The following is a contributed article by Vote Solar's Regulatory Director Nathan Phelps.
The Massachusetts Department of Public Utilities (DPU) recently issued its Order approving or denying different aspects of National Grid’s proposed new customer electricity rates. The Order looks at the many different infrastructure investments and programs that National Grid would like to pursue and tells the utility which costs they can pass on to customers.
The result is good for solar customers in the short-term, but there is still a lot of work to be done before the interests of solar advocates and National Grid are aligned.
Vote Solar partnered with the Northeast Clean Energy Council (NECEC) as an expert witness in this case.
1. Management audit
The DPU has required a management review just twice in the last 30 years. But concerns over interconnection delays, electric vehicle (EV) program development, and IT strategy and cybersecurity triggered an audit this year.
As discussed below, National Grid proposed a new EV program soon after an EV program was approved by the DPU. The DPU correctly noted that the two EV programs were developed by different departments within National Grid, a huge ratepayer funded inefficiency.
NECEC and Vote Solar made interconnection a central issue in the rate case.
Although we have concerns about National Grid’s interconnection processes in general, there is one particular area of concern: the infamous "cluster study." The cluster study is a transmission study being performed on the 900 megawatts of proposed solar in Central and Western Massachusetts.
While none of the projects would individually require a transmission study, collectively the projects have triggered a review at the wholesale transmission level.
Without getting into all the details, figuring out jurisdiction, the resulting studies and the eventual system improvements will delay these projects years. The cluster study has become quite the boondoggle and should probably be rebranded as the study that shall-not-be-named.
As a result of the issues associated with interconnection the DPU opened a separate proceeding (DPU 19-55) and required the management audit. We’ll see what comes out of the separate proceeding and the audit, but hopefully National Grid’s interconnection processes will become faster, more transparent, and more efficient..
2. Performance-based regulation
Performance-based regulation (PBR) has the potential to align the interests of utilities with the interests of solar advocates, but the PBR approved by the DPU doesn’t get us there yet.
Essentially, the approved PBR allows for performance incentives in the future, but it doesn’t actually include any performance incentives. This is because the DPU approved the PBR structure but did not approve any performance incentive mechanisms. This is similar to buying a vehicle, but not buying any fuel.
To be fair, the DPU had concerns with the structure of the proposed performance incentives, and the DPU did provide helpful guidance for the design of future incentives. Nonetheless, the DPU did approve some scorecard metrics; which are essentially topic areas to start tracking data.
The end result is that we have a lot more work to do before PBR works well in Massachusetts.
3. Non-wires alternatives
Utilities are routinely deploying infrastructure to repair, replace or upgrade equipment. With the current business model, utilities make money based on the cost of the equipment that they deploy. This means that utilities have a financial motivation to deploy as much infrastructure as possible in order to increase revenue.
However, deployed infrastructure is not always in the best interest of ratepayers. This is where non-wires alternatives (NWA) come into play.
What if it is less expensive to deploy distributed energy resources (e.g., solar, storage, energy efficiency, demand response, etc.) than utility owned infrastructure? Shouldn’t the utility be required to deploy distributed energy resources instead of the infrastructure?
The answer is clearly yes, and the DPU agrees. Now, National Grid is going to be required to evaluate NWA options side-by-side with utility-owned infrastructure. And, if National Grid chooses utility-owned infrastructure over NWA, they must demonstrate why (and if they do not have a good reason, then they run the risk of the DPU denying cost recovery for the infrastructure).
4. Monthly minimum reliability contribution
National Grid proposed a requirement that rooftop solar customers pay a fixed fee every month to contribute to grid reliability. This type of conspicuous solar tax is unnecessary because rooftop solar customers are already contributing to the costs of the distribution system.
Ultimately, the DPU rejected National Grid’s proposal. But that battle isn’t over.
Instead, the DPU noted a strong preference for Massachusetts utilities to jointly propose a monthly minimum reliability contribution (MMRC) to encourage uniform treatment of all solar customers. We agree that all customers should be treated fairly, and that means no unnecessary solar taxes.
5. Electric vehicles
National Grid proposed a new electric vehicle program just a few months after an electric vehicle program was approved by the DPU. The DPU determined that phase two was premature when there hasn’t been an evaluation of phase one; however, the DPU did approve: (1) an off-peak charging rebate program; (2) fleet advisory services for public transit and government fleets; and (3) research and development.
Hopefully these additions will help foster the competitive deployment of EVs in Massachusetts. The rejected portion of phase two added a lot of utility owned EV charging stations, which are best left to the competitive marketplace.
As a result of this proceeding, National Grid has agreed to refrain from filing a request for new rate structures for five years. That’s good news for ratepayers.
Although National Grid will not be able to change the structure of rates for a few years, solar customers and advocates must continue to be vigilant in fighting for the best interest of energy freedom at the DPU, particularly in regard to any future MMRC proposals or other discriminatory treatment of solar customers.