10 state rooftop solar debates to watch in 2016 and beyond
As solar deployment spreads, so do the policy debates over its value
The rapid growth of rooftop solar hasn’t come without its growing pains.
Only a few years ago, most regulations and policies were aimed at expanding rooftop solar. Coupled with these policies and other incentives, falling costs and innovative financing models helped rooftop solar to boom in many regions. But this created a challenge for utilities in trying to maintain grid reliability and recover fixed costs in the face of increasing penetrations of rooftop solar. Many state regulatory commissions are now turning their attention to these challenges, mulling new policies that are aimed at helping manage the growth.
More than half of the states underwent some sort of policy challenge over rooftop solar issues in 2015, according to a recent study by NC Clean Energy Technology Center, running the gamut of net metering battles to fixed charge increases.
Some of the most significant questions facing policymakers center on solar's value, such has how much rooftop solar systems should be credited for energy sent back to the grid or whether solar incentives create a cost-shift that unduly burdens non-solar customers. Other issues focus on the legal status of rooftop solar, especially third-party owned systems and utility ownership of solar.
Various solutions have been proposed, but since the growth of rooftop solar is still in its early stages, no one region seems to have found the perfect policy cocktail for the resource. While some states offer intriguing regulatory models for the management of solar growth, which ones will catch on throughout the rest of the nation still remains to be seen.
Wtih that in mind, Utility Dive has compiled a list of 10 states with major rooftop solar debates to watch in 2016 and beyond. While some issues overlap, most of these states have unique challenges or are pioneering different policies to handle high solar penetration. Here's what you need to know.
Hawaii’s high penetration of rooftop solar has propelled experts to label it the most advanced technical market for solar installations in the U.S. With about 12% of Hawaiian Electric's residential customers already having installed solar panels by the end of 2014, what Hawaii does will have wide-ranging implications for the utility and solar sectors.
In 2015, the Hawaii Public Utilities Commission moved to eliminate retail rate remuneration for net metering customers. The move is viewed by many in the industry as "a postcard from the future" for states looking at their own net metering policies in the upcoming year.
Hawaii’s high penetration of rooftop solar has propelled experts to label it the most advanced technical market for solar installations in the U.S.
Instead of continuing retail rate net metering, the Hawaii PUC created two new options to simultaneously compensate customers for solar and address utility concerns of a cost shift. The options compensate customers at a new fixed rate if they are supplying power back to the grid, or provide customers with a minimum bill if they are not.
In 2016, the industry will be watching how the rooftop solar market reacts to the policy changes in the state. Retail rate net metering was a compelling incentive for residents to go solar, especially given Hawaii's high electricity prices. But with Hawaii the first state to eliminate its retail rate net metering program, experts aren’t sure how distributed generation will continue to grow in the state.
Whether or not other states will mimic this policy shift is not yet clear. But regulators and utilities from the mainland will be watching this state closely to see how its rooftop solar market behaves in the post-net metering era.
With respect to other decisions playing out in Nevada, California and Arizona, Hawaii's move isn't necessarily the model that others will follow on the same level since its market is the most advanced, GTM Research's Senior Solar Analyst Cory Honeyman said, which makes "it kind of an outlier."
For some additional background reading on Hawaii's rooftop solar issues, check out these other Utility Dive stories:
On the mainland, California has been a leader in the rooftop solar market. Now, with more than 600 MW of residential solar installed in 2014 alone, the state is grappling with rate reforms and net metering policies that could have broad consequences for the rooftop solar market.
"California is still well-positioned to be the No. 1 state market for residential and commercial markets." – GTM's Cory Honeyman
Earlier this month, the California Public Utilities Commission issued a proposed decision that preserves retail rate net metering while adding smaller fees to address the cost-shift argument from utilities. A final decision is scheduled for the end of January 2016, and could inform how other states deal with their rooftop solar issues.
