Potential Win-Win Business & Regulatory Frameworks for DG

Background on current activities in Massachusetts to develop a win-win framework can be found at www.masstech.org/dg/winwin.htm.  These activities include:

• EPRI-STAC DER Public/Private Partnership (includes draft documents not listed below but currently under discussion)
• MTC Congestion Relief Pilots
• Distribution Planning Working Group

The following files are pdf unless otherwise noted.  (They are listed by date, in sections that only represent approximate categories.)

General Reference Materials

• July 2008 -- Distributed Energy: The Way Forward, The Center for International Environment and Resource Policy, The Fletcher School of Law and Diplomacy, Tufts University
• November 2007 -- Creating Incentives for Electricity Providers to Integrate DER, a Report of the EPRI DER Public/Private Partnership, Technical Report 1014899, E. Petrill et. al., funded by California Energy Commission (John Sugar), Massachusetts Technology Collaborative (Fran Cummings), Massachusetts Division of Energy Resources (Gerry Bingham) and National Association of State Energy Officials as a State Technology Advancement Collaborative (STAC)
• July 2007 -- What Utilities Can Do With Renewable Energy, T. Meissner, Chief Operating Officer, Unitil, presentation to NARUC Committee on Energy Resources and the Environment
• February 2007 -- The Potential Benefits of DG and Rate-Related Issues that May Impede Their Expansion, A Study Pursuant to Section 1817 of the Energy Policy Act of 2005, US DOE
• June 2007 -- Aligning Incentives: New Roles for Distribution Companies to Support Distributed Resources,  F. Cummings, presentation to Northeast Combined Heat and Power Initiative Annual Conference
• 2006 -- Utility Incentives for Demand-Side Resources, section 6.2 of EPA's Clean Energy-Environment Guide to Action
  • July 2006 -- Energy Efficiency Benefits Calculator, part of EPA's National Action Plan for Energy Efficiency, prepared by Energy and Environmental Econcomics, Inc. (one of the subcontractors to the EPRI DER Partnership):
    • -- July 31 worksheet (2.7 MB excel file)
    • -- link to worksheet on EPA website
  • see rest of Clean Energy-Environment Guide on EPA website
• 2006 -- Designing Rates to Level the Playing Field for Clean Energy Supply, 4-page fact sheet from EPA's Combined Heat and Power Partnership
• December 2006 -- Utility Owned Generation?(UOG), Mary Smith of Harvard and The Energy Consortium, Electric Restructuring Roundtable
• November 2006 -- An Approach for the Deployment of Energy Recycling in Ontario: Executive Briefing, The Ontario Alliance for Clean Technology
• October 2006 -- Aligning Utility Interests with Energy Efficiency Objectives, Kushlet et. al., ACEEE Report U-061
• August 2006 -- A Comprehensive Process Evaluation of Early Experience Under New York’s Pilot Program for Integration of DG in Utility System Planning, Final Report 06-11, NYSERDA, by Fred Zalcman et. al., Pace Law School Energy Project and Synapse Energy Economics, Inc.
• March 2006 -- Combined Heat and Power: Connecting the Gap between Markets and Utility Interconnection and Tariff Practices (Part I), R. Neal Elliott et. al, ACEEE

