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New York PSC Authorizes Utility Consolidated Billing Of Community Distributed Generation

PSC Sets Discount Rate, Minimum Savings For Participation

Rejects Utility Proposal To Engage In Customer Acquisition For CDG

December 13, 2019

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Copyright 2010-19
Reporting by Paul Ring •

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The New York PSC ordered the electric utilities to allow community distributed generation (CDG) providers to bill for the projects on a utility consolidated bill

The PSC adopted a net crediting model for implementing utility consolidated billing of CDG

"The Commission adopts the net crediting model of consolidated billing proposed in the Joint Utilities’ comments and in Platform 1 in the National Grid Petition. Under the net crediting model, the CDG Sponsor would enroll a project in net crediting and would designate the CDG Savings Rate for that project, which represents the percentage of the project’s monthly value that will provided to members after the subscription charge is subtracted out. For example, if the total value of credits generated by a project in a particular month is $10,000, the CDG Savings Rate for that project is 10%, and that project is evenly divided among ten members, each member of the project would receive a Net Member Credit on his or her bill of $100, for a total of $1,000 in Net Member Credits, while the CDG Sponsor would receive a Sponsor Payment of $9,000 from the utility in the form of a direct monetary payment. Because CDG Savings Rate will always be greater than zero, the members are guaranteed to save money on their bills each month. This use of a specified percentage benefit for CDG members each month is already a common method familiar to CDG Sponsors, but the ability to effectuate it through the utility bill will substantially reduce costs and complexity," the PSC said

The Joint Utilities were directed to implement net crediting as a billing option for all CDG projects, both existing and new.

The PSC said that, "As compared to the more traditional consolidated billing used for ESCOs, where the ESCO identifies a charge for the utility to put on the customer’s bill and the utility collects that charge on behalf of the ESCO,11 the net crediting model avoids putting the utility in the position of collecting a higher charge than it would have applied to the customer by guaranteeing savings to the customer. Therefore, it can be assumed that any partial payment or nonpayment would have happened even in the absence of the customer’s CDG membership and there is no risk that the amount of uncollectibles or the utility’s exposure will increase."

The PSC set a minimum CDG Savings Rate for subscribers at 5% for CDG projects to participate in utility consolidated billing

The same CDG Savings Rate must be used for all net crediting customers of a particular CDG project. A CDG provider may use different rates for different projects, however (or forego use of UCB for other projects)

Concerning the required uniform savings rate for subscribers of a specific project, the PSC said, "As contractual arrangements with large customers participating in CDG projects are likely to be different and more complex than with mass market customers, CDG Sponsors are permitted to engage in additional contractual and financial transactions with large customers receiving net crediting outside of the net crediting arrangement. However, for mass market customers billed under the net crediting arrangement, CDG Sponsors may not charge any additional fee or otherwise require additional payment outside of the net crediting arrangement."

Moreover, the PSC said, "To avoid unnecessary complication in implementing the net crediting model, for each individual project for which net crediting is used, the utility may require the CDG Sponsor to use net crediting for all customers of that project. To ensure that this does not prevent large customers from participating in CDG, net crediting should be available for all customer classes. However, to the extent that it can be done without significantly increasing the implementation timeline or costs, each utility should also consider allowing a CDG Sponsor to exclude one large, anchor customer from a net crediting arrangement in a project where all other customers are included in a net crediting arrangement. The Joint Utilities should identify whether they are able to include this option in the Implementation Plan filings."

The Commission emphasized that net crediting is an optional program for CDG providers, and that CDG Sponsors are under no obligation to participate. In addition, a CDG Sponsor may choose to use net crediting for some projects it owns or manages but not for others.

The PSC rejected the utilities' suggestion that net crediting should only be available to CDG projects receiving Value Stack compensation and not to CDG projects receiving kWh credits (i.e., Tranche 0 projects). "This proposal is rejected as it would unreasonably limit the availability of net crediting," the PSC said

The PSC noted that the use of the net crediting model would eliminate the need for a POR method for subscription fees, since subscription fees would be withheld automatically from bill credits and paid directly to the CDG Sponsor.