“[It’s a] huge decision across the board for utilities continuing to deal with the highest levels of DG penetration,” Honeyman told Utility Dive. “There are huge implications for residential solar installers and developers; half of your sales footprint is based in California. It will be one of the biggest decisions shaping the growth direction of PV over next 5-10 years.”
Under the proposed decision, California will end its current net metering program in July 2017, or when utilities hit regulatory caps on net metered systems that limit their combined output to 5% of a utility's peak demand.
The proposed decision adds a one-time interconnection fee and non-bypassable fees to residential and small commercial installations, and includes a provision to move new net metering customers to time-of-use (TOU) rates by 2017, with the goal of moving all customers to TOU rates by 2019.
Many of the debates over rooftop solar can be traced back to Assembly Bill 327, passed in 2013. The bill is considered to be one of the biggest reforms to residential rates in California since the 2001-02 energy crisis. The intent was to lift some restrictions placed on the CPUC to raise rates on specific customers, expand the net metering program, and lift the cap on solar installations. The CPUC was directed to find a new solar tariff that ensured the growth of distributed generation by Dec. 31, 2015.
Amid the push to develop a new solar tariff, the CPUC issued a separate proposed decision in 2015 to flatten its four-tier electrical rate system into two tiers and move towards time-of-use rates to reform a rate structure that critics say unfairly burdens large power users. Some California utilities proposed fixed monthly charges in the rate reform process, but they were deferred by regulators, much to the relief of solar advocates.
Solar advocates praised regulators for deferring their decision on monthly fixed charges and said the new rate structure could allow for solar growth if retail net metering was preserved. For the CPUC decision on net metering, major California utilities such as Pacific Gas and Electric and San Diego Gas & Electric lobbied for monthly fixed fees and reducing the remuneration rate paid to net metering customers. When regulators did not follow their recommendations, SDG&E said the decision fails to adequately address the "growing cost burden" on their ratepayers, which the utility estimated to be about $160 million per year, or $100 per monthly family bill. The utilities are now pushing an alternate net metering reform proposal, filed in comments on the proposed decision last week.
Ultimately, it’s “a net win for rooftop solar industry,” Honeyman said. Alongside “the introduction of [the ruling] are some moderate rollbacks to the value of net metered projects. California is still well-positioned to be the No. 1 state market for residential and commercial markets.”
California’s solar market has always been in the utility and solar industry spotlight. With a final decision for the CPUC net metering proposal scheduled for the end of January 2016, no other major decisions regarding solar are not on the table. But what California does now with solar — and the results they see — will undoubtedly influence how other states deal with the resource.
For some additional background reading on California's rooftop solar issues, check out these other Utility Dive stories:
Arizona boasts the second highest penetration of solar on the mainland in installed solar capacity, according to SEIA, just behind California. Of the 247 MW of solar installed in 2014, 94 MW was residential.
While not as advanced as the Hawaii and California markets, the state has undergone some very heated policy debates, mostly over net metering issues. The first round occurred in 2013, and the rancorous tone and aggressive tactics used by both sides in that debate have since set the tone for debates in some other states.
That year, Arizona Public Service Co. (APS) pushed regulators to add a monthly fixed fee for distributed solar systems. Solar advocates led by The Alliance for Solar Choice (TASC) fought back against the proposal, and the tensions from that debate spilled over into the 2014 election that saw two seats on the Arizona Corporation Commission (ACC) up for grabs. Amid the tension, the ACC settled on a flat grid access fee of $5, or $0.70/kW. However, the ACC said that a fee of $21 was reasonable and that the utility could revisit the issue in upcoming years, according to the 2013 ACC decision.
In 2015, Arizona Public Service Co. filed a request with the ACC to increase the fee to $21, or $3/kW. The proposal was met with resistance from the solar industry, notably from leading California-based solar developer SolarCity and TASC. Around the same time, public utility Salt River Project’s board added fixed fees to distributed generation users’ bills, which boosted monthly bills for such users by $50. Meanwhile, another Arizona utility, Tuscon Electric Power (TEP), also filed a request to reduce the retail rate remuneration to a wholesale rate, but later withdrew their request and said they would bring it up again in a general rate case for 2017 rates.
