STATE OF MAINE

PUBLIC UTILITIES COMMISSION

)
MAINE PUBLIC UTILITIES COMMISSION ) PETITION FOR
Amendments to Net Energy Billing Rule ) RECONSIDERATION
)
Docket No. 2016-00222 ) March 20, 2017
)

Dot Kelly hereby petitions the Public Utilities Commission (Commission), pursuant to 65-407

CMR ch. 110, 11(D), for reconsideration of its Order Amendments to Net Energy Billing Rule

issued on March 1, 2017 (Order). As mentioned in my October 12, 2016 comment I am a former

director of energy and environmental services for a Fortune 200 chemical manufacturer as well as

currently the acting chair of the Phippsburg Conservation Commission. I was the chair of a chemical

industry eco-efficiency demonstration project within President Clintons Council on Sustainable

Development, as well as an advisory board member for Harvards Center for Risk Analysis and a board

member of the quasi-governmental Connecticut Resource Recovery Authority (CRRA) from 2010 to

2012, which owned a waste-to-energy facility, sold power into the grid and provided black start

capability to a nuclear power plant. Thus I have had a wide range of energy related positions. I have

been active on energy and environmental issues in the legislative and regulatory arena for the last 30

years.

Having submitted two filings during the comment period for the proposed rule, I am a

participant in the applicable non-adjudicatory proceeding, and therefore, this petition is submitted

according to the procedural requirements governing this proceeding, as follows:

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 Rehearing, Reopening, Reconsideration and Clarification 65-407 CMR ch.110, 11(D)

Petitions to change, modify, rescind, clarify, reconsider or vacate any decision or order of
the Commission or presiding officer must be filed by any party in the case of an adjudicatory
proceeding or any participant in a non-adjudicatory proceeding with the Commission
within 20 days after entry of the determination or order to which the petition relates or at any
time within the 20 days following entry of the Commission's final decision or order. A petition
for rehearing, reopening or reconsideration shall set forth specifically all grounds supporting
the petition and the relief requested. Any petition for rehearing, reopening or reconsideration
not granted within 20 days from the date of filing is denied. The time for appeal of a final
Commission order does not begin to run until the motion for reopening, rehearing or
reconsideration is acted upon or presumed to be denied. (emphasis added).

I. Summary of Petition

a. Compliance with 5 M.R.S.A 8051-8074. This petition for reconsideration requests that

the rule be reconsidered in order to come into compliance with the Maine Administrative

Procedures Act, 5 M.R.S.A 8051-8074. In particular, 5 M.R.S.A. 8052 (5) requires that

the written record list each commenter, specifically address each comment or concern with

the proposed rule and state its rationale for failing to adopt the suggested changes. Even

though 25 filings and 305 public comments were submitted for this proposed rule only a

select handful of commenters were listed by name and many comments were not specifically

addressed in the Order.

b. Three Specific Issues a Response to Comments Should Address. Although there are many

specific comments and concerns that need to be addressed in a response to comments, this

petition for reconsideration highlights three issues.

i. Cross Subsidy Issue. The PUC incorrectly focused exclusively on one perceived

rate design issue that non-NEB customers tend to subsidize NEB customers. Doing

just a single issue case, as the PUC did here, leads to unjust rates because the

investigation was incomplete and ignored potentially offsetting issues.

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 ii. Value of Solar. The PUC made specific adjustments to rates even though they failed

to determine critical facts to support those rate changes; such as using their expertise

to pick a number that best represents the value of solar. In addition to failing to pick

a number for the value of solar, the PUC failed to monetize many solar benefits even

though these benefits were part of the record. The PUC has a duty to monetize and

analyze all benefits and costs and not just narrowly focus on one suspected cross-

subsidy.

iii. Policy of the State to Encourage Solar Generation. Although the PUC

acknowledges that encouragement of solar generation through net metering is State

policy as set by the Legislature, the PUC then rewrites the net metering rule reducing

an already insufficient payback period of 10-20 year. By this rule, the compensatory

value of solar to the homeowner is cut by more than half, given current electricity and

T&D charges on utility electric bills.

II. Compliance with 5 M.R.S.A 8051-8074.

This petition requests that the rule be reconsidered in order to come into compliance with

the Maine Administrative Procedures Act (MAPA), 5 M.R.S.A 8051-8074. In particular, 5

M.R.S.A. 8052 (5) requires that the written record list each commenter, specifically address

each comment or concern with the proposed rule and state the rationale for failing to adopt the

suggested changes. Even though 25 filings and 305 public comments were submitted for this

proposed rule only a select handful of commenters were listed by name and many comments

were not specifically addressed in the Order.