• November 2005 -- "The Business Case for DR," T. Brunetto and J. Wimberly, Distributed Energy Financial Group, EnergyPulse Website
• July 2005 -- New Business Models for PV in CA, L. Frantzis et. al., Navigant
• March 2005 -- Proposal for an Experiment to Test Real Time Pricing Of Distribution Services, by Mark B. Lively, Utility Economic Engineers
• January 2004 -- Massachusetts Symposium on Regulatory Frameworks for DG:
  • Potential Regulatory Incentives & Frameworks (pdf)
    presented by Stan Blazewicz of Navigant Consulting
  • Presentations on several different stakeholder perspectives
  Dec. 2003 -- Making the Business case for Distributed Energy, An Economic Analysis, Richard Scheer, Energetics, Inc., 2003 Distributed Energy Peer Review (pdf)
• Small Is Profitable, sections on Benefits of Distributed Resources and Policy Recommendations, Amory Lovins et. al.
• July 2003 -- excerpts with potentially relevant recommendations from the report of NEDRI, the NE Demand Response Initiative (also available: full NEDRI Report, pdf)
• March 2001 -- National CHP Roadmap
• Materials from UK Office of Gas and Electricity Markets ("Ofgem") and other UK sources:
  • Introduction to new "Registered Power Zones" (RPZ) for DG innovation, ofgem (web)
  • June 2004 -- DG, Innovation Funding Incentive & Registered Power Zones: Regulatory Instruction & Guidance, Ofgem (pdf)
  • August 2005 -- A Scoping Study: Demand Side Measures on the UK Electrical System, KEMA, for DTI (UK Dept. of Training & Industry)

Standby Charges & Other Rate Issues

 Standby charges represent a subset of the many rate issues that will affect the growth of clean distributed energy resources in Massachusetts.  These rates have a range of impacts on the owners and hosts of distributed resources, on other ratepayers, on electric utilities and on the state's economy and environment. In addition to the documents listed below, a separate web page provides additional information:

• Overview of DG Rate Issues

• September-October 2006 -- Comments and Reply Comments filed in D.T.E. 02-38-C, someof which address standby charges
• 2006 -- Removing Unintended Utility Rate Barriers to DG, section 6.3 of EPA's Clean Energy-Environment Guide to Action
  • see rest of EPA Guide on website
• August 2006 -- Aligning Regulatory Incentives with Demand-Side Resources, a workshop hosted by NARUC and EPA, selected presentations include:
  • Understanding the Ratemaking Implications of Linking Profits and Sales, David Moskovitz, RAP
  • Decoupling: Should Ratepayers Be Worried?, Simon ffitch, Washington State Attorney General’s Office
  • Examples of Decoupling Mechanisms, Jim Lazar
  • Decoupling in California: More Than Two Decades of Broad Support and Success, Roland Risser, PG&E
• August 2006 -- Presentations on CHP and Standby Rates, NARUC 2006 Summer Meeting, Committee on Electricity, San Francisco, CA
  • Making the Legal Case for Good Policy on Standby Rate Design, Sean Casten
  • Standby Rate Design Principles A Utility Perspective, Akbar Jazayeri
  • Standby Rates for Customers with DG, Wayne Shirley, RAP
  • On-Site Generation: The Business Perspective, Don King, Director, Maintenance & Operations, Kaiser Permanente
• May 2006 -- The Value of DG under Different Tariff Structures, by Ryan Firestone et. al., LBNL-60589
• May 2006 -- Order Extending Deadline and Continuing Standby Rate Exemption, NYPSC, Case 99-E-1470
• May 2006 -- Responding to EPAct 2005: Looking at Smart Meters for Electricity, Time-Based Rate Structures, and Net Metering, by NERA, Inc. for the Edison Electric Institute (EEI)
• March 2006 -- CT DPUC Order, Docket 05-07-16, Incentives for Customer-Side Distributed Resources, including inclentives to utilities and provision changing standby charges (word)
• December 2005 -- Rate Structures for Customers With Onsite Generation: Practice and Innovation, by Synapse Energy Economics and Regulatory Assistance Project, NREL/SR-560-39142
• September 2005 -- Standby Charges and Fuel Cells: New Opportunities for State Policy Coordination, a Report from Clean Energy Group and the Public Fuel Cell Alliance
• June 2004 -- Settlement of a standby tariff case by NSTAR and 8 other parties in DTE 03-121
  • For the many materials filed in this case, enter Docket Number "02-121" at DTE website

"Decoupling" Utility Rates & Other Utility Incentives

Note: see a specialized list of these and additional documents on decoupling at masstech.org/dg/decoupling.htm.