"I think in next year [or] toward the end of next year, the hot button will be Arizona with a long proceeding about future of solar valuation." – GTM's Cory Honeyman
Two other utilities in Arizona joined APS and TEP in filing requests to reduce the retail remuneration rate for net metering customers or add a fixed charge in 2015. The utilities’ requests revived the simmering tensions from 2013, which also brought accusations that APS allegedly funneled so-called dark money into nonprofits that supported two current ACC commissioners’ 2014 election campaigns.
Amid the controversy, all utilities withdrew their requests. While APS called for a cost-of-service analysis for distributed solar, the ACC instead opened a generic docket for a cost-benefit analysis of solar.
While no immediate decision is expected on the cost-benefit analysis of solar, Arizona is a solar hotspot to watch in the upcoming year, experts say, as the docket is ongoing. Another aspect of the state’s solar sector to watch is distributed solar’s future in Salt River Project’s service territory, which leading solar developer SolarCity claimed has claimed tamped down on more than 90% of new rooftop solar applications since the public utility approved fees for solar owners, Greentech Media reports. GTM Research puts the number closer to 75%.
“I think in next year [or] toward the end of next year, the hot button will be Arizona with a long proceeding about future of solar valuation,” GTM’s Honeyman said.
For some additional background reading on Arizona's rooftop solar issues, check out these other Utility Dive stories:
All eyes will likely be on Nevada's solar market this year as the state utility regulators recently approved one of the most contentious net metering policies to date.
Nevada witnessed the one of the biggest explosion of growth contained in the space of a few years. In 2014, the Solar Energy Industries Association reported that $569 million was invested in solar installations in Nevada, representing a 427% increase over 2013. But there were some side effects from the growth in 2015, as the rapid pace of the installations maxed out the state’s 235 MW cap on net metered systems.
NV Energy anticipated hitting the cap at the end of 2015, while solar installers warned the utility that the limit would likely be reached sooner, in the summer.
"There's potential for this [Nevada net metering decision] to be the focal point of the industry, where the issue could evolve into a much broader argument that shapes the future of net metering reforms."– GTM's Honeyman
In May, lawmakers directed the Public Utilities Commission of Nevada (PUCN) to come up with a solar tariff in place of the previous net metering policy by the end of 2015 as the solar industry pushed to expand or lift the cap.
The cap was then hit in early August. The PUCN initially rejected a bid to expand the cap, pushing installer Vivint Solar to cease operations in the state. Shortly after, regulators reversed themselves, deciding to keep retail rate remuneration until the end of 2015, when a new net metering policy would be put in place.
The Commission arrived at a decision in December. They not only reduced the retail remuneration rate paid to net metering customers, but created a separate customer class for residential and small-scale commercial solar projects.
The policy includes an increase in fixed charges alongside a decrease in the volumetric commodity charge designed to recoup costs from net metering customers. It also includes a time-of-use pricing option. But most controversially, it applies not only to new rooftop solar systems, but exsisting ones as well.
The decision to apply the new policy to existing systems is "something we haven’t seen in approved net metering decisions,” Honeyman said. “This would be a pretty big deal.”
That approach has already attracted at least one legal challege from solar customers, who say changing the remuneration rate for their solar systems violates the U.S. constitution's contracts clause. Regulators have said they plan to review the provision at a February meeting.
But beyond its application to existing systems, the policy reflects a growing trend among states opting to re-evaluate how they approach net metering policies, aside from proposing higher fixed fees.
"A lot of states were basically putting together proposals that were sort of reactive to the recent growth we've seen in residential solar," Honeyman said. "That recent growth is impressive but the response in reaction to that growth in looking at the first wave of prospoals in 2013 -2014, utilities were just proposing high fixed charge increases, which was used as a blunt instrument approach. It wasn’t the most accurate ... approach to address [the boom]."