5 M.R.S.A. 8052 (5) requires that a written statement be adopted with the finalization of

the rule:

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 At the time of adoption of any rule, the agency shall adopt a written statement

explaining the factual and policy basis for the rule. The agency shall list the names of

persons whose comments were received, including through testimony at hearings, the

organizations the persons represent and summaries of their comments. The agency shall

address the specific comments and concerns expressed about any proposed rule and state

its rationale for adopting any changes from the proposed rule, failing to adopt the

suggested changes or drawing findings and recommendations that differ from those

expressed about the proposed rule.

As opposed to following the requirements of 5 M.R.S.A. 8052 (5) the Order only

mentioned twenty-two (22) commenters in its summary of commenters on page 4, and then

lumped all 305 public comments into one short paragraph.

The Commission also received a large number of public comments from individuals

and groups (including customers both with and without solar facilities) which primarily

supported solar incentives to address climate change and promote jobs in the solar

industry. These comments were in opposition to changes to the NEB rules. Other

individual commenters supported changes to the NEB rules to minimize impact on non-

NEB customers.

As one can see, the current Order does not include a response to comments that meets the

requirements of 5 M.R.S.A. 8052 (5). The PUC practice of only noting interested party

commenters is not consistent with the MAPA regulation cited above.

The Environmental Protection Agency rulemaking proceedings have complied with the

Administrative Procedure Act requirements by having their Response to Comments document

give each submission a number, and then if an issue was raised in more than one submission, the

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 issue would list all the submission numbers that had raised the issue. This may be a useful

practice for the PUC to adopt. Then, on reviewing the response to comments document, a

commenter could understand if and where their comment and other commenters comments had

been considered.

III. Cross Subsidy Issue.

The PUC incorrectly focused exclusively on one perceived rate design issue that non-NEB

customers tend to subsidize NEB customers. Doing just a single issue case, as the PUC did here, leads

to unjust rates because the investigation was incomplete and ignored potentially offsetting issues.

Cross-subsidies are a complicated issue. Commissioner Littell on rate case 2013-00168 Request

for Approval of an Alternative Rate Plan (ARP 2014) Pertaining to Central Maine Power Company

issued a separate concurring opinion which was included in Ms. Kellys comment submitted on

November 2, 2016. In that opinion he discussed four issues related to cross subsidies and the costs and

savings related to peak demand that are useful to compare to the net energy billing rulemaking. First,

he discussed the non-transmission alternative (NTA) Grid Solar project in Boothbay. Where instead of

a large capital investment in a new transmission line (which was teed up for approval), Grid Solar used

both energy efficiency and distributed generation to save the ratepayers millions. However, the few

facilities that installed generators were compensated at a rate even more favorable than net energy

billing. If the rationale used by the PUC in this net energy billing rule was extended to the NTA, the

PUC would never mention the overall savings of a transmission line and only focus on how the customers

with generators were harming the non-generator customers because of the incentives they received to

produce their distributed energy.

From page 21 of the Littell opinion:

One example is the nontransmission alternatives (NTA) project being undertaken by Grid

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 Solar in Boothbay, piloting a coordinator function for NTAs using energy efficiency and demand

response measures to reduce load rather than building new transmission to serve load.

Preliminary results are encouraging: compared to the costs of new transmission infrastructure,

the NTA is thus far saving ratepayers millions of dollars through a variety of local investments

in energy efficiency and demand response technologies that may avoid the need to build new

transmission to serve the Boothbay peninsula.

Second, Commission Littell discussed his belief that utility customers without air conditioners

were subsidizing the build out of transmission lines since the peak hours of electricity usage are on hot

summer afternoons. Given that the hot days are often in full sun, solar installations help reduce the

summer afternoon peak load. Once a real evaluation of the costs and benefits of distributed solar is

done, it may be that non-air conditioning users are a much more affected negative cross-subsidy class

than the negative cross-subsidy due to distributed solar (if it even exists).

From page 22 of the Littell opinion:

Over the entire CMP system, in every year but one (2004) for the last decade, the shift

from winter to summer peak is driven in part by the shift to air conditioning. Id. This is true of

overall distribution system peak. Except for meters and distribution transformers that service

individual buildings and residences, most distribution system costs, particularly of the primary

lines and substations are sized to meet distribution system peak. Mr. Normand acknowledged

that primary distribution elements and substations are sized to meet peak distribution system

demand; off-peak months are not taken into account in sizing of primary system elements and

substations. GridSolar Brief at 13 (citing Hearing Transcript (April 15, 2014) at page 110, line

17 to page 111, line 18; page 113, line 21 to page 115, line 8). The growth in summer demand is

in general increasing the costs in the distribution system. So in a sense ratepayers without air

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 conditioners have been subsidizing the build out of distribution circuits, substations, switches

and other equipment to service summer load. The air conditioning electricity demand which

produces peak load on the hottest summer days and other summer demands are driving the cost

of new distribution infrastructure.