• Decoupling Resources (web page of the NJ Center for Energy, Economic & Environmental Policy, CEEEP)
• Rate Reform/DeCoupling, American Gas Association (web page)
• August 2006 -- Examples of Good, Bad, and Ugly Decoupling Mechanisms, Jim Lazar
• January 2006 CT DPUC Order, Docket 05-09-09, Decoupling Energy Distribution Company Earnings From Sales (pdf)

• December 2005 -- Rate Structures for Customers with Onsite Generation: Practice and Innovation, L. Johnson et. al., NREL/SR-39142

• December 2005 -- EPA and Next Generation of Energy Efficiency, Stacy Angel, EPA Climate Protection Partnerships (see "Decoupling" and other "Ratemaking" slides in presentation to Minnesota)

• October 2005 -- Decoupling White Paper #1, Presented for discussion at the Strategic Issues Forum, Rutgers Center for Energy, Economic and Environmental Policy
• February 2004 -- Report on Utility Incentives Mechanisms for the Promotion of Energy Efficiency and System Reliability, Maine PUC, presented to the Utilities and Energy Committee
• December 2001 -- Breaking The Consumption Habit:  Ratemaking for Efficient Resource Decisions, Sheryl Carter, The Electricity Journal
• August 1994 -- Decoupling and Public Utility Regulation, R. Graniere et. al., The National Regulatory Research Institute
• January 1994, The Theory and Practice of Decoupling, Eto, J. et.al. (LBL-34555)
• Source materials on decoupling from NEEP's website (neep.org)

Materials from EPRI DER Partnership

• This project is described at:
  • www.masstech.org/dg/EPRI-STAC.htm
  • Contact Ellen Petrill (650-855-8939) to discuss ways to participate in this project.
• November 2007 -- Creating Incentives for Electricity Providers to Integrate DER, a Report of the EPRI DER Public/Private Partnership, Technical Report 1014899, E. Petrill et. al., funded by California Energy Commission (John Sugar), Massachusetts Technology Collaborative (Fran Cummings), Massachusetts Division of Energy Resources (Gerry Bingham) and National Association of State Energy Officials as a State Technology Advancement Collaborative (STAC)
• June 2006 -- DER Stakeholder Collaboration at Work: Shaping a California DER Procurement, a Report of the EPRI DER Public/Private Partnership, Technical Update
• December 2005 -- EPRI article on Intelligrid
• July 11, 2005 -- STAC proposal submitted by Massachusetts DOER with EPRI and other co-sponsors
• EPRI Massachusetts Report (Appendix C of 2005 Report)

Materials from ISO-New England & NEPOOL committees to develop new rules for inclusion of Distributed Resources in the NE capacity market

 Detailed information on this topic is available at the ISO Market Rules page.  The following points are introductory:

• November 2006 -- Options for State Funded Energy Efficiency Programs in the Forward Capacity Market, Synapse
• June 2006 -- ISO-NE email request for estimates of the future number of "Other Demand Resource" (ODR) projects in NE (e.g., DG, energy efficiency, load management projects at retail customer sites)
• April 2006 -- ISO-NE initiated two new Work Groups pursuant to the LICAP Settlement Agreement:
  • Intermittent Resource Group, to address the treatment in future capacity arrangements of wind, solar and run-of-river hydro resources, and 
  • Demand Resource Group, to develop ISO rules for treatment of DG in the new NE Forward Capacity Market
• March 2006 -- Summary of capacity settlement by ISO-NE

Materials Presented at MADRI

 In addition to particular materials available below, see the latest info at Mid-Atlantic Distributed Resources Initiative Working Group.  In January 2006, Rich Sedano of the Regulatory Assistance Project made a Presentation on MADRI at the Massachusetts Symposium on Technical and Business Challenges for DG to Play a Role in T&D Planning.

