VERMONT PUBLIC SERVICE DEPARTMENT · transmission planning, new transmission costs would begin in...
Transcript of VERMONT PUBLIC SERVICE DEPARTMENT · transmission planning, new transmission costs would begin in...
VERMONT PUBLIC SERVICE DEPARTMENTRATE DESIGN INITIATIVE / DISTRIBUTED ENERGY RESOURCES STUDYSTAKEHOLDER ENGAGEMENT MEETING #3
April 16, 2020
NEWGEN STRATEGIES AND SOLUTIONS, LLC
VERMONT RATE DESIGN INITIATIVELSAM™ AND THE VT RATE DESIGN INITIATIVE
• LSAM™ allows iteration of input assumptions to evaluate a multitude of future states of the electric market in Vermont
Future electric usage will vary vis-à-vis market forces, decarbonization, and technology adoption
• LSAM™ allows the user to manage system peaks through
Electric rates to send price signals to manage load
• Static and dynamic rate design
• Behavioral change, technology adoption, or both
Directly manage load through flex capacity
Controllable flex load “calls”, timing and duration
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NEWGEN STRATEGIES AND SOLUTIONS, LLC
VERMONT RATE DESIGN INITIATIVELSAM™ UPDATE – SINCE LAST STAKEHOLDER MEETING
• Updated demand elasticity
• Carbon accounting refinement
• “Dynamic” rate design
• Increased detail on Utility Cost Key Performance Indicators (KPIs)
• Increased model functionality from stakeholder feedback
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NEWGEN STRATEGIES AND SOLUTIONS, LLC
VERMONT RATE DESIGN INITIATIVELSAM™ UPDATE – SINCE LAST STAKEHOLDER MEETING
• Updated demand elasticity
RAP/Brattle survey of Critical Peak Pricing (CPP) / Time-of-Use (TOU) program elasticity for non-electric vehicle (EV) loads
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edu
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On-Peak to Off-Peak Pricing Differential
RAP Report – Elasticity of Electric Demand
Price Only Technology
NEWGEN STRATEGIES AND SOLUTIONS, LLC
VERMONT RATE DESIGN INITIATIVELSAM™ UPDATE – SINCE LAST STAKEHOLDER MEETING
• Updated demand elasticity
RAP/Brattle survey of Critical Peak Pricing (CPP) / Time-of-Use (TOU) program elasticity for non-electric vehicle (EV) loads
EV short-run elasticity is assumed to be substantially greater, per Department of Energy (DOE) EV Project
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0%
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On-Peak to Off-Peak Pricing Differential
RAP + DOE (EV) Elasticities
Price Only Technology EV-Specific Elasticity
NEWGEN STRATEGIES AND SOLUTIONS, LLC
VERMONT RATE DESIGN INITIATIVELSAM™ UPDATE – SINCE LAST STAKEHOLDER MEETING
• Carbon accounting refinement
Feedback from EAN Vermont
Increased detail on accounting for current space / water heating fuel portfolio
• Feedback from Biomass Energy Resource Center (BERC)
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(3,000,000)
(2,500,000)
(2,000,000)
(1,500,000)
(1,000,000)
(500,000)
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2017 2021 2025 2029 2033 2037
MET
RIC
TO
NN
S C
O2
CO2 Emissions Savings Sector/Year
EV Savings Vermont Renewables Savings Electrified Space/Water Heating Savings
NEWGEN STRATEGIES AND SOLUTIONS, LLC
VERMONT RATE DESIGN INITIATIVELSAM™ UPDATE – SINCE LAST STAKEHOLDER MEETING
• Dynamic rate design
Critical Peak Pricing (CPP)
• Regional Network Service (RNS) annual capacity costs moved into an energy rate to be “called” by the model user up to 60 times in a modeled year
Real-Time Pricing
• Passes-through 2018 actual ISO-NE hourly Day-Ahead energy charges to the customer
• Rate design is separated for EV and non-EV load
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NEWGEN STRATEGIES AND SOLUTIONS, LLC