Now utilities are looking to more flexible, "sophisticated" approaches for existing net-metering customers that aren't reliant on fixed charges. But as seen in Nevada, that flexibility can be a double-edged sword.
"That flexibility is a fairly contentious one," Honeyman added. "You have utilties that are offering a policy paradigm about how [the customers] would be compensated, and to change that as recently approved in Nevada is at least something up for debate [about] whether or not that’s a legally justified approach... To what extent did the rules [and rates] that were initially communicated to the customer should be left intact" is the question.
SolarCity and Sunrun have decided to halt sales and installations following the decision. Their exit alongside Vivint Solar earlier in 2015 will significantly diminish market since the three companies were responsible for about two-thirds of the residential solar installed over the past few years, Honeyman said.
With major solar developers already departing Nevada, future growth of residential solar is uncertain. While no other major decisions regarding the policy are expected, stay tuned for the potential appeal of the policy and possible lawsuits in addition to how the market reacts to the decision.
"There's potential for this [decision] to be the focal point of the industry, where the issue could evolve into a much broader argument that shapes the future of net metering reforms." Honeyman said.
For some additional background reading on Nevada's rooftop solar issues, check out these other Utility Dive stories:
5. South Carolina
The Southeastern U.S. is one of the last regions to establish a vibrant rooftop solar market. But that’s slowly changing due to a handful of states establishing policies designed to encourage the resource’s growth. South Carolina is one of the states on the forefront of this shift.
South Carolina’s General Assembly in 2014 passed the landmark Act 236, which outlined how the state would tackle net metering, third-party ownership of solar and the value of solar. The South Carolina Public Service Commission approved retail rate net metering as directed by the legislation. The legislation grew out of a coalition of environmentalists, solar advocates, utilities and electric cooperatives overseen by the General Assembly. Their aim was to prepare for solar’s growth without getting into the bitter battles that the industry saw in other states, particularly Arizona.
"Our idea was to get ahead of mass adoption so it would not be necessary to correct messy policy later."– John Frick, Electric Cooperatives of SC Government Relations VP
– “Electric Cooperatives of South Carolina Government Relations Vice President John Frick
“In other states there has been a lot of adoption, and then they discovered they had policies that were causing big fights,” Electric Cooperatives of South Carolina Government Relations Vice President John Frick told Utility Dive. "As use increases, rate structure issues get bigger and technical issues come quickly, like a tipping point, at higher penetrations. Our idea was to get ahead of mass adoption so it would not be necessary to correct messy policy later.”
But the move hasn’t come without growing pains as the state’s utilities come to terms with distributed solar on their grid.
South Carolina’s public utility Santee Cooper board approved a new package of solar incentives and fixed charges on distributed solar users in late 2015 that has drawn criticism from solar advocates. The publicly-owned utility is exempt from several provisions of Act 236, but advocates say they should be held to the same policy as investor-owned utilities (IOUs). While the IOUs have agreed to solar targets and retail rate net metering, Santee Cooper has argued that rebates and avoided cost remuneration is the more beneficial option.
Another aspect that makes South Carolina stand out, besides Act 236, is the shorter timeline for net metering policy. According to the PSC, residential and commercial customers who install systems before 2021 are eligible for this rate up until 2025. The PSC plans to reevaluate all net metering and solar policies in 2020. Mississippi has also enacted a similar timeframe. According to Honeyman, most net metering policies are indefinite.
"In some states, however, there are net metering program capacity limits, which means that when a certain level distributed solar has been added to the grid, the PUC is authorized to review preexisting net metering rules," the GTM analyst said
“On one hand, you have pretty attractive markets with net metering and incentives,” Honeyman added. “But [there are] definite questions as to how do you price solar for a customer when you have only 10 years right now, and the certainty will decline each year.”
Honeyman said that with net metering policies up for debate in 19 states in the U.S., more utility regulators are opting for shorter timeframes to reevaluate the policy. The shorter timeline allows utilities to react faster as residential solar increases.