• January 2007 -- Quantifying Demand Response Benefits
  In PJM,  The Brattle Group, for PJM and MADRI

• June 2006 -- Policy Statement in Support of DER Initiatives

• A pilot project is being initiated in New Jersey, funded by New Jersey’s Clean Energy Program, that is similar to MTC's Congestion Relief Pilots.  It is described in detail in the solicitation:

  • April 2006 -- Utility Distributed Energy Resources Pilot Project Grant Solicitation (word)
• June 5, 2006 (MADRI meeting date) -- Demand Response Cost-Effectiveness, PHI
• April 20, 2006 -- Distributed Resources: Incentives, by NERA for EEI
• Selection of recent MADRI options papers for use in January 25, 2006 Massachusetts Symposium
• Dec. 19, 2005 (MADRI Meeting date) -- Potential Model for Monetizing DR Distribution System Value, a strawman concept, prepared by Brad Johnson
• Dec. 19, 2005 (MADRI Meeting date) -- Bridging the Gap Between Wholesale and Retail Markets, Frank Magnotti, Comverge
• Dec. 12, 2005 (MADRI Meeting date) -- Potential MADRI Business Sub-Group Overview, 1-slide flow-chart
• Nov. 21, 2005 (MADRI Meeting date) -- MADRI draft outline of a "DR Benefits Assessment Study," Brad Johnson
• Regulatory Sub-Group -- potential rates to adjust incentives for DER:
  • Nov. 3, 2005 -- Distribution System Regulation, Draft (see discussion of Distributed Resource Credits)
  • Nov. 3, 2005 -- Electric Utility Revenue Stability Adjustment Factor (Draft 1), Wayne Shirley
  • Presentation on the draft Model Revenue Stability Rate Rider, Wayne Shirley
  • Excel file with example (xls)
  • MADRI Weblog (see postings about Model Revenue Stability Rate Rider)
  • See also updates at the RAP web site at the following address: http://WWW.raponline.org/MADRI/Archives/Uploads/Decoupling.zip

• MADRI Business Case Sub-Group -- draft materials on "Alternative Models for Fostering Disco & 3rd Party DR Development:"
  • October 17, 2005 -- A Workplan for Developing Utility Business Models, Eric Ackerman, EEI
  • September 2005 -- Designing Financial Incentives for Utility Involvement in Distributed Resources (Section 5), Gene Meehan, prepared by NERA for EEI
  • September 2005 -- Provide Utilities with Rate Base Opportunities, Comverge
  • May 2005 -- EEI letter with 8 DER Principles and comments on RAP MADRI Scoping Paper, Eric Ackerman Senior Manager, Regulatory Policy
• MADRI Business Case (and Regulatory) Sub-Group(s) -- draft materials on "Options for New DR Pricing & Tariffs to Bridge W/S & Retail Markets:"
  • Nov. 3, 2005 -- Dynamic Pricing: Options and Policies
  • Nov. 3, 2005 -- PSEG myPower Pilot Program, Fred Lynk (see myPower Link utility-activated small C&I load mgmt)
  • Oct. 20, 2005 -- Bridging the Gap Between Wholesale and retail Markets, F. Magnotti, Comverge, Inc.
  • May 2005 -- Business Models: Perspectives from Customer Resource Industry, F. Magnotti (VPC, Virtual Peaking Capacity Contract)
  • May 2005 -- California's Statewide Pricing Pilot, Stephen George and Ahmad Faruqui, Charles River Associates
  • See also items under CA below
• Business Case Sub-Group Updates & Meeting Notes:
  • October 11, 2005 (with matrix of 4 Focus Areas under study)
  • September 20, 2005 (with Framework for Developing 10 Strawman Options)
  • August 10, 2005 (summary, no business case for residential DR in PJM)
  • July 22, 2005 (MADRI DR Business Case Task)
• October 20, 2005 -- The following materials were also presented at the 10/20 Business Case Sub-Group Meeting:
  • A Work Plan for Developing an Extra Market Incentive Plan, Jim Torpey (Portfolio Standard, ICAP)
  • Operation Kill-A-Watt: A MADRI Demand Response Program, Bob Lesch et. al.
• Sept. 20, 2005 -- The following materials were presented at the 9/20 Business Case Sub-Group Meeting:
  • Business Model Abstracts (see also revisions at 10/20 meeting above)
• July 22, 2005 -- Is There a Business Case for Demand Response in the MADRI Area, Jim Torpey
• June 2005 -- NJ-PA STAC DR Project: Supporting MADRI Initiatives, Jim Torpey
• June 2005 -- MADRI Scoping Paper on the Throughput Issue: Addressing the Adverse Impact of Distributed Resources on Utility Earnings, F. Weston and W. Shirley