VERMONT RATE DESIGN INITIATIVELSAM™ UPDATE – SINCE LAST STAKEHOLDER MEETING
• Increased detail on Utility Cost KPIs RNS-Related Bulk Transmission Costs
• Embedded costs – current RNS rate forecast from Vermont Department of Public Service (PSD)
• Marginal costs – for incremental system peaks above 1,100 MW
VELCO providing feedback on $/MW of new capacity above embedded costs / RNS rate
Incremental Distribution Capacity Costs• Feedback from GMP and VEC on costs
of substantial new load on distribution system
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Vermont Modeled Forecast Peak Demand
Current Trans. Capacity Incremental Trans. Capacity
NEWGEN STRATEGIES AND SOLUTIONS, LLC
VERMONT RATE DESIGN INITIATIVELSAM™ UPDATE – SINCE LAST STAKEHOLDER MEETING
• Increased model functionality from stakeholder feedback
New inputs• New rate implementation assumptions:
% of customers participating in new rate
• Discrete EV adoption inputs, % of vehicles that are EV in 2030 and 2040
• Discrete electric combined cooling, heat and power (CCHP) and heat pump hot water inputs (kWh/yr and % adoption)
• Incremental impacts of rates / flex load:
2018 baseline
Including Tech but no rates / flex load
Including Tech but with rates / flex load
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NEWGEN STRATEGIES AND SOLUTIONS, LLC
VERMONT RATE DESIGN INITIATIVE – WORKSHOP 3
• Introduction
• Panel Discussion 1
Policymaking and planning in the context of VT electric market evolution
• NewGen presentation on LSAM™ modeling and innovative rate design
• Panel Discussion 2
Implementation challenges of electric rate innovation
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PANEL DISCUSSION 1UTILITY PLANNING FOR THE FUTURE AND THE STATE’S OBJECTIVES
DYNAMIC RATES AND FRAMEWORK FOR EVALUATING FUTURE OPTIONS
RATE DESIGN INITIATIVE / DISTRIBUTED ENERGY RESOURCES STUDYSTAKEHOLDER ENGAGEMENT MEETING #3
13NEWGEN STRATEGIES AND SOLUTIONS, LLC
UTILITIES INCUR COSTS DIFFERENTLY BY UTILITY FUNCTION
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NEWGEN STRATEGIES AND SOLUTIONS, LLC
OVERVIEW OF LSAM™ “UTILITY COST KPIS”
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Local Distribution System(s)
ISO-NE Power Supply Costs
Bulk TransmissionRegional Network Service (RNS)
NEWGEN STRATEGIES AND SOLUTIONS, LLC
REGIONAL NETWORK SERVICE (BULK TRANSMISSION)
• Bulk Transmission is pooled in New England
Vermont is charged for average of state’s aggregate peak load per month
• Future RNS costs depend on several factors:
Total transmission costs in pool
Regional transmission rate design
Vermont load
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VELCO: Vermont’s system can handle ~1,200 MW without new investment, but for long-term planning, new investment is
needed in the 1,100-1,150 MW range
23.9%
19.2%
26.9%
21.5%
29.9% 28.4%
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Vermont Peak Load and Excess RNS Capacity
NEWGEN STRATEGIES AND SOLUTIONS, LLC
REGIONAL NETWORK SERVICE (BULK TRANSMISSION)
• For this study, we assume the regional transmission pool = Vermont
Capacity has headroom (~28%)
Transmission rate design remains constant
• Vermont load incurs transmission costs in two ways:
Load <1,100 MW billed forecast RNS rate
Load >1,100 MW billed incremental $/MW• Assumed $94/kW-year from updated
screening tool values used for Efficiency Vermont, which was comparable to VELCO levelized cost
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VELCO: Vermont’s system is built for ~1,200 MW without new investment, but due to long-term nature of
transmission planning, new transmission costs would begin in the 1,100-1,150 range
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2018 2022 2026 2030 2034 2038
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Vermont Modeled Forecast Peak Demand
Current Trans. Capacity Incremental Trans. Capacity
NEWGEN STRATEGIES AND SOLUTIONS, LLC
OVERVIEW OF LSAM™ “UTILITY COST KPIS”
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Local Distribution System(s)
ISO-NE Power Supply Costs
Bulk TransmissionRegional Network Service (RNS)
NEWGEN STRATEGIES AND SOLUTIONS, LLC
VERMONT RATE DESIGN INITIATIVELSAM™ UPDATE – SINCE LAST STAKEHOLDER MEETING• Increased detail on incremental Distribution
capacity costs Feedback from GMP and VEC on costs of
substantial new load on distribution system
• Cost estimate currently under further review
• Cost does not currently include cost of upgrading nearly all poll transformers, currently <10 kVA
~$1,400/transformer, ~1,000 transformers on 10 evaluated circuits
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1. Conductor is priced $200k/mi, with each overloaded conductor event equating to 250 ft. of conductor
$240.00
$250.00
$260.00
$270.00
$280.00
$290.00
$300.00
$310.00
$-
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5,000 65,000 125,000 185,000
$/kW
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tal L
oad
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wth
$To
tal
kW Incremental Load Growth
Cost of Incremental Dist. Upgrades
Fuses Conductor Regulator Recloser $/kW
GMP Data
Dist. Element $/Overload
Fuses $400
Conductor1 $9,470
Regulator $130,000
Recloser $50,000
NEWGEN STRATEGIES AND SOLUTIONS, LLC
REFINED “UTILITY COST KPIS” FOR LSAM
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Local Distribution System(s)
• Capacity: Highly Specific to Utility and Specific Location
• Calculated: ~$300/kW
Bulk TransmissionRegional Network Service (RNS)
• Embedded Capacity: ~$110-$200/kW-yrAvg. of 12 Monthly Peaks
• Incremental Capacity: $94/kW-yr >1,100 (2020)
ISO-NE Power Supply Costs
• Energy: ~$0.03-$0.07/kWhDepending on Timing
• RES Compliance: ~$1.50-$12.00/MWh over period
• Capacity: ~$6-$7/kWhDuring 1 ISO-NE CP Hour
Important Note: LSAM Utility Cost KPIs
do not make up the entirety of VT utilities’ revenue requirements
NEWGEN STRATEGIES AND SOLUTIONS, LLC
CALCULATING “UTILITY COST KPIS” FOR LSAM
Component Billing Determinants and Forecast Cost Basis
ISO-NE Capacity VT Demand during ISO-NE CP Time x Forecast Forward Capacity Price
ISO-NE Energy All Purchased Energy from ISO-NE x Forecast All-In Energy Rate
RES Compliance Costs All Purchased Energy from ISO-NE x RES % x Forecast REC Price
RNS Capacity (Embedded Costs) Average Total VT Monthly Peak Demand x Forecast RNS Capacity Rate
Incremental Bulk Transmission Cost Incremental Annual Peak Demand (>1,100MW) x Incremental Trans. Cost
Incremental Distribution Cost Incremental Annual Peak Demand (>2018 Baseline) x ~$300/kW + infl.
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NEWGEN STRATEGIES AND SOLUTIONS, LLC
LSAM™ SCENARIO ANALYSIS – KEY ASSUMPTIONS/OUTPUTSPROVIDED FOR ILLUSTRATIVE PURPOSES
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EV Adoption Forecast
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Assumed EV Chargers by Voltage
1.8 kW 7.2 kW 12 kW
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Electrification Adoption Forecast
Cold Climate Heat Pumps Electric Hot Water
Forecast
Forecast
PV Policy:
Offsetting onsite load credited at
retail;
Excess generation credited at $0.09/kWh,
trued-up hourly
EV Adoption:
20% of all consumer
vehicles by 2030
50% of all consumer
vehicles by 2040
10% of vehicles
have access to at-work charging