Third, on page 24 of the Order, Commissioner Littell highlighted that ratepayers and CMP gain when

an energy efficient air conditioner is installed much more than the customer. The customer saves $6,

but saves the ratepayers $22 in avoided costs.

CMPs witness Mr. Normand agreed that his proposed rate would save a customer who

installs a more efficient air conditioner that lowers by 1 kW for six months only $6 a year on

electrical distribution costs even though CMP would save $28 a year in expected substation costs

based on CMPs own marginal cost of an additional substation per kW. GridSolar Brief at 11

(citing Hearing Transcript (April 15, 2014) at page 141, line 23 to page 142, line 25.) Thus, a

customer who installs a more efficient air conditioner unit would subsidize other ratepayers or

the company by $22 per year for the marginal substation costs that customer avoids. This

illustrates that under the current rate design, the incentives are not in the right place to

encourage this type of efficient investment to save ratepayer money and reduce overall

distribution system costs.

Fourth, also on page 24, Commission Littell described that CMP load factor is decreasing, so that the

expense of peak demand is becoming more critical and that the summer peak demand is the major issue

because the transmission system can carry 2-3 times the amount of electricity in the cold weather. This

shows another benefit of distributed solar, even more than utility-sized solar from away, in that it doesnt

need to be transported during the peak load times.

It is notable that CMPs load factor is declining and is projected to continue to decline.

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 The Customer Coalition points out that CMPs system load factor was over 70% in the year

2000, declined to 66.78% in 2010 and is projected to be 63% in 2020. Consumer Coalition Brief

at 6 (citing Data Request IECG-001-027, located in IECG Exhibit 8). This means the CMP

system is being used less to serve energy load and increasingly to serve peak demand. The road

(the electrical transmission system) is being built more to service rush hour traffic (peak hours)

than traffic in hours outside rush hour (energy usage) because rush hour is getting worse in

comparison to traffic overall. I agree and join in the findings that the ability of the distribution

system to handle loading and peak demand is much higher in winter than summer. Due to higher

electrical system carrying capacity in cold weather, system capacity in winter can be as much as

two times higher than summer capacity, meaning the distribution system has as much as two-

times the capacity in the winter as summer. Consumer Coalition Brief at 4-5.

There are some Utility rate differences that may also result in cross subsidies (some of which

support policies of the State and therefore may be worthwhile to keep, as I would argue is the case with

net energy billing). These rate differences include Special Contracts (the details of which are not readily

available), Special Economic Development Riders, Street Lighting Services and the Retired Employee

Residential Service Rate, to name a few.

In my opinion, this section shows that while the rule is reconsidered for compliance with the

MAPA, the superficial arguments offered in the Order related to cross subsidies need to be expanded to

answer the issues raised in the comments to the proposed rule.

IV. Value of Solar.

The PUC made specific adjustments to rates even though they failed to determine critical facts

to support those rate changes; such as using their expertise to pick a number that best represents the

value of solar. In addition to failing to pick a number for the value of solar, the PUC failed to monetize

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many solar benefits even though these benefits were part of the record. The PUC has a duty to monetize

and analyze all benefits and costs and not just narrowly focus on one suspected cross-subsidy.

As shown in the previous sections discussion on Commissioner Littells statements, summer

peak load reductions and the high cost of transmission enhancements are real factors that have been

discussed in prior rate cases and are germane to value of distributed solar to the electricity system. From

news articles, the PUC has spent effort and approved expenditures by the utilities for utility scale solar

and wind projects. In particular the Maine Renewable Energy Interconnect and the Clean Power

Connection transmission lines which will cost upward of $100 Million. As shown in the previous

section, utility scale solar that needs to use transmission and distribution to get to an area is not as

beneficial for peak load savings because in the summer the T&D lines are constrained, there are line

losses of electricity, and installing new T&D capacity is expensive.

On page 6 of the Order the PUC noted that commenters stated that NEB customers are not

receiving the value that their installations provide to the system, including climate change benefits, and

that the Commission did not consider its own value of solar study. Rather than address that comment as

required by the APA, the Order immediately discussed Cost Shifts and Rate Impacts. In reconsidering

the rule, responses to comments need to address the issue raised in the comment.

