ID: CC3B1C2D-43BF-4649-928D-5C87B1954D12 Third, by changing the value of solar exported to the grid, this will change the economics of the installation for the homeowner and may lead your residential ratepayers to forgo new installations. Every time this happens, Fort Collins falls further behind it is laudable goal of 100% renewable energy by 2030. By not capitalizing on the private expenditure that the homeowner is willing to spend, additional money will need to be raised from all citizens to purchase that energy production and capacity, plus the ongoing operations and maintenance costs. Given that Platte River Power Authority just started a Value of Distributed Energy Resources working group with the four cities it serves, it makes the most sense to delay any rate changes until that work is completed. The solar and storage industries are more than happy to work with you and others at Fort Collins Utilities to help create a rate that captures the costs and value residential solar brings to the city. After many years of working collaboratively with Fort Collins Utilities and the residents of Fort Collins, our membership is considerably surprised by the inconsistency of the proposed rate change with Fort Collins' renewable energy goal, as well as Fort Collins Utilities' incentivization of residential solar implementation. Historically, Fort Collins has been in a position of statewide leadership with innovative renewable energy policy--an impressive legacy that stands at risk in light of the proposed solar rate adjustment. Sincerely, Mike Kruger President & CEO Colorado Solar and Storage Association Bryce Carter Executive Director Solar United Neighbors of Colorado DocuSign Envelope ID: CC3B1C2D-43BF-4649-928D-5C87B1954D12