"Having these interim net metering policies with shorter timeframes and not indefinitely in place allows them to evaluate more quickly for pre-existing homeowners," Honeyman said. "It allows utilities flexibility to revise rules."
For South Carolina, no immediate decisions are expected in 2016, but it is a state to watch to see how solar may grow in the Southeast and what will happen to the net metering policy in 2020.
For some additional background reading on South Carolina's rooftop solar issues, check out these other Utility Dive stories:
One of the last states without a net metering policy, Mississippi’s utility regulators voted in November 2015 to establish one, becoming the 45th state to do so. Though the Southern state has a small solar penetration — 1 MW of installed solar overall — this move highlights a quietly growing market in the Southeast, one of the last regions to have a strong solar presence.
Mississippi’s decision arrived five years after the Public Service Commission first opened a docket to evaluate the potential of such a policy. This culminated last year in a study by Synapse Energy Economics, which found the benefits of a net metering policy would outweigh the costs in nearly every scenario. However, the study did warn that if rooftop solar penetration is below 0.5%, it would decrease revenues for the state's utilities.
"It’s very challenging for installers to pitch the idea for a homeowner when the [net metering] rules in place are not for the entire life of PV systems."GTM's Honeyman
The PSC enacted a policy in December that will compensate solar customers for the power they send to the grid at a rate between the retail and wholesale prices, a compromise between what utilities wanted and what solar advocates wanted, echoing the collaborative tone set in South Carolina. Those prices are set at $0.07 to $0.075 per kWh with an adder of $0.025 to account for “unquantifiable benefits.” After three years, the "adder" will be replaced after "actual benefits" are figured out, according to the Mississippi Business Journal.
The net metering policy will only last five years until it’s up for reevaluation, again echoing South Carolina’s move. The shorter timeframe makes the “economics tough to pencil in the compensation rate for $0.07- $0.075 cents/ kWh,” Honeyman said. "It’s very challenging for installers to pitch the idea for a homeowner when the rules in place are not for the entire life of pv systems."
Much like South Carolina, Mississippi has no immediate, specific debates coming in the next year, but it will be a state to watch to see how its initial net metering policy influences residential solar’s growth before it’s up for review in five years.
For some additional background reading on Mississippi's rooftop solar issues, check out these other Utility Dive stories:
Maine’s solar sector might be small, but it’s undergoing major policy evolutions to tackle the potential growth and value of solar in the state.
Autumn Proudlove, a senior policy analyst at the NC Clean Energy Technology Center, said Maine has emerged as a state with implications for the solar sector as there may be significant changes to how regulators manage the resource.
"We may see a departure from net metering in Maine."– Autumn Proudlove, policy analyst for NC Clean Energy Technology Center
These potential changes grew out of two pressing issues in the state: how to continue after Central Maine Power, the dominant utility in the state, hits the looming 1% of peak load net metering cap and how to properly value solar.
In March 2015, the Maine Public Utilities Commission released a study that put the value of solar at $0.33/kWh, substantially higher than what state residents pay for traditional power. Solar advocates said the study underscored how the resource is underutilized in the state.
In June 2015, Maine’s Office of the Public Advocate Mission, which oversees utility customers, partnered with a state lawmaker to lead a joint committee of the state’s Legislature to pass a bill that would give solar developers a chance to opt out of net metering at every level to capture more of the value of solar.
The proposal includes long-term compensation reflecting the value of solar while improving upon over the current net metering policy. It incorporates a competitive reverse auction for the commercial-industrial sector alongside a capacity-based declining block program for residential solar owners. These two market techniques are designed to drive the price of solar down, while another program provision aims to capture its full value.
The final objective of the proposal calls for a Standard Buyer agency that would aggregate and sell wind or solar-generated electricity into available markets to capture the full value of solar. A final regulatory decision on is expected to come in January. What will come out of it could be an overhaul of the existing net metering policy, which allows net metering with credits set at the retail rate.
"We're still waiting to see what the details look like, but we may see a departure from net metering in Maine,” Proudlove told Utility Dive.