One subject that was not discussed in the Order was the interaction of forward capacity market

costs, payments and solar installations. Although Ms. Kellys October 12, 2016 comment requested

information on forward capacity market payments and how that figures into the value of solar and T&D

expenses, the Order did not provide any information on forward capacity market. As I understand the

ISO New England based program, ISO pays for peak load generation. Generators who bid into the

market are paid three years in advance for committing to generation capacity in the future and then

continued payments are made as long as the generation capability is online and the process for bidding

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into the forward capacity market is followed.

(From the ISO New England forward capacity market webpage 3/20/2019)

www.iso-ne.com/markets-operations/markets/forward-capacity-market

Forward Capacity Auctions (FCAs) are held annually, three years in advance of the

operating period. Resources compete in the auctions to obtain a commitment to supply capacity

in exchange for a market-priced capacity payment. These payments help support the development

of new resources. Capacity payments also help retain existing resources.

Forward capacity payments are not given to small solar facilities because the process is not

streamlined or friendly to small units. However the electricity system benefits from these

uncompensated peak load units. Here is a clear instance where the net energy billing facilities are adding

value above the price of the energy to the electricity system and they are functionally prohibited from

accessing the program that is available to larger facilities. The reconsidered rule should address forward

capacity market payments within the value of solar calculation as well as within the context of the PUC

assisting in the State policy of encouraging small solar facilities.

Perhaps most disturbing was the discussion in the Order on the value of solar study, which

it commissioned as required by the Legislature. Besides not adopting either the $0.24 per KWh value

or the $0.37 per KWh value that the study developed, the Order then added a footnote that misleads a

reader into thinking that the range of the value of solar is anywhere between $0.33 per KWh and $0.03

per KWh because the Order provided no expert conclusion about which value was most correct for

Maine. Footnote 17 on page 8 of the Order states:

This rulemaking record identifies at least 13 different value studies conducted in 11

different states, commissioned by utilities, public utility commissions and other organizations.

The reports range in findings from as high as 33 cents per KWh to 3 cents per KWh. The widely

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 varying range can be attributed to differing assumptions including time horizons, levelized cost

approach and benefits to be counted, and whether an avoided cost or a cost of service approach

was taken.

Since the PUC did not note which commenters had submitted this information, and in my reading

the many comments submitted on the proposed rule I did not see any reference to $0.03 per KWh value

of solar, I googled the $0.03 per KWh solar value and came up empty-handed. This reference clearly

does not meet the requirements of the Maine APA or generally accepted practice of citing the source of

a study whose result is used as a valid data point. In my opinion, this section shows that while the rule

is reconsidered for compliance with the MAPA, the PUC is required to determine a specific value of the

benefit and cost of net metered solar before it can finalize a rate adjustment.

V. Policy of the State to Encourage Solar Generation. Although the PUC acknowledges that

encouragement of solar generation through net metering is State policy as set by the Legislature,

the PUC then rewrites the net metering rule reducing an already insufficient payback period of

10-20 year. By this rule, the compensatory value of solar to the homeowner is cut by more than

half, given current electricity and T&D charges on utility electric bills.

The Order notes on page 2 that NEB supports State energy policies in favor of the

promotion and development of renewable, diverse and indigenous electricity supply resources

that do not rely on fossil fuels and do not contribute to greenhouse gas emissions. The Order

than quotes 35-A M.R.S.A. 3472(1), a law titled The Maine Solar Act. Although the law is

short on specifics the important action of the law is its goal for solar in the state. The law states

in 35-A M.R.S.A. 3474 (2):

State solar energy generation goals. When encouraging the development of solar

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 energy generation, the State shall pursue cost-effective developments, policies and

programs that advance the following goals: A. Ensuring that solar electricity

generation, along with electricity generation from other renewable energy

technologies, meaningfully contributes to the generation capacity of the State

through increasing private investment in solar capacity in the State; [2013, c. 562,

1 (NEW).] (emphasis added).

The question that was not answered in the Order, was how does this net energy billing

amendment encourage the goal of the Maine Solar Act, to have solar meaningfully contribute to the

generation capacity of the State through increasing private investment in solar capacity in the State?

As the PUC knows, the utility is considered to provide cost-effective services even though the

allowed expenditure for cost of capital, overbuilt systems, lawyers and consultants, administration

charges, and a 10% rate of return may seem excessive to many of us. It seems self-evident that the

current solar systems, whereby the generator gets a payback period of 10-20 years on its initial

investment without allowing for any maintenance and repair or other expenses, is much more cost-

effective than the utility system. In fact many companies insist on a payback period of less than three

years for energy saving improvements, so incentives that allow a small solar system an even shorter

payback period would encourage significantly more solar to be installed. This encouragement of more

cost-effective solar would meaningfully contribute to the generation capacity of the State through

increasing private investment in solar capacity.

Thank you for considering this petition for reconsideration.

Respectfully submitted,

Dot Kelly

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