Staff Report Item 4
TO: Ava Community Energy Executive Committee
FROM: Kelly Brezovec, Director of Account Services
Jin Ruan, Energy Analyst - Financial Modeler
SUBJECT: Solar Billing Plan Policy recommendations
DATE: November 1, 2023
__________________________________________________________________ Recommendation
Receive an update on staff policy recommendations for the Solar Billing Plan (SBP), also known as Net Billing Tariff (NBT). Provide feedback in advance of policy going to the full board for a vote in November.
Background
Ava Community Energy regulatory staff has been tracking the NEM 2.0 successor tariff and presented on major developments at the December 2022 Board of Directors meeting. Staff returned to the September 2023 Board of Directors meeting to provide a history of the NEM tariffs and the Net Billing Tariff, with an intention to return with Ava-specific data and a proposal for implementation.
Net Billing Tariff (NBT) is the successor to NEM 2.0. Rather than receive the retail rate for generation that is exported to the grid, customers receive compensation at a new Avoided Cost Calculation (ACC) rate, also called the Energy Export Credit (EEC). The ACC is a tool used by the California Public Utility Commission (CPUC) to determine the value of onsite solar and other distributed energy resources. The ACC varies by the hour and the month. Spring and summer mid-day ACC compensation rates are the lowest while late summer early evening prices are the highest. ACC pricing is aligned with historic California Independent System Operator, or CAISO, energy demand and availability.
The policy proposed by the CPUC, adopted by PG&E, includes a “glidepath” for new residential SBP customers, which provides an adder, or increase, to the established ACC for new solar customers who are voluntarily installing solar with larger adders for CARE or FERA customers. Residential new construction is required per State building code to install solar and will not receive the Energy Export Bonus Credit, as these are “involuntary” system installations. The glidepath uses a vintage-like system with customers receiving their adder for nine years. The glidepath adder under the base SBP plan is called the Energy Export Bonus Credit. Note that the glidepath does not apply to non-residential customers.
Table 1: Energy Export Bonus Credits (SBP Glidepath)
Residential $/kWh Low Income $/kWh
2023 $0.022 $0.090
2024 $0.018 $0.072
2025 $0.013 $0.054
2026 $0.009 $0.036
2027 $0.004 $0.018
Implementation Schedule
There are two groups of customers that will initially be eligible for SBP:
1. Customers that completed their self-generation application after April 14, 2023 will be automatically placed on SBP.
2. Customers that have completed 20 years on NEM 1.0, and eventually 20 years on NEM 2.0, will transition to SBP at their next PG&E delivery true-up.
Given the complexities of this new tariff, PG&E’s billing systems are not ready to bill on SBP. PG&E expects to have their residential SBP operations ready by December 2023 and non-residential prepared by July 2024. Once the billing systems are ready, customers will transition to SBP based on their PG&E delivery true-up date or interconnection date.
Existing NEM customers will remain on their current tariff until they have reached their 20-year legacy period.
For reference, figure 1 depicts the movement from our existing NEM customers to the new Solar Billing Plan tariff, based on the 20-year legacy period. Ava will not see the majority of our current NEM customers transition to SBP until 2037.
Figure 1: Charting Ava customers’ transition dates, NEM 1.0 and 2.0 to Solar Billing Plan Ava SBP Policy Proposal
Staff proposes to implement SBP, largely mirroring PG&E’s structure - with three major differences as listed below and followed by additional detail.
1. Peak load management compensation
2. CARE/FERA export adder
3. Peak hours export adder
First, SBP lends itself to paired solar and storage installations, as the customer can use their own excess energy later in the evening. Ava staff is exploring program opportunities to compensate customers with a capacity-based payment based on the size of the customer’s battery for storage use that is aligned with our peak, and is able to flex with price signals provided by Ava. This program would be the successor to the Resilient Home program, and provide benefits to Ava customers in the form of cost savings resulting from active battery management as well as capacity-based payments for use of storage Program design is under development, and seeks to provide a route for broad participation for Ava customers regardless of battery vendor while advancing local solar resource usage and peak load management. Program design is under development, and seeks to provide a route for broad participation for Ava customers regardless of battery vendor while advancing local solar resource usage and peak load management.
Staff will return to the Board within the first half of 2024 with a program to encourage solar plus storage adoption and usage in Ava’s service area via meaningful, on-going capacity-based payments based on customer participation.
Second, all SBP CARE/FERA Ava customers - including those transitioning from NEM 1.0 and 2.0, or those customers who were required to add solar to meet the California building code for new housing - will be eligible for a $0.01 per kWh Ava adder for all exported energy. Note that this is on top of the Energy Export Credit Bonus that new installations will receive.
Third, all remaining SBP Ava customers, again, including those transitioning from NEM 1.0 and 2.0, or those customers who were required to add solar to meet the California building code for new housing and including non-residential customers - will be eligible for a $0.025 per kWh export adder during the Ava peak hours of 3-8 pm, 7 days a week.
