Arizona Commission Adopts Policy Statement To Expand Competitive Electric Supply Buy-through Program To Medium-Sized Customers
December 18, 2018 Email This Story Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • firstname.lastname@example.org
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The Arizona Corporation Commission, on a 5-0 vote, today adopted a policy statement to institute a competitive electric supply buy-through program open to medium-sized C&I customers
As previously reported by EnergyChoiceMatters.com, ACC Chair Tom Forese had earlier requested that Staff ready a proposal to allow a limited number of customers, who are smaller than the current size threshold for the AG-X program currently in place at Arizona Public Service for very large customers, to take competitive supply under a similar program
As previously reported by EnergyChoiceMatters.com, the AG-X program is a program under which a capped number of large customers and load are permitted to procure alternative sources of generation supply, which is delivered to the utility, with the utility ultimately supplying the customer with such alternative generation. For example, at APS, Rider AG-X is available to customers who have an Aggregated Peak Load of 10 MW or more and are served under Rate Schedules E-34, E-35, E32-L, or E-32 TOU L. At APS, total AG-X program participation is limited to 200 MW of customer load, 100 MW of which was initially reserved for customers with single-site peak demands of 20 MW or greater and with monthly average load factors above 70% unless not fully subscribed during the solicitation process.
In the policy statement, the ACC sets forth a new program, called AG-Y, to be available for, "medium and large commercial customers."
The adopted policy statement does not define any thresholds for eligible medium and large C&I customers for AG-Y. Eligibility will be addressed in utility filings in response to direction from the ACC
Implementation of AG-Y will not be until the utilities' next rate case
Under the adopted policy statement, APS is directed to either expand and modify its current AG-X to allow medium size commercial customers to participate or propose a new AG-Y alternative generation/buy-through program that would be for medium size commercial customers in its next rate case.
Under the adopted policy statement, Tucson Electric Power Company is directed to propose an AG-Y alternative generation/buy-through program for medium and large commercial and industrial customers in its next rate case.
Under the adopted policy statement, UNS Electric, Inc. is directed to propose an AG-Y alternative generation/buy-through program for medium and large commercial and industrial customers in its next rate case.
Under the adopted policy statement, the Commission directs such utilities, when modifying or expanding AG-X or proposing an AG-Y alternative generation/buy-through program, to address, at a minimum, the following:
• eligibility requirements
• customer load aggregation
• rate structure
• administrative, credit, and other costs of the program
• rate impacts on non-participating customers
• utility cost recovery provisions
• customers returning to full requirements tariff
• whether there would be a cap on participation
• if there is a participation cap, how will the participants be selected
• whether there would be a minimum participation timeline
• whether the program would be experimental
• resource adequacy and planning issues
The adopted policy statement further holds that:
• Utilities may offer participating customers an option to procure energy and capacity from the wholesale market as part of the Utility's competitive procurement process.
• Utilities may offer different purchasing structures based on the size and load factor of eligible customers.
• The Commission directs the Utilities to consult with customers who may be potential participants on program design prior to filing the program proposal.
• The Commission directs that the proposed program shall not shift costs to non-participating customers.
• The Commission directs that the program shall address any implications for a utility's renewable and energy efficiency standard compliance.
• The Commission directs that the program shall consider consumer protections for both participants and non-participants.
• The Commission directs that any modification or expansion of AG-X or a new AG-Y alternative generation/buy-through program shall be addressed in a rate case proceeding.
The ACC adopted language for the policy statement, listed above, as proposed by Staff
A representative from Calpine during the ACC's meeting did raise concern with two pieces of language in the policy statement; however, Commissioners said that any concerns would be more efficiently addressed in evaluating the specific utility proposals in the rate case, rather than adjusting the policy statement language.
One of Calpine's concerns is that the policy statement provides that, "Utilities may offer participating customers an option to procure energy and capacity from the wholesale market as part of the Utility's competitive procurement process."
Calpine's concern is that the language, as written, would allow a utility to approach a customer and offer the customer the opportunity to, through the utility, procure energy and capacity from the wholesale market, rather than through a competitive provider.
Calpine suggested that the language instead state, "Utilities, through an unregulated affiliate, may offer participating customers an option to procure energy and capacity from the wholesale market."
Calpine also raised concern with the language stating that, "Utilities may offer different purchasing structures based on the size and load factor of eligible customers," as Calpine said that the language is vague and unnecessary, as utilities already have authority to propose special or customer-specific rates (e.g. high load factor) in rate cases
ACC Chairman Tom Forese said that Calpine's changes, "have merit," but, as noted above, any changes will be addressed in response to specific proposals, rather than changing the policy statement
Separately, Arizonans for Electric Choice and Competition had suggested a tweak to the adopted language which provides that, "The Commission directs that the proposed program shall not shift costs to non-participating customers," with AECC suggesting that the language instead read, "The Commission directs that the proposed program shall not shift costs to non-eligible customers."