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BEFORE THE PUBLIC UTILITIES COMMISSION OF NEVADA

IN THE MATTER of the Emergency Petition of The Alliance For Solar Choice for a Declaratory Order that Senate Bill 374 Requires Continuous and Uninterrupted Net Energy Metering be Offered to Customer Generators in Nevada

) ) ) ) )

Docket No. 15-07021

COMMENTS REGARDING AND ANSWER TO EMERGENCY PETITION FOR DECLARATORY ORDER

Pursuant to the July 17, 2015 Notice of Petition for a Declaratory Order, Nevada Power

Company d/b/a NV Energy (Nevada Power) and Sierra Pacific Power Company d/b/a NV

Energy (Sierra Pacific and, together with Nevada Power, NVE or the Companies)

submit these Comments Regarding and Answer to the Emergency Petition for a Declaratory

Order (the Petition) filed by The Alliance For Solar Choice (TASC). The Petition requests

an order regarding the meaning of Senate Bill (SB) 374. Specifically, TASC asks the Public

Utilities Commission of Nevada (Commission) to issue a declaratory order requiring the

Companies to continue to offer net energy metering under the currently effective net metering

tariff until such time as the Commission approves a new net metering tariff. This specific

request from TASC should be rejected. I. INTRODUCTION

A. TASC stated that, under SB 374, no more than 235 MW of customer-generation would be served under existing net metering rules

One objective of SB 374 is clear as expressed by TASC to legislators and the public,1

SB 374 was designed to provide the Commission with wide latitude to establish a smooth

transition between current net metering rules (NEM1) and new, sustainable net metering

rules to become effective on or before December 31, 2015 (NEM2). According to TASC, SB

1 Assembly Commerce and Labor, May 25, 2015. Written minutes of the hearing are not available from the

Legislative Counsel Bureau. However, the hearing was videotaped. Mr. Uithovens remarks begin at minute 11:42 at the following link: http://nvleg.granicus.com/MediaPlayer.php?view_id=14&clip_id=5022. See also, the joint

press release issued on May 25, 2015 by TASC and NVE, attached hereto as Answer Exhibit A.

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374 defined the existing 3 percent net metering cap to be 235 megawatts,2 which is the

maximum amount of net metering permitted under the current net metering rules until

December 31, 2015.3 SB 374 identifies the single, specific scenario under which NEM1

would remain in place after NVE has accepted applications for 235 megawatts under NEM1:

only if the Commission fails to finalize NEM2 rules by December 31, 2015.4 The Petition

seeks relief that is inconsistent with the text of SB 374 and TASCs description of the

legislation. Equally important, the relief requested by TASC would not provide for a smooth

transition from NEM1 to NEM2.

B. NVE will propose a transition mechanism in its July 31, 2015 filing

In contrast, the Companies July 31, 2015 filings will propose a mechanism for

efficiently transitioning from NEM1 to NEM2 consistent with the latitude afforded the

Commission under SB 374 to craft and implement a NEM2 program. First, consistent with SB

374, the NVE Companies will continue to interconnect customer-generators under NEM1 until

it accepts and approves applications from 235 megawatts of customer-generators. Second,

again consistent with SB 374, thereafter the NVE Companies proposal will be to continue

accepting applications from customers requesting the interconnection of renewable distributed

generation and the installation of a net meter. Third, consistent with SB 374, the filing will

include a marginal cost of service study and a new NEM2 tariff, providing the Commission the

data to evaluate NEM2 rules. Fourth, consistent with SB 374, the Companies will request

permission from the Commission to begin billing customers under the proposed NEM2 tariff at

an appropriate time before December 31, 2015, 5

subject to refund in the event that the final

NEM2 tariff provides NEM2 customers with a more advantageous rate.

2 Answer Exhibit A.

3 Id.

4 Id. See also, Subsection 5 of section 4.5 of SB 374 (requiring that, for the period beginning January 1, 2016, the

companies must offer net metering under existing rules if the Commission has not issued an order approving new

net metering rules). 5 The Companies are making the system changes necessary to begin billing NEM2 customers, with the goal of

being in a position to start billing under NEM2 rules and rates as soon as September 15, 2015.

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The Companies forthcoming proposal is consistent with SB 374 and furthers Nevadas

energy policies. Under the proposal, customer-generators may continue to submit

interconnection and net metering applications and the renewable distributed generation

industry may continue to install such systems, without interruption. The proposal provides an

organized process for transitioning from NEM1 to NEM2, without interruption to the sales and

fulfillment processes. The proposal thus will achieve TASCs stated objectives in a manner

that is consistent with legislation that TASC supported.6 Ultimately, the transition to NEM2

will allow further growth in distributed generation, while ensuring that customers without these

systems will not continue to subsidize net metering.

C. Consistent with the preference established by Section 4.5 of SB 374, NVE will propose a just, reasonable and fair billing regime for NEM2 customers that eliminates the unreasonable shifting of costs to customers who do not choose to install rooftop solar systems.

