0 cellpadding=0 cellspacing=0 width=100%>
Yahoo! is not affiliated with the authors of this page or responsible for its content.
Arizona Corporation Commission Arizona Corporation Commission
Meeting Minutes

DATE:
September
7,
2006

TIME:
9:30
a.m.

PLACE: Arizona
Department
of
Environmental Quality, 1110 W.
Washington Street #250 Phoenix, Arizona 85007

ATTENDANCE:
No quorum of Commissioners. See attendance list on Attachment
2.

TOPIC: NET
METERING
WORKSHOP
DOCKET NO. E-00000A-99-0431

Ms. Barbara Keene of Commission Staff welcomed the participants of the
workshop and each participant made a self-introduction. Ms. Keene provided
background on the metering standard included in the Energy Policy Act (EPACT).

According to the EPACT, the Arizona Corporation Commission (ACC) is to
make a determination whether or not it is appropriate to implement the net metering
standard. The ACC may decline to implement the standard or adopt a modified standard.
The ACC is required to begin its consideration by August 8, 2007, and complete its
consideration by August 8, 2008. The standard would apply to utilities with greater than
500,000 megawatt-hours (MWh) in annual retail sales. The standard is as follows:

Each electric utility shall make available upon request net metering service
to any electric consumer that the electric utility serves. For purposes of
this paragraph, the term 'net metering service' means service to an electric
consumer under which electric energy generated by that electric consumer
from an eligible on-site generating facility and delivered to the local
distribution facilities may be used to offset electric energy provided by the
electric utility to the electric consumer during the applicable billing
period.

Ms. Keene explained that the ACC is required to consider the three purposes of
PURPA in its determination of whether to adopt the net metering standard. The three
purposes of PURPA are as follows:

Conservation of energy supplied by electric utilities
Optimal efficiency of electric utility facilities and resources
Equitable rates for electric consumers


Ms. Keene asked the group to provide feedback about how net metering would
play a role in conservation. Various parties commented that net metering technologies
Page 1 of 7 would create an incentive to install distributed generation (DG) and lead to the
conservation of fossil fuels. There was a statement that a surplus is not a sale of kWh
back to the customer, but actually represents an exchange of kWh.


There was also discussion about the value of the kWh going in one direction may
not be the same value as that of the kWh going in the other direction due to timing
(seasonal or time of day).


A question was asked about whether or not independent generators selling back to
the grid would be regulated by the ACC. It was mentioned that Nevada and Pennsylvania
do not require them to be regulated. A comment was made that a Certificate of
Convenience and Necessity should not be required, and that PURPA and a Supreme
Court case have already addressed this issue. Also, it would be impossible to prove
where the kilowatt-hours (kWh) came from or where they were delivered. There was
also comment that the ACC should regulate to ensure reliability of the grid, and safety
concerns should be addressed during the interconnection process through specific safety
requirements.


The group discussed other issues related to net metering: plan elements
(participation and eligibility, metering, treatment of net excess generation), costs, and rate
structures.

Participation and Eligibility


The issue of customer caps based on total participation or project size was
discussed. A comment was made that caps on project size could prevent economies of
scale that exist with large projects. Also, caps could stifle the implementation of net
metering, and a cap could be added later if it is found that caps are needed. A statement
was made that it doesnt make sense to establish a cap based on project size, and
whatever is adopted would need to be in alignment with the proposed Renewable Energy
Standard (RES) rules. It was also mentioned that in the interconnection workshops the
participants agreed that the service entrance should be the basis for establishing the
customers size.


The question of what is meant by aggregate cap in terms of basing the cap on
total participation was discussed. Ms. Keene commented that the aggregate cap could
refer to the total amount of all the customers that could participate in net metering as a
percentage of a utility's total retail load or simply a total number of MW of customer
generation. Comment was made that if a cap is to be adopted it should not be set too low.
Comment was also made that you could start with a cap and then increase the cap over
time. It was mentioned that New Jersey has a 2 MW project size limit with no cap on
total participation, and California had a 0.5 percent of utility peak demand cap on total
capacity which was raised to 2.5 percent. It was stated that the Arizona market is similar
to the California market, but the California market is already moving so we shouldnt
need to go through the same learning curve that California did.

Page 2 of 7
Other comments were made, including that there could be a cap on the aggregate
participation, but there should not be a cap on project size. Also, a project cap could be
set at 100 percent of customer load.


A utility representative expressed concern about the utility not being able to
recover all distribution and service costs and commented that the ACC should adopt
customer service charges to reflect the true cost of service. Ms. Keene asked the group if
rates had been redesigned in other states in response to net metering. Comments were
made that rates have not been redesigned because the goal in many states is to encourage
net metering and distributed generation.


The issue of cost subsidization was discussed where the rates for the entire
customer base could be increased due to the potential for utility losses. For instance,
some fixed costs are recovered through kWh rates. It was mentioned that the benefits
need to be considered as well as the costs. Comment was made that renewables provide a
benefit to all. However, there was also discussion that low income customers would
benefit from reduced capital cost. A utility representative commented that he is
concerned about the recovery problem facing the utilities. Comment was also made that
subsidization is not a problem, and we should forget about chasing numbers. One
participant commented that he would support a cost-benefit study. Ms. Keene indicated
that the group should provide comments about the costs and benefits associated with net
metering.


In regard to what customer sectors should be allowed to participate in net
metering, comments were made that all customer sectors should be allowed to participate.


The next topic discussed was about what generation resources should be eligible
for net metering. Should the resources include just renewables or some other mix? For
instance, should generation resources be based on the Federal Energy Regulatory
Commissions definition of a Qualifying Facility? Comments included: (1) having
multiple resource options is a good policy, and that this standard this is not just a green
standard; (2) the standard should include only renewables because it would help prevent
fraud on the part of the customer; and (3) there are benefits to fossil fuel generators, and
it is hard to achieve goals with only renewable resources. Mr. Bill Murphy of the
Distributed Energy Association of Arizona stated that his preference would be to have
renewables and combined heat and power (CHP) included in a net metering standard.
A question was raised about how this standard would tie to the proposed RES rules. Ms.
Keene commented that the two standards should be separate, but compatible, and the net
metering standard should be able to stand on its own. Comment was made that fuel cells,
micro turbines, and CHP were part of the state standard in North Dakota and Arkansas.

Meters


Ms. Keene raised the question about how net metering should be approached from
the perspective of the meter. For instance, should one meter be used or two meters?
Comment was made that costs should be considered and kept down, and some small
Page 3 of 7 systems do not require a meter. Comment was also made that the meter should be able to
run forward and backward and most do run bidirectionally. Mr. Tom Yost of APS
commented that it would require APS to change out every meter to account for this, and
costs could range from $200-$500 per meter. APS was asked if it would be cheaper to
add second meter instead of replacing the current meter. APS indicated that it would be
more costly; plus utilizing two meters can create an esthetic issue for its customers. Mr.
Tom Olsen of American Solar Electric said that the meter cost is included in the price of
the system and i