Staff proposes the Ava bonus structure will be in place for five years, from 2024 to 2029. The Ava tariff will include a provision to edit or remove the adder after the five-year period. In contrast with the IOU’s glidepath, this bonus structure is flat for five years, which allows Ava to learn more about SBP, customer installation patterns and behaviors, and develop our robust battery storage capacity-based incentive program. After 2029, Ava may step down or remove this adder.
Table 2: Comparison between Energy Export Bonus and Ava Adders Implementer Customer
Segment
Timeframe Structure Amount
Energy
Export
Bonus
Credit
(SBP base
plan)
PG&E
Ava
Residential
customers with
new voluntary
solar installation
after April 14,
2023
Applies to
customers who
install solar in
the first 5 years
of the new SBP
program (2023-
2027); the rate
is locked in for 9
years
- Value of credit
goes down by 20%
each year within
the 5-year period
to incentivize
going solar sooner
- CARE/FERA
customers receive
a higher credit
Varied, from
$0.004 to
$0.090 per kWh
Ava Adder
-
CARE/FERA
(Proposed)
Ava All CARE/FERA
SBP customers
Residential,
voluntary or
involuntary
install, new or
transitioning
from NEM
1.0/2.0
5 years (2024 –
2029); Ava tariff
will include a
provision to edit
or remove after
the 5-year
period
- Flat adder for
energy exports at
all hours
- On top of Energy
Export Bonus
credit, if
applicable
$0.01 per kWh
Ava Adder
- Peak
Hours
(Proposed)
Ava All SBP
customers, non-CARE/FERA
Residential,
commercial,
voluntary or
involuntary
install, new or
transitioning
from NEM
1.0/2.0
5 years (2024 –
2029); Ava tariff
will include a
provision to edit
or remove after
the 5-year
period
- Flat adder for
energy exports
between Ava
peak hours of 3-8
pm
- On top of Energy
Export Bonus
credit, if
applicable
$0.025 per kWh
(3-8 pm)
Fiscal Impact
The fiscal impact is in the direction of customer credits that are shifting from Ava to the customer. With the Ava Peak Hours Adder scenario outlined above, we see an additional $20 in annual credits for non-CARE/FERA customers and $45 in annual credits for CARE/FERA customers through the Ava CARE/FERA Adder.
Table 3: Estimated annual credits for excess generation CARE/FERA, new
voluntary
installation
Non-CARE/FERA,
new voluntary
installation
CARE/FERA, NEM
transition or
mandatory install
Non-CARE/FERA, NEM
transition or
mandatory install
Base SBP $481 $236 $167 $163
SBP + Ava
Adders
$525 $257 $211 $184
The value for commercial, or non-residential, customers is not as meaningful to model, as system size and usage is highly variable.
Overall, five years of the Ava Adders will mean an additional $8.4M in customer credits for solar production, with the bulk of those credits being applied to excess generation during the Ava peak demand period of 3-8 pm.
Table 4: Annual Export Generation Costs under Solar Billing Plan Scenarios 2024 2025 2026 2027 2028 Total
Base SBP $4,579,619 $7,824,747 $12,228,903 $16,572,929 $20,394,958 $61,601,157 CARE/FERA $820,571 $1,396,707 $2,172,137 $2,926,022 $3,555,654 $10,871,091 Non-CARE/FERA $3,759,048 $6,428,040 $10,056,766 $13,646,907 $16,839,304 $50,730,066 SBP + Ava Adder $5,227,403 $8,982,844 $13,898,276 $18,755,731 $23,099,998 $69,964,251 CARE/FERA $1,011,016 $1,736,504 $2,661,738 $3,565,624 $4,344,755 $13,319,637 Non-CARE/FERA $4,216,387 $7,246,339 $11,236,539 $15,190,107 $18,755,243 $56,644,615 As shown in Figure 1, existing NEM customers will transition to SBP each year, with 2,500 NEM customers transitioning to SBP by 2028. The estimated annual credits shown in Table 4 are based on these transitioning customers and estimated new SBP installations.
Attachment
A. Presentation
Solar Billing Plan
Policy Proposal
Executive Committee Meeting
November 1, 2023
1. Introduction
2. Base Solar Billing Plan
3. Proposed Ava SBP
4. Fiscal Impact – Customer
5. Fiscal Impact – Ava
6. Recommendation
•
•
•
Introduction
Solar Billing Plan Refresher Eligibility and Timeline
•
•
▪
Base Solar Billing Plan:
CPUC/PG&E Glidepath
•
•
•
•
Ava Solar Billing
Plan
Peak Load
Management
Compensation:
Capacity-Based
Battery Storage
Program
•••
•••
Proposed Ava Adders
•
•
•
•
•
•
The Ava Adders as proposed will be in place
for five years, through EOY 2028. By 2029,
staff expects to use SBP data to better
understand: • Solar installation patterns, including rate of install and size of system
• Energy use behaviors • Battery storage characteristics, such as size, usage patterns, and installation
rates
Ava Adder
Duration
Customer Financial Impacts –
Annual Credits for Exports
Ava Financial Impacts –
Credits Provided for Exports
•
•
•
•
Summary of
Recommendations
Thank you!
Kelly Brezovec
Director, Account Services
[email protected]