The CPUC is failing to play by its own rules in setting SDG&E rates
SEIA's Sean Gallagher says SDG&E's proposal to dramatically shift peak time-of-use timeframe could hurt solar customers.
The following is a viewpoint from Sean Gallagher, vice president of state affairs for the Solar Energy Industries Association.
Last week, the California Public Utilities Commission (CPUC) released a revised Proposed Decision in a San Diego Gas & Electric (SDG&E) rate case that, if adopted, would set back the most vibrant solar market in the country.
SDG&E, and the other major investor-owned utilities, have proposed a dramatic shift in their peak time-of-use (TOU) periods to the late afternoon and evening when solar output is low and declining. TOU rates are critical to solar customers under the Net Energy Metering successor tariff, because they’re required to be on a TOU rate. If the Commission adopts the utility’s position, it will set a worrisome standard for the remaining utilities, whose proposals are more severe.
Oddly, the CPUC will be breaking its own rules if the SDG&E decision passes as currently written. The Commission spent over a year developing a methodology for designing TOU rates through a formal proceeding, including reams of comments from two dozen parties. It needs to follow its own rules now more than ever as the state faces the first major change in time-of-use periods in more than three decades.
SEIA and our member companies understand the need to modify TOU periods. The middle of the day, which used to be the most expensive time of day to provide power, is now increasingly supplied with low-cost, zero-carbon and zero-water renewable energy. While the highest generation costs are moving into the evening, transmission and distribution costs are forecast to remain highest earlier, in summer afternoons, when the transmission and distribution system peaks.
Rooftop solar can help avoid the costly construction of new transmission and distribution infrastructure. We can see these substantial benefits piling up: in 2016, PG&E canceled 13 proposed transmission projects, saving electricity consumers $192 million; the “Central Valley Connect” Project, near Fresno, was deferred, saving $115-$145 million; and the Energy Commission found that deploying more distributed energy resources in the San Joaquin Valley could provide $300 million in benefits to ratepayers.
Tackling these high distribution and transmission costs is critical. Distribution costs at California’s IOUs have doubled in the past decade, while transmission costs have risen between 10 - 14 percent. Moving peak TOU periods too late in the day will severely damage solar deployment and discourage conservation, rather than enable solar and DERs to support the grid, i.e., by producing more power during the peak times for transmission and distribution. Already, commercial customers, whose TOU periods will be the first to change, are holding off on signing new solar contracts because of the threat of dramatic changes to TOU periods.
Because TOU rates are supposed to send accurate price signals to customers about grid needs, SEIA has argued that transmission and distribution costs need to be included in determining TOU periods. This means that peak TOU periods should indeed start and end later in the day than they do now – but not as late as SDG&E and other utilities have proposed.
A mere seven months ago, the Commission agreed in a decision on TOU design rules. And in the judge’s original proposed decision for SDG&E, the TOU methodology was largely applied. But now the Commission is backtracking, abruptly shifting the peak TOU period from the current 11 a.m. to 6 p.m. timeframe to a new peak period of 4 p.m. to 9 p.m.
There’s not much rationale in the one-paragraph explanation for the change.
The newly proposed peak period is simply not supported by the Commission’s own TOU methodology from the January decision and neither are the new mandatory “super off peak” periods in the middle of spring weekdays that the proposed decision would create.
One is left to wonder why the Commission would spend a year working on rules addressing the development of TOU rates only to wholly ignore them in the first rate case of major significance. Placing customers on rates that are not cost-based defies the entire rationale for changing time-of-use periods. This problem is compounded by its implications. Failure to use the Commission’s TOU design rules will undoubtedly damage customers’ ability to go solar, which will make it more difficult for California to meet its nation-leading clean energy deployment and greenhouse gas reduction policies. This is a problem the Commission can, and should, fix immediately.
The state and the nation are watching.