July 2, 2009
Susan M. Hudson, Clerk
Vermont Public Service Board
112 State Street – Drawer 20
Montpelier, VT 05620-2701
Re:
Implementation of Standard Offer Prices for Sustainably Priced Energy
Enterprise Development (“SPEED”) Resources
Docket No. 7523
Dear Sue:
As requested by the Board’s Memorandum of June 22, 2009 issued in connection with
the above-referenced docket, what follows are Burlington Electric Department’s (“BED’s”)
initial comments on the Board’s list of issues circulated at the June 19, 2009 workshop, as
revised on June 26, 2009.
At the outset BED refers the Board to the physician’s creed – First do no harm. That
creed has direct applicability to the decisions the PSB must make in implementing Act 45.
Specifically, BED would note that in addition to meeting the requirements of the Act itself, any
standard offer ultimately developed by the Board must interact with existing mechanisms already
in place, including:
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Net metering rules and regulations;
Existing VEPPI administrative infrastructure, since the VEPPI and SPEED implementing
entities are one and the same; and
FERC transmission regulations.
BED is extremely concerned that the aggressive timelines contained in the legislation,
combined with the heavy workload of other pressing federal and state initiatives affecting the
Board and many of the parties to this Docket could lead to decisions that create inequities that
will persist for decades to come. As a result, BED’s comments suggest an approach that builds
on existing systems in place, leaving them intact without interference or overlap with the
standard offer, while establishing a system that can be modified as information is developed and
becomes more concrete over time. BED’s specific comments on particular points raised by the
Board’s list of issues are as follows:
Susan M. Hudson, Clerk
July 2, 2009
Page 2
Setting the price
As evidenced by numerous discussions among Docket participants occurring outside of
the hearing room, BED believes that development of pricing for the standard offer will prove to
be a difficult and daunting task. There is a wide range of views as to how pricing should be
developed across both unit size and fuel type. As a result, BED believes the Board will be hard
pressed to complete a ground up pricing review by the September 15th deadline for having
contracts available. Instead BED would encourage the Board to use the record created by the
legislature in developing Act 45 as the basis for the initial pricing review. The legislature
received significant testimony related to the appropriate levels to set initial pricing. BED
believes this record could serve as the basis for the Board to make the initial determination that
prices in the legislation are reasonable, and that initial efforts should be focused on identifying
whether any offsets to the legislated prices are appropriate.
Relative to the specific question related to time of use (“TOU”) rates, BED believes that
ultimately the standard offer should be broken into peak and non-peak payments in some
instances. However, this is very much dependent upon fuel type. In discussions with solar
developers BED has learned that the solar system design will differ depending upon the standard
offer price. For example, the design for a flat $0.20/kwh rate will be different than it would be if
the rate were $0.50/kwh during the summer peak period and $0.10/kwh all remaining times, even
though the average revenue to the project under both instances would be $0.20/kwh. So long as
the average payment to the developer covers the anticipated cost, BED believes some fuel types
should receive TOU rates that incentivize project designs that bring the most value to Vermont
consumers.
Minimum size
BED is specifically concerned with the administrative burden that could accompany
tracking very small (1-10kW) generators within the standard offer. The legislation does not
consider the administrative burden that surrounds implementation. In particular, the significant
utility overhead involved in removing generation from each standard offer project from a
utility’s load and then allocating that generation across all Vermont utilities to insure that net
energy purchases accurately reflect individual utility obligations. While a mechanism exists to
accomplish this task through VEPPI, it was never intended to address residential scale resources.
To BED the path forward on this front appears very clear. By setting the minimum size
to qualify for a standard offer contract as being the cutoff for net metering qualification, the
Board would address a number of issues immediately. Such a minimum would make it clear that
small projects (less than 250 KW) do not need to wait for this Docket to resolve, so the issues
surrounding delay of this summer’s construction season would be minimized. Many of the
issues surrounding transmission tariffs would be addressed, at least in part, since generators
below 250kW would be net metered and remain within a single utilities’ territory, thereby
avoiding the entire transmission debate, while larger generators (250kW to 2.2MW) would be of
sufficient size to incorporate transmission costs into their development efforts. Such a minimum
would also address issues surrounding utility allocations and minimize administrative burdens on
the SPEED Facilitator. The minimum size could then be evaluated as part of the subsequent
Susan M. Hudson, Clerk
July 2, 2009
Page 3
Docket in relation to the net metering thresholds to insure that an appropriate transition size has
been established.
REC Tracking and Allocation
BED notes that one of the key aspects of Act 45 that led to the determination that the
legislated pricing was appropriate was the assumption that the utilities would be able to monetize
the value of renewable energy certificates. However, in order to accomplish this, a number of
steps are required. These include the ability to gather total production data for the generator,
submit that data to the NEPOOL GIS, and transfer the REC’s either to Vermont utilities or to
third parties. BED strongly believes that generators obtaining standard offer contracts should be
required to provide the SPEED Facilitator with sufficient information to qualify the generators as
renewable resources in all applicable New England markets, and should be required to cooperate
with the SPEED Facilitator in achieving these qualifications. Once a generator is qualified, BED
believes the SPEED Facilitator’s role should include submittal of the generation data to facilitate
REC creation, and transfer of the certificates to the Vermont utilities.
Transmission
Unfortunately BED believes the transmission question before the Board is even more
complicated than the initial comments at the workshop suggested. FERC requirements apply to
transmission lines and transmission service. These rules are directly applicable to utility scale
generation, and as suggested by CVPS will need to be addressed in developing the standard offer
approach. In addition, BED would point out that Act 45 opens a new area of debate relative to
wheeling costs. Most of the projects being contemplated for development in this Docket will be
connected to the utility distribution lines. None of Vermont’s utilities have wheeling tariffs in
place for distribution level service. BED has no initial position on whether transmission fees
should be charged related to Standard Offer contracts, but would note that whichever path is
chosen it should be consistently applied to both distribution and transmission service.
BED appreciates the opportunity to submit these comments for the Board’s consideration,
and looks forward to actively participating in this proceeding.
Very truly yours,
William F. Ellis
WFE/
cc:
Docket No. 7523 Service List
211050-57