Other Materials from RAP

See also Regulatory Assistance Project website and RAP materials posted above under MADRI

• May 2006 -- Order Extending Deadline and Continuing Standby Rate Exemption, NYPSC, Case 99-E-1470
• May, 2006 -- Understanding the Values of CHP in Today’s Electric Sector, Wayne Shirley, USCHPA Conference
• December 2005 -- Rate Structures for Customers With Onsite Generation: Practice and Innovation, by Synapse Energy Economics and Regulatory Assistance Project, NREL/SR-560-39142
• July 2005 -- Clean Solutions: What’s In It For Utilities?, David Moskowitz, RAP, presentation to NARUC ERE Committee
• June 2005 -- MADRI Scoping Paper on the Throughput Issue: Addressing the Adverse Impact of Distributed Resources on Utility Earnings, F. Weston and W. Shirley
• June 2005 -- Distributed Resource Barriers, presentation by Wayne Shirley to NECA Conference
• October 2002 -- DR Distribution Credit Pilot Programs: Revealing the Value to Consumers and Vendors, RAP (NREL/SR-560-32499)
• February 2000 -- Profits and Progress Through Distributed Resources, David Moskovitz
• September 2001 -- Distribution System Cost Methodologies for DG, Wayne Shirley

Massachusetts Rate Provisions

• December 2005: Proposed Settlement of NSTAR Rate Case
  • For more materials, enter Docket Number "05-85" at DTE website
• See "Electric rates" sheet in file entitled "Energy Cost Savings Module" for customer-sited DG, available for download at Navigant Reports page

Related DG and DER Policies in Other States (selected)

• Potential Win-Win Regulatory Frameworks: Related Policies in Other States (web page)  -- some of these policies are also cited below:

• Clean energy policies of selected states (web page)
• Rhode Island Energy Act of 2006: S 2903 Substitute B
• July 2005 -- Energy Policy Act of 2005, Conference Report (1.6 MB pdf) -- FERC implementation activities (web page)

Other Source Materials for Reference

• DG Benefits and Costs

• Economics of Renewable DG

• Environmental Benefits and Impacts of DG

• Methodologies for Addressing DG in Distribution Planning

(Click here to return to the Distribution Planning Working Group Page.)

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Related Projects

Massachusetts Technology Collaborative (MTC) is a leader or sponsor of the following two projects which are closely related to the work of the Distribution Planning Working Group:

• MTC Congestion Relief Pilot Projects

 

• July 11, 2005 -- EPRI DER Public/Private Partnership: Creating and Demonstrating Incentives for Electricity Providers to Integrate Distributed Energy Resources (DER), a proposal submitted by Massachusetts DOER to the State Technologies Advancement Collaborative (STAC) -- contact Ellen Petrill (650-855-8939) to discuss ways to participate in the EPRI DER Partnership.

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Working Groups of the Massachusetts DG Collaborative:

• Distribution Planning Working Group
• Tariff Working Group
• Technical/Network Working Group

This page is under construction -- suggestions for additional resources, or other questions or comments about the Massachusetts DG Collaborative, may be directed to:

          Fran Cummings, RET Policy Director

Website: New "Win-Win" Paradigm for Distributed Energy Resources