Implementation still carries costs, however, and the PSC set a discount for amounts paid to the CDG sponsor

"As the implementation of the net crediting model will create a substantial cost savings for participating CDG Sponsors by essentially eliminating their billing and collections costs, it is appropriate for the costs of implementation to be covered by those participants, rather than socialized among non-participating ratepayers. This can be accomplished through a similar model to that used for collecting the cost of ESCO consolidated billing from participating ESCOs, which is primarily accomplished through the utility applying a discount rate to the payment to the ESCO and retaining the amount equal to that discount rate to cover consolidated billing costs. Discount rates for ESCO consolidated billing and POR significantly vary among utilities and change over time but are generally between 1% and 5%. Because a substantial portion of those costs represents POR charges not applicable in the net crediting model, and because overall costs are likely to be moderated by the simplicity of the net crediting model, a discount rate at the bottom of that range is appropriate," the PSC said

"At this time, the Commission directs that the Joint Utilities implement the net crediting model with a discount rate equal to 1% of the total value of the credits, subtracted from the Sponsor Payment," the PSC said

Each utility was directed to track costs associated with the implementation and operation of the net crediting model, as well as the amount recovered through the discount rate, and file an annual report on March 31 of each year for the preceding year, beginning with March 31, 2021. An annual report shall also include the number of CDG Sponsors participating in net crediting, as well as the number and capacity of projects and the number of participating customers.

Concerning the presentation of CDG on utility bills, the PSC said that while the Joint Utilities may initially implement net crediting using only a single line showing the Net Member Credit, "they are directed to work towards a more detailed presentation[.]"

The PSC noted that utility bills currently have space allocated to ESCO text, which may go unused

"The Joint Utilities and the EDI Working Group shall explore the feasibility of allowing a CDG Sponsor participating in net crediting to use that bill message for customers not served by an ESCO, as well as for customers also served by the ESCO if the ESCO is not using a bill message," the PSC said

Utilities were directed to file implementation plans by February 1, 2020 that include an anticipated timeline for implementation of net crediting as well as a cost estimate.

The Commission directed each utility to make all reasonable efforts to develop a timeline that allows for implementation of net crediting by January 1, 2021.

At this time, the Commission restricted UCB to CDG projects only. "Both on-site VDER projects, such as residential rooftop solar, and other DERs, such as demand response and energy efficiency resources, present a more complicated proposition for consolidated billing because a significant part of the customer benefit is a reduction in consumption at the utility meter and the utility generally does not have full information on the cause of that reduction," the PSC said

The PSC also declined to address at this time issues related to CDG and municipal aggregations (CCAs), including opt-out enrollment onto CDG

"[F]urther consideration is needed prior to changing CCA rules. Staff is directed to work with stakeholders to determine what issues need to be addressed for the integration of CCA and CDG, including for the use of the CCA opt-out model for CDG membership, and to file recommendations for Commission consideration by March 1, 2020. This will provide the opportunity for appropriate generic rules to be developed before net crediting is fully implemented and ensure that all CCA Administrators are operating under the same paradigm," the PSC said

The PSC rejected a proposal from National Grid under which the utility sought to offer "Customer Acquisition and Turnover Management" services (Supplemental Services), where the EDC would use its brand recognition to enroll customers with solar CDG Sponsors and manage ongoing customer turnover. National Grid proposed that under its Supplemental Services the standardized solar CDG offering would include a CDG satellite discount of 10 percent off of participating customers’ retail bill, which would assure that all participating customers pay less to participate in CDG than they otherwise would, according to the company. National Grid proposed to similarly share 80% of the revenues from this proposal with ratepayers and retain the remainder.

"The Commission denies Platform 2 of the National Grid Petition, the Customer Acquisition and Turnover Management proposal. As commenters argue, National Grid’s proposed customer acquisition activity would crowd out the private market, rather than supplementing market activity or correcting for a market failure. The proposal would allow National Grid to take advantage of its monopoly status and privileged access to customers in a way that would discourage investment and activity from competitive providers," the PSC said

Case 19-M-0463

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