For some additional background reading on Maine's rooftop solar issues, check out these other Utility Dive stories here:
Compared to places like Arizona and California, Wisconsin’s solar market is very small, but its utilities have been very active in seeking greater fixed charges for rooftop solar users. Nationwide, there were at least 26 fixed charge cases in 2015, according to NC Clean Energy Technology Center, and Wisconsin was one of the more notable of those.
Fixed charges are particularly significant in a nascent solar market because they can have a negative impact on rooftop solar growth. Wisconsin utilities have proposed over the past two years a variety of solutions to solve what they see as distributed solar users’ reduced contribution to maintain the grid and shifting of fixed costs onto other consumers.
"[Wisconsin] is a less contentious hotspot than in other states. It’s just the beginning of the debate.”– GTM's Honeyman
A slew of proposals in 2014 set the precedent for ongoing debates over fixed charges in Wisconsin today. We Energies was granted a 75% monthly fixed charge increase for residential customers in 2014, and this was followed by the PSC approving a proposed fixed charge increase from Madison Gas & Electric, which boosted the monthly charges 85% from $10.29 to $19.
A Dane County Circuit court judge ruled in October 2015 that the PSC didn’t have enough information to approve We Energies’ 2014 fee increase request, the Milwaukee Sentinel-Journal reports. The court decision effectively throws out the fees that would have been imposed on residential solar users, the news outlet reported. At the time, We Energies and the PSC said they were reviewing their options, and no news has yet surfaced on whether the entities will appeal the decision.
Wisconsin Public Service (WPS) recently proposed in 2015 to add a monthly fixed charge of $6 to its residential customers' electricity bills, on top of the $19 monthly fixed charges it won from the commission over the past two years. If approved, WPS’ proposal would lower the variable residential charges based on power usage, moving more of the utility's revenues to fixed fees. The utility argued that a rate design that emphasizes variable charges could lower utility revenues as increases in efficiency and a higher penetration of rooftop solar decrease customer energy usage.
These proposals have sparked a backlash across the state, which has enjoyed bipartisan support for solar energy, Midwest Energy News reports.
“I don’t think this is the last time you are going to see a proposal reevaluating net metering [in Wisconsin],” GTM’s Honeyman said. “Wisconsin is a pretty nascent market when it comes to rooftop solar; it’s on the margins when it comes to economics of rooftop solar. [The state] is a less contentious hotspot than in other states. It’s just the beginning of the debate.”
As of yet, there are no more proposals on the table, but Honeyman said to keep an eye on the state because it’s a “it’s a multi-year conversation and not just a one-year battle.”
For additional background reading on Wisconsin's rooftop solar issues, check out these Utility Dive stories here:
Florida is considered a sleeping giant of the solar industry, but its potential has been far underutilitized, experts said. The big question facing the state is whether or not third-party-owned solar systems have the right to sell energy directly to the consumer without being classified as a utility.
Florida is one of four states that restricts residents from purchasing solar energy from any developer except a utility. Two dueling solar ballot initiatives introduced by two different coalitions are trying to snag the signatures and judicial approval needed to make it onto the 2016 ballot.
Florida is considered a sleeping giant of the solar industry, but its potential has been far underutilitized, experts said.
Both amendments address whether or not Florida solar suppliers have the right to sell electricity directly to the customer. The emergence of third party ownership (TPO) models made owning solar affordable for many consumers, and many solar developers, particularly SolarCity, developed their business around the model.
A GTM report titled “U.S. Residential Solar Financing 2015-2020” found that in 2014, TPO-financed solar sales composed 72% of the market. And this year, while lower costs have made it easier for people to own their own arrays, TPO solar sales are expected to make up 63% of the market. Advocates say allowing the financing model could help Florida reach its solar potential, while also opening up the market to consumers.
