Following a March 1 Rhode Island Public Utilities Commission (PUC) staff memorandum to commissioners that provided recommendations on issues to consider in a docket to investigate the changing distribution system, the PUC at a March 3 open meeting opened such a docket (Docket No. 4600).
As noted in staff’s memorandum, Rhode Island in 2014 enacted the Renewable Energy Growth Program to, among other things, facilitate and promote installation of grid-connected generation of renewable energy; support and encourage development of distributed renewable energy generation systems; reduce environmental impacts; and reduce carbon emissions that contribute to climate change by encouraging the siting of renewable energy projects in the load zone of the electric distribution company.
As part of that program, the PUC was required to, and did, open a docket to consider rate design and distribution cost allocation among rate classes in light of net metering and the changing distribution system that is expected to include more distributed-energy resources, including distributed generation.
The PUC, staff added, was to determine the appropriate cost responsibility and contributions to the operation, maintenance and investment in the distribution system that is relied upon by all customers, including, without limitation, non-net-metered and net-metered customers.
In PUC Docket No. 4568, National Grid plc subsidiary National Grid filed a new, revenue-neutral rate design proposal using the previously approved cost-of-service upon which current rates were set, in accordance with the Renewable Energy Growth Program statute. After months of review, staff added, National Grid requested, with no objection from parties, and was granted, a motion to withdraw the filing without prejudice. The docket will be closed upon issuance of a written order.
At a Jan. 19 open meeting, in allowing the motion for withdrawal, the PUC decided that it would open a docket or series of dockets to review the changing distribution system, staff added. The PUC conveyed that the issues raised in the docket would be ongoing, and that the rate design policy set forth in the Renewable Energy Growth Program was intended to affect future rates, regardless of any decisions in the immediate docket.
PUC Chairperson Margaret Curran directed staff to work with the Office of Energy Resources (OER) regarding which agency would take the lead on various issues related to the anticipated docket(s) and to make recommendations on the best way to go forward.
Discussing its recommendations for Docket No. 4600, staff added that it is clear that the PUC has interpreted the law to mean that in setting future distribution rates for National Grid, the PUC will be required to take into account and balance certain factors, such as the benefits of distributed energy resources and equitable ratemaking principles regarding the allocation of the costs of the distribution system.
The material presented by parties in Docket No. 4568 demonstrated disagreement on such factors. For instance, staff added, many parties argued that distributed energy resources provided benefits, but no party presented specific and concrete means to include such benefits in rates, nor was a test presented to determine how such benefits could be measured and if they were aligned with state policy and all of the General Assembly’s legislative purposes in creating the program.
At a minimum, and for the benefit of setting just and reasonable rates in a future rate case, staff said it recommends the PUC use the new docket to better determine the certain factors noted in the memorandum.
Staff also noted that the test for justness and reasonableness regarding rates in Rhode Island is influenced by, and is inextricable from, state policy that may be unlike policies in other jurisdictions. Much of that policy is informed through the creation of various utility programs that are decided by the PUC individually in any given year, staff said. The discreteness of programs and dockets can lead to an inefficient implementation strategy – and potentially higher program costs and corresponding rates – when a state policy goal spans multiple programs, or when the goals of one program is at odds with the goals of another, staff said.
Staff recommended that the natural guiding principle in considering rates across programs is the principle of least-cost procurement. To the extent possible and consistent with the law, staff added, benefits and costs considered in one program should be considered in all other programs so that state policy goals are procured in a consistent manner across programs. Staff said it refers to that as a normalization of least-cost procurement across all programs, and recognizes that while it may not be a readily achievable outcome in the new docket, it is an appropriate guiding principle.
Staff also recommended that in Docket No. 4600, the PUC seek answers to the overarching question of, what attributes are possible to measure on the electric system and why should they be measured? That question, staff said, can be further broken down into three broad questions, including what are the costs and benefits that can be applied across any and/or all programs, identifying each and whether each is aligned with state policy?
Among other things, staff also noted that the main question in the docket should be what changes to ratemaking will ensure just and reasonable rates and best align the interest of the utility with state policy, and, correspondingly, how to best set rates to ensure customers are paying the lowest possible cost for safe and reliable service. In response to that category of responses, staff said it suggests that the PUC accept stakeholders’ interests in the New York Reforming the Energy Vision proceeding and similar dockets in other jurisdictions as a benefit to Docket No. 4600 and future dockets, but that the PUC keep this proceeding focused on the need to set just and reasonable rates aligned with state policy.