Elec. Adoption:
CCHP: 20% by 2030
H2O: 5% by 2030
CCHP: 50% by 2040
H2O: 10% by 2040
EV Charger Voltage:
Reasonable assumptions based on currently available models,
assumed to increase in
voltage over time
Illustrative Scenario
NEWGEN STRATEGIES AND SOLUTIONS, LLC
$-
$100,000
$200,000
$300,000
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$500,000
$600,000
2020 2025 2030
$000
Add Technology Adoption
ISO-NE Capacity ISO-NE Energy
RES Compliance Costs RNS Capacity (Embedded Costs)
Incremental Bulk Transmission Cost Distribution Capacity
$-
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
2020 2025 2030
$000
2018 Baseline w/ 0.5% Growth
ISO-NE Capacity ISO-NE Energy
RES Compliance Costs RNS Capacity (Embedded Costs)
Incremental Bulk Transmission Cost Distribution Capacity
COMPARISON BETWEEN MODELED SCENARIOSBASELINE VS. INCLUDING TECHNOLOGY ADOPTION - 2030
22
3.2% CAGR
5.1% CAGR
NEWGEN STRATEGIES AND SOLUTIONS, LLC
$-
$200,000
$400,000
$600,000
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$1,400,000
2020 2025 2030 2035 2040
$000
Add Technology Adoption
ISO-NE Capacity ISO-NE Energy
RES Compliance Costs RNS Capacity (Embedded Costs)
Incremental Bulk Transmission Cost Distribution Capacity
$-
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
2020 2025 2030 2035 2040
$000
2018 Baseline w/ 0.5% Growth
ISO-NE Capacity ISO-NE Energy
RES Compliance Costs RNS Capacity (Embedded Costs)
Incremental Bulk Transmission Cost Distribution Capacity
COMPARISON BETWEEN MODELED SCENARIOSBASELINE VS. INCLUDING TECHNOLOGY ADOPTION - 2040
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3.8% CAGR
7.1% CAGR
NEWGEN STRATEGIES AND SOLUTIONS, LLC
COMPARISON BETWEEN MODELED SCENARIOSBASELINE VS. INCLUDING TECHNOLOGY ADOPTION - 2040
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22.1%, $101,458
78.9%, $510,849
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
Base w/ Tech Base w/ Tech Base w/ Tech Difference Base w/ Tech Base w/ Tech Difference
2020 2025 2030 2030 2035 2040 2040
$0
00
ISO-NE Capacity ISO-NE Energy RES Compliance Costs RNS Capacity (Embedded Costs)
Incremental Bulk Transmission Cost Incremental Dist. Capacity Cost Total Base Total Tech
NEWGEN STRATEGIES AND SOLUTIONS, LLC
COMPARISON BETWEEN MODELED SCENARIOSBASELINE VS. INCLUDING TECHNOLOGY ADOPTION - 2040
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2020 2025 2030 2035 2040
Ret
ail E
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gy (M
Wh
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$000
2018 Baseline w/ 0.5% Growth
ISO-NE Capacity ISO-NE Energy
RES Compliance Costs RNS Capacity (Embedded Costs)
Incremental Bulk Transmission Cost Distribution Capacity
Retail Energy - Base
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Ret
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$000
Add Technology Adoption
ISO-NE Capacity ISO-NE Energy
RES Compliance Costs RNS Capacity (Embedded Costs)
Incremental Bulk Transmission Cost Distribution Capacity
Retail Energy - Tech
NEWGEN STRATEGIES AND SOLUTIONS, LLC
$-
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$0.18
$0.20
2020 2025 2030 2035 2040
$/kW
h
Average Rate (Cost KPIs / Retail Energy Sales)
Avg. Rate - Base Avg. Rate - Tech
OPTIONS TO MANAGE UPWARD RATE PRESSURE
• Increasing electrification drives both new utility revenues and costs
LSAM™ modeling suggests costs outpace revenue growth
• Options to manage upward rate pressure:
“Pay the bill”
• Continue to buy capacity/energy from the “market”
“Acquire” capacity and energy in other ways
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2.8% CAGR
4.8% CAGR
NEWGEN STRATEGIES AND SOLUTIONS, LLC