But there are dueling amendments hoping to make to make it onto the 2016 ballot. One amendment, pushed by the Floridians for Solar Choice, would allow small-scale suppliers to sell electricity directly to consumers without being classified as a utility. The other amendment, backed by a coalition of former state lawmakers and electrical utilities, would allow Florida solar owners to sell their generation to Florida's utilities while ensuring there is no cost-shift on non-solar consumers.
The language in the amendment to allow small-scale suppliers to sell electricity directly to consumers was approved by the Florida Supreme Court, but a payment dispute with a consulting firm hired to secure signed petitions failed to help it nab the required number of signatures. The FSC is "exploring options for 2018," while the other amendment, backed by electric utilities, is edging closer to garnering enough signatures to land a place on the 2016 ballot.
Florida will be a state to watch to see if the utility-backed amendment earns a place on the 2016 ballot, and whether the state opens up its market to TPO solar financing.
For additional background reading on Florida's rooftop solar issues, check out these Utility Dive stories:
10. New York
New York’s Reforming the Energy Vision (REV) initiative is one of the most transformative policy packages that could shape how utilities evolve their business model nationwide. While other utilities in other states are looking to solve the challenges caused by rooftop solar in piecemeal fashion, the REV initiative instead looks to leverage distributed resources to solve broader challenges, such as grid reliability, peak demand and aging infrastructure.
Of all the debates regarding solar policy on this list, REV is the only one that extends far beyond solar and looks to holistically overhaul the utility model. But the implications of the proceeding could reverberate across the country and shape how regulators address the challenge of rooftop solar.
"There are problems being looked at that utilities across the nation [are] grappling with similar concerns and looking to them to see what comes out of it and potentially the ability to replicate it or taking a comprehensive look at the electrical service [sector]." Benjamin Inskeep, analyst at NC Clean Energy Technology Center
“I would say the New York REV proceeding is highly influential,” said Benjamin Inskeep, a clean energy policy analyst with NC Clean Energy Technology Center. “There are problems being looked at that utilities across the nation [are] grappling with similar concerns and looking to them to see what comes out of it and potentially the ability to replicate it or taking a comprehensive look at the electrical service [sector]."
Ultimately, the initiative aims to transform utilities into distribution system platform providers (DSPPs) that will own and maintain the grid as usual, while overseeing the interconnection of distributed resources and the creation of new distributed energy markets.
Among the issues under discussion in the REV docket are the valuation of DERs and suggestions for a new net metering tariff.
The Public Service Commission said achieving a “precise” value for solar and DERs is a “cornerstone REV issue.” While a deadline to complete the valuation is set for the end of 2016, the commission is also looking to define a more near-term transition for net metering. Until recently, New York's net metered systems were capped at 0.06% of a utility's electric demand based on 2005 levels.
But earlier this year, the PSC suspended the cap until the REV valuation is completed. Meanwhile, owners of distributed generation will continue to receive retail rate remuneration for electricity sent to New York’s grid while the PSC and utilities look to reformed rate design to ease the coming transition from retail rate net metering.
A white paper issued last year by state regulators envisions a full valuation model for distributed resources — the "value of D" — to settle debates about remuneration rates and help DSPPs site and operate DERs.
A "bill-crediting transactional mechanism, similar to that used in [net energy metering] NEM, should be considered for DER resources, beyond those to which NEM already applies, that transact with the system either through actions that respond to DSP requests for service, or through the ability to inject power into the system," regulators wrote.
But utilities have disagreed with the Commission over whether or not net metering retail remuneration should remain. Instead the “value of D” as a pricing mechanism will be effective only if it is properly developed and doesn't allow DER customers to skirt "responsibility for the fixed costs of distribution service," utilities said in comments.
While no major decisions are expected to come before the end of 2016, when the valuation of DERs is expected to be completed, the initiative is expected to have a series of hearings and technical conferences that could inform how REV ultimately reaches its goals.
Public hearings are scheduled for Jan. 26 on the REV docket, with technical conferences on market-based earnings and "Earning Impact Mechanisms" scheduled for the 28th and 29th.
For additional background reading on New York's rooftop solar issues, check out these Utility Dive stories: