Standby Rates as a Barrier to CHP · 2017. 11. 27. · Scheduled 32-hour on-peak Consumers DTE Xcel...

Jennifer KeferAlliance for Industrial Efficiency

Executive Director202-816-9302

Standby Rates as a Barrier to CHPElectricity Consumers Resource Council (ELCON)

Sept. 14, 2017

Agenda

Standby rates as a barrier

Best practices

Market trends and potential

5 Lakes AnalysisMichigan

Minnesota

Ohio

Pennsylvania

2

Exposing the Hidden Fees

Facility charge

Delivery charge

Monthly demand charge for non-reserved service

Monthly customer charge

Monthly reservation charge

Seasonal maintenance charges

Seasonal energy charges for non-reserved service

Seasonal backup demand charges

Seasonal backup energy charges

3

Issues Regarding Standby Rates

Rates are not transparent

Rates are inconsistent

In Minnesota, one company could pay up to 5x more

“Captive” ratepayers

Erodes economic benefits of CHP

Rates assume outages occur at peak – and that all systems breakdown simultaneously

4

CHP Is Reliable

During Hurricane Sandy, when the grid lost power, all 24 CHP sites surveyed performed as expected.

5

Reciprocating Engine

Steam Turbine Gas Turbine Microturbine Fuel Cell

96-98% 72-99% 93-96% 98-99% >95%

Source: EPA, 2015

SystemAvailability

Best Practices

6

Transparency

Reflect actual costs

Eliminate “demand ratchets”

Allow for customer choice

Standby Rates in Practice

7

Existing CHP Capacity (MW)

CHP Technical Potential (MW)

Alliance for Industrial EfficiencyExecutive Director

[email protected]

Jennifer Kefer

www.5lakesenergy.com

“Apples-to-Apples”StandbyAnalysispresentationtoElectricityConsumersResourceCouncilSeptember14,2017


Overview

• 5Lakes’apples-to-applesmethodcalculatesmonthlystandbychargesforanidenticalCHPcustomeracrossdifferentutilities– Detailedapproachenablesustocompare,contrast,andevaluatespecificaspectsofutilities’standbytariffs

– Breadthofanalyses(4statessofar)allowsustomakeeducatedobservationsandpolicyrecommendationsacrossstates


Wheredidthisgetstarted?

• MinnesotaStandbyProceeding• DocketNo.E015/CI-15-115requiredrate-regulatedutilitiestofileupdatedstandbytariffs/riderswithMNPublicUtilityCommission.

• MinnesotaPower,XcelEnergy,OtterTailPower,andDakotaElectric


DifficulttoCompare

• Lackofuniformity• Lackoftransparency• Utilitiesprovidedsimulatedcalculations,butsystemsizesandotherassumptionsdiffered

• Aneedtohighlightcustomerexperiencethroughestimatedstandbybills


OutageScenarioComparison

• Nooutage• Scheduled,16-houroff-peak outage• Scheduled,16-hourON-peakoutage• Scheduled,8-hourON-peak,8houroff-peakoutage

• Scheduled,32-hourON-peak• UNscheduled,8-hourON-peak,8-houroff-peak outage


CustomerCharacteristics

• 3,000kWinstandard(supplemental)service• 2,000kWinreservedstandbyservice• Generalservice,primarydistributionlevel• Onemonthofstandbycharges


UtilitiesVerified

• Startedwith“coldread”ofpublishedtariff• Workedwithutilitiestoverifycalculations• Obtainednecessarydata• Clarifiedtarifflanguage• Clarifiedinterpretationandapplicationtoourscenarios


MinnesotaPower

NoOutage ScheduledOutage,16

HoursOff-Peak

ScheduledOutage,16

HoursOn-Peak

ScheduledOutage,8Hours

On-Peak,8HoursOff-Peak

ScheduledOutage,32

HoursOn-Peak

UnscheduledOutage,8Hours

On-Peak

$1,007 $2,699 $2,699 $2,699 $4,391 $20,180


DakotaElectric

NoOutage ScheduledOutage,16

HoursOff-Peak

ScheduledOutage,16

HoursOn-Peak

ScheduledOutage,8Hours

On-Peak,8HoursOff-Peak

ScheduledOutage,32

HoursOn-Peak

UnscheduledOutage,8Hours

On-Peak

$6,594 $20,127 $20,127 $20,127 $22,561 $20,127


MNSnapshotNoOutage Scheduled

Outage,16HoursOff-

Peak

ScheduledOutage,16HoursOn-

Peak


Peak,8HoursOff-Peak


Peak

UnscheduledOutage,8HoursOn-

Peak,8HoursOff-Peak

MinnesotaPower $1,007 $2,699 $2,699 $2,699 $4,391 $20,180

XcelEnergy$4,940 $5,935 $5,935 $5,935 $7,912 $6,135

OtterTailPower $1,632 $3,167 $4,113 $3,640 $6,594 $4,408DakotaElectric $6,594 $20,127 $20,127 $20,127 $22,561 $20,127


MinnesotaPowerStandbyReforms

• Redefine“unscheduled”toallowformaintenanceduringnon-shouldermonths

• Reconsideringunscheduled“ratchet”• Couldsavecustomer$14,000perunscheduledoutage

• Plusadditionalsavingsfromallowingmoreflexibilityforschedulingmaintenance


DakotaElectricStandbyReforms

• DakotaElectricconsideringreducingchargesforscheduled/maintenancestandbyservice

• Customerscouldsave$9,000perscheduledoutage

• Assumingquarterlymaintenance,thisrepresentsasavingsofatleast$36,000peryear


MichiganStandbyReforms

• StandbyRateWorkingGroup• ConsumersEnergyandDTEGeneralRateCases

• Examiningutilitycost-of-servicestudiesinlightofapples-to-applesstandbyanalyses


Scheduled32-houron-peakConsumers DTE

Xcel- MNMinnesotaPower

OtterTailPower- MN

DakotaElectric- MN

ServiceCharge $200 $275 $25.75 $0 $304 $34

DeliveryCapacity/Distribution

Charge$8,100 $6,760 $0 $0 $0 $0

ReservationFee $0 $3500 $4,940 $1,007 $428 $0

DemandCharges $4,463 $20,800 $983 $0 $0 $18,020

EnergyCharges $2,070 $2,436 $1,989 $3,384 $4,961 $4,966

StandbyFacilitiesCharge $0 $0 $0 $0 $900 $0

Total $14,833 $30,271 $7,938 $4,391 $6,594 $23,020


Unscheduled8on/8off-peakConsumers DTE

Xcel- MNMinnesotaPower

OtterTailPower- MN

DakotaElectric- MN

ServiceCharge $200 $275 $26 $0 $304 $34

DeliveryCapacity/Distribution

Charge$8,100 $6,760 $0 $0 $0 $0

ReservationFee $0 $3,500 $5,140 $0 $428 $0

DemandCharges $1,116 $9,340 $0 $21,180 $816 $18,020

EnergyCharges $1,775 $1,170 $995 hourlyenergycosts $1,959 $2,483

StandbyFacilitiesCharge $0 $0 $0 $0 $900 $0

Total $11,191 $17,545 $6,160 $21,180plushourly

$4,408 $20,537


Pennsylvania

• PECOEnergyandPPLElectric• 2MWCHPsystem– PPL-$5,200/month– PECO- $11,500/month

• 30MWCHPsystem– PPL- $1,000/month– PECO- $65,000/month


Ohio

• Duke,FirstEnergy,AEP,DaytonPower&Light• DiscussedhighdistributionchargeswithPUCO• InterestinaligningCHPIncentiveRebateProgramswithbetterstandbyratedesign

• Distributedgenerationviewedaskeytogridmodernizationefforts


MajorTakeawaysre:StandbyRates

• Lackoftransparency,accessibilityforcustomers

• Lackofuniformityinlanguage,structure• Significantvariationincharges• Highreservationfees,demandchargesposebarriertoCHP


Contagion?

• MichiganrespondedtoanalysisinMinnesota• PennsylvaniarespondedtoMinnesotaandMichigan– thenOhio

• InterestinLouisiana• Additionalanalysesincreasepressureonutilitiestoincreasetransparency,accessibility

• Helpsregulatorsidentify“redflags”forfurtherinquiry/discussion

• Replicableinotherstates


JamieScripps5LakesEnergyLLC(517)897-4649

[email protected]

Standby Rates as a Barrier to CHP · 2017. 11. 27. · Scheduled 32-hour on-peak Consumers DTE Xcel...

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