Massachusetts regulators seek comments on DER cost recovery

The department said that through its Oct. 22 order, it proposes a new distributed energy resource planning process with the purpose of assessing optimal solutions for the interconnection of DG facilities, taking a long-term planning perspective

The Massachusetts Department of Public Utilities, in an Oct. 22 order, opened an investigation into two issues for electric distribution companies: distributed energy resource planning, as well as the associated assignment and recovery of costs related to the distributed generation (DG) process and infrastructure modifications needed to interconnect DG to a distribution company’s electric power system (EPS).

As noted in the order, the department in May 2019 opened a proceeding (D.P.U. 19-55) to investigate the interconnection of DG in Massachusetts, under the Standards for Interconnection of Distributed Generation tariff. The department said that through its decisions in that proceeding, it has taken steps to improve the DG interconnection process in consideration of its objectives to preserve the safety and reliability of the EPS, as well as to provide transparent and uniform technical requirements, procedures, and agreements to make interconnection as predictable, timely, and reasonably priced as possible.

The department said that through its Oct. 22 order, it proposes a new distributed energy resource planning process with the purpose of assessing optimal solutions for the interconnection of DG facilities, taking a long-term planning perspective. In addition, the department said that it seeks comment on methods for the assignment and recovery of costs associated with the DG interconnection process and system modifications needed for interconnection. Those proposals and requests for comment are presented as a straw proposal, included as “Attachment A” in the order.

The department also noted that in setting rates for utility service and otherwise providing for the recovery of costs by utilities, the department applies the basic principle of cost causation; namely, the entity responsible for cost to be incurred is responsible for payment of the costs.

In D.P.U. 19-55, stakeholders submitted several proposals with alternatives to the cost causation principle, with the department identifying two proposals for further investigation and seeking detailed proposals that could be implemented in the near term:

  • 
A proposal for residential and small commercial DG facilities that have historically not been required to pay for infrastructure modifications
  • A proposal for medium and large DG facilities that are currently subject to the cost causation principle

The department also said that while Massachusetts continues the development of approaches for achieving the clean energy mandates, it is reasonable to expect that meeting the mandate will impact the distribution system, whether through accelerated deployment of DG and electric vehicles, increased load growth resulting from efforts to decarbonize other sectors, or in some other form. Therefore, the department said, it proposes alternatives to the cost causation principle that includes both near-term and long-term approaches.

With the growth of DG, evolving customer needs and interests, and the importance of environmental considerations in making system investments, the department finds it appropriate to consider a new system planning process. The straw proposal, the department added, would require a system planning analysis for infrastructure investment in consideration of clean energy and climate policy objectives, incorporation of DG investments, and development of associated planning criteria.

The straw proposal enables proactive investment through ratepayer funding, with cost recovery from fees recovered from future interconnecting DG facilities intended largely, if not fully, to offset costs borne by ratepayers in order to minimize the impact on ratepayers, the department said.

As noted in Attachment A, a distribution company would, for instance, identify the cost of, and kilowatt capacity enabled by, proposed capital investment projects, and based on that information, the department would then establish a dollar-per-kW capital investment project fee for the distribution company to allocate to each facility that subsequently benefits from the capital investment project.

The enabled capacity costs would be initially funded by the distribution company with subsequent cost recovery from all customers through a reconciling charge. Attachment A also noted that for a period of 10 years from pre-approval, the capital investment projects would be credited to the reconciling charge to reduce — or possibly offset entirely — the costs borne by ratepayers at large. The costs eligible for special rate treatment include those associated with the capital investment projects, and do not include facility specific interconnection costs or administrative fees, the filing noted.

Among other things, the department said that comments are due Dec. 17, with reply comments due Jan. 14, 2021.

 

 

 

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About Corina Rivera-Linares 3058 Articles
Corina Rivera-Linares, chief editor for TransmissionHub, has covered the U.S. power industry for the past 15 years. Before joining TransmissionHub, Corina covered renewable energy and environmental issues, as well as transmission, generation, regulation, legislation and ISO/RTO matters at SNL Financial. She has also covered such topics as health, politics, and education for weekly newspapers and national magazines. She can be reached at clinares@endeavorb2b.com.