FUTURE VERMONT CAPACITY PROCUREMENT
Wholesale-Side Management
• Generation
ISO-NE Capacity
VT Utility-Owned Gen/Storage
• Transmission
RNS Capacity Cleared in Market
VT Utility-Owned Gen/Storage
Load-Side Management
• Sources of controllable load
EV
Industrial/Lg. Commercial
Residential
Energy storage
• Control
Direct: Utility, Third-Party
Indirect: Customer (Rate Design)
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NEWGEN STRATEGIES AND SOLUTIONS, LLC
FUTURE VERMONT CAPACITY PROCUREMENT
Wholesale-Side Management
• Sources of controllable load
EV
Industrial/Lg. Commercial
Residential
Energy storage
• Control
Direct: Utility, Third-Party
Indirect: Customer (Rate Design
Customer Load Control – Rate Design
• Static Rate Design
Non-TOU
TOU
• Demand, Energy
• Seasonal
• Tiered
• Dynamic Rate Design
Real-Time Pricing (RTP)
Critical Peak Pricing (CPP)
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BREAK FOR LUNCH11:30 – 12:30 EST
DYNAMIC RATES AND FLEXIBLE LOADS TO MANAGE UTILITY COST KPIS
RATE DESIGN INITIATIVE / DISTRIBUTED ENERGY RESOURCES STUDYSTAKEHOLDER ENGAGEMENT MEETING #3
31NEWGEN STRATEGIES AND SOLUTIONS, LLC
INNOVATIVE RATE DESIGN
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NEWGEN STRATEGIES AND SOLUTIONS, LLC
INNOVATIVE RATE DESIGN AND IMPLEMENTATION CHALLENGES
• Without management, increasing electrification will drive an increase in capacity costs outpacing increased revenue
• Rates can serve as a resource in managing loads, but challenges exist:
Efficacy in managing loads requires:
• Higher enrollment in innovative rates / programs
Regulatory mandates
Self-selecting enrollment
Other options?
• Customers changing usage patterns
Third-party and/or technology facilitation
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NEWGEN STRATEGIES AND SOLUTIONS, LLC
RATE DESIGN COMPLEXITY, EFFICACY & RESPONSIVENESS STATUS
Rate Design Enrollment Pricing StrategyComplexity to
CustomerEfficacy in Managing
LoadResponsiveness to
Rapid Market Evolution
Static Rate Design
Non-TOU Status Quo Status Quo
TOU High Aggressive
Mid Less-Aggressive
Low Less-Aggressive
Dynamic Rate Design
Real-Time Pricing High Market pass-through
Low Market pass-through
Critical Peak Pricing High Aggressive
Mid Less-Aggressive
Low Less-Aggressive
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/
/
/
NEWGEN STRATEGIES AND SOLUTIONS, LLC
RATE DESIGN COMPLEXITY, EFFICACY & RESPONSIVENESS STATUS – FILTERED FOR EFFICACY
Rate Design Enrollment Pricing StrategyComplexity to
CustomerEfficacy in Managing
LoadResponsiveness to
Rapid Market Evolution
Static Rate Design
TOU High Aggressive
Dynamic Rate Design
Real-Time Pricing High Market pass-through
Critical Peak Pricing High Aggressive
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/
/
Aggressive pricing in which there are substantial customer “winners and losers” will not result in high
rates of voluntary enrollment
Higher enrollment can stem from:1. Regulatory mandate2. “Opt-Out” structure3. Third-Party load management
Mandates are challenging with more aggressive pricing/greater efficacy
“Opt-Out” and Third-Party unlikely to get as much enrollment
/
PANEL DISCUSSION 2UTILITY PLANNING FOR THE FUTURE AND THE STATE’S OBJECTIVES
ADDITIONAL SCENARIO MODELING:THE MODELED VALUE OF INNOVATIVE RATES
RATE DESIGN INITIATIVE / DISTRIBUTED ENERGY RESOURCES STUDYSTAKEHOLDER ENGAGEMENT MEETING #3
NEWGEN STRATEGIES AND SOLUTIONS, LLC
LSAM™ MODELED SCENARIO
• Tech adoption assumptions previous employed
PV adoption based on updated NM policy
EV adoption
• 20% of vehicles by 2030; 50% by 2040
Electric space and water heating
• CCHP: 20% of Residential by 2030, 50% by 2040
• Heat pump H20: 5% of Residential by 2030, 10% by 2040
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NEWGEN STRATEGIES AND SOLUTIONS, LLC
COMPARISON BETWEEN MODELED SCENARIOSBASELINE VS. INCLUDING TECHNOLOGY ADOPTION - 2040
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22.1%, $101,458
78.9%, $510,849
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
Base w/ Tech Base w/ Tech Base w/ Tech Difference Base w/ Tech Base w/ Tech Difference
2020 2025 2030 2030 2035 2040 2040
$0
00
ISO-NE Capacity ISO-NE Energy RES Compliance Costs RNS Capacity (Embedded Costs)
Incremental Bulk Transmission Cost Incremental Dist. Capacity Cost Total Base Total Tech
Up
ward
Pre
ssure
NEWGEN STRATEGIES AND SOLUTIONS, LLC
LSAM™ MODELED SCENARIOSTRATEGIC RATE DESIGN
• Static TOU Rates
EV charging rates set with 3-4 hour on-peak evening window
• On-Peak rate is current otherwise effective energy rate
• Off-Peak rate is set to 2/3 of On-Peak rate
• Up to 24 flexible load events “called,” with capacity ½ max EV load
Duration of 4 hours, limited at one/day
• RNS capacity costs recovered through Critical Peak Events
Up to 5x per month, with duration of 4 hours, limited at one/day
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NEWGEN STRATEGIES AND SOLUTIONS, LLC
COMPARISON BETWEEN MODELED SCENARIOSTECHNOLOGY ADOPTION FUTURE VS. TECH W/ RATES - 2040
40
-9.0%, $50,324
-12.8%, $148,286
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
Tech w/ Rates w/ Tech Tech w/ Rates w/ Tech Tech w/ Rates w/ Tech Difference Tech w/ Rates w/ Tech Tech w/ Rates w/ Tech Difference
2020 2025 2030 2030 2035 2040 2040
$0
00
ISO-NE Capacity ISO-NE Energy RES Compliance Costs RNS Capacity (Embedded Costs)
Incremental Bulk Transmission Cost Incremental Dist. Capacity Cost Total Tech w Rates Total Tech
Do
wn
ward
Pre
ssure
NEWGEN STRATEGIES AND SOLUTIONS, LLC
COMPARISON BETWEEN MODELED SCENARIOSTECHNOLOGY ADOPTION FUTURE VS. TECH W/ RATES, AT-WORK EV - 2040
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-9.0%, $50,324
-12.8%, $148,286
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
Tech w/ Rates w/ Tech Tech w/ Rates w/ Tech Tech w/ Rates w/ Tech Difference Tech w/ Rates w/ Tech Tech w/ Rates w/ Tech Difference
2020 2025 2030 2030 2035 2040 2040
$0
00
ISO-NE Capacity ISO-NE Energy RES Compliance Costs RNS Capacity (Embedded Costs)
Incremental Bulk Transmission Cost Incremental Dist. Capacity Cost Total Tech w Rates Total Tech
-4.4%, $50,000
50% At-Work EV Charging
Do
wn
ward
Pre
ssure
CONCLUSIONS AND KEY TAKEAWAYSRATE DESIGN INITIATIVE / DISTRIBUTED ENERGY RESOURCES STUDY
STAKEHOLDER ENGAGEMENT MEETING #3
NEWGEN STRATEGIES AND SOLUTIONS, LLC
CONCLUSIONS AND KEY TAKEAWAYS
• Electric market evolution will exert upward rate pressure
CAGR of 4.8% vs. 2.8% (Base)
• Innovative rates can send price signals for customers to change usage and manage costs
Initial modeled savings $150M-$200M
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$-
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$0.20
2020 2025 2030 2035 2040
$/kW
h
Average Rate (Cost KPIs / Retail Energy Sales)
Avg. Rate - Base Avg. Rate - Tech Avg. Rate - Tech w/ Rates
2.8% CAGR
4.8% CAGR
4.2% CAGR
NEWGEN STRATEGIES AND SOLUTIONS, LLC
CONCLUSIONS AND KEY TAKEAWAYS
• There are challenges in implementing innovative rates:
Increased complexity to the customer
Efficacy in reducing peaks
Program enrollment
Regulatory approval
Third-party participation
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NEWGEN STRATEGIES AND SOLUTIONS, LLC
NEXT STEPS
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THANK YOU FOR YOUR PARTICIPATION!