Subsection 3 of Section 4.5 of SB 374 establishes a preference for the NEM2 billing

regime. The preference established by the law is for a three-part rate that consists of a basic

service charge, a demand charge, and an energy charge. These charges will be based on the

specific costs that NVE incurs to provide electric service to customers who install intermittent,

renewable generation. Pursuant to SB 374, the basic service charge will reflect marginal fixed

costs incurred to provide safe and reliable service to customer generators. These costs include

back-office systems (e.g., accounting, billing, and customer service systems), employees,

meters and the terminals, transformers, and wires that are closest to the customers premise.

These costs do not vary based on the amount of electricity a customer consumes. Pursuant to

SB 374, the demand charge will reflect the maximum load requirement that a customer-

generator places on the system, including the need to accommodate energy delivered by the

customer-generator.7 The demand charge will reflect the Companies investment in the

6 Assembly Commerce and Labor, May 20, 2015. Written minutes of the hearing are not available from the

Legislative Counsel Bureau. Mr. Lyndon Rives remarks regarding the industrys concern regarding the transition between NEM1 and NEM2 begin at hour 3:17:00 at the following link:

http://nvleg.granicus.com/MediaPlayer.php?view_id=14&clip_id=4959 7 That is, the demand charge will reflect the cost of provide the specific service that a customer-generator receives,

which includes both stand-by service and energy receipt service.

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generation, transmission, and distribution facilities that are needed to ensure the delivery of

reliable service to customer-generators. Again, pursuant to the SB 374, the energy charge will

reflect the volume of energy consumed by a customer. Energy costs, such as fuel and

purchased power, typically vary based on consumption.

The three-part rate is neither new nor novel. The Companies and utilities across the

country have offered three- and multi-part rate structures to commercial customers. Indeed, the

Companies have used a three-part rate structure to bill commercial accounts for more than six

decades. A three-part rate design better reflects the cost of providing electric service, is well-

established and provides a fair and reasonable way to recognize the cost of serving customer-

generators.

In this vein, NVEs July 31, 2015 filing will further the policy of SB 374. The filing

will propose just, reasonable and fair rates that reflect the cost of providing service to

customers who choose to install variable distributed generation. Not only will the proposal

eliminate the unreasonable shifting of costs from customer-generators to other customers, but

the filing will propose rules that fairly compensate customer-generators for any capacity and

energy benefits associated with their systems. In summary, the filing will seek to establish a

sustainable environment for renewable distributed generation one that treats all customers

fairly and one that recognizes that the inherent subsidy utilized to promote distributed

generation is no longer needed to ensure the growth of renewable distributed generation.

II. THE COMPANIES WILL CONTINUE TO ACCEPT APPLICATIONS FROM

CUSTOMER-GENERATORS AND REQUESTS TO INSTALL NET METERS AFTER THE 235 MEGAWATT LIMITATION SUPPORTED BY TASC IS REACHED.

Subsection 1 of section 2.3 of SB 374 provides: Except as otherwise provided in subsection 3, each utility shall, in accordance with a tariff filed by the utility and approved by the Commission, offer net metering to customer-generators who submit applications to install net metering systems within its service territory after the date on which the cumulative capacity requirement described in paragraph (a) of subsection 1 NRS 704.773 is met.

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While subsection 2 of section 2.3 allows the Commission to establish enrollment limitations

under the NEM2 tariff, NVE does not anticipate asking for a capacity limitation on NEM2 in

its July 31, 2015 filing.8 Accordingly, the Companies will propose to continue to accept

applications requesting interconnection of on-site renewable generation and the installation of

net meters after the 235 megawatt-limitation on NEM1 described in the statute is reached.

NVE also will ask the Commission to allow it to begin billing NEM2 rates at an appropriate

point before December 31, 2015.

III. SB 374 ALLOWS THE COMMISSION TO DETERMINE WHETHER AND HOW TO TRANSITION BETWEEN NEM1 AND NEM2

The Petition asks the Commission to issue an order requiring the Companies to offer

net metering under existing rules until the Commission approves the NEM2 tariff. As

explained above, the Companies will provide a solution in their July 31, 2015 filing. The only

matter at issue is how the Companies will bill new customer-generators after the 235

megawatt-limitation. That matter is intended to be resolved by the Commission in accordance

with the process outlined in SB 374.

Subsection 1(a) of Section 2.95 of SB 374 provides that until the 235 megawatt cap is

reached, customer-generators will be charged under the NEM1 rules.9 Then, subsection 1(b) of

Section 2.95 requires the Companies to offer net metering in accordance with a new net

metering program and tariffs (NEM2) filed with and approved by the Commission.10

To move

from NEM1 to NEM2, section 4.5 of SB 374 requires the Companies to file cost of service

studies and NEM 2 tariffs with the Commission. To facilitate the transition from NEM1 to

8 Subsection 2 of section 2.3 provides, in relevant part, the Commission . . . [m]ay close to new customer-

generators a tariff filed pursuant to subsection 1 and approved by the Commission if the Commission determines

that closing the tariff to new customer-generators is in the public interest. 9 Subsection (a) provides, In accordance with the provisions of this Section, NRS 704.774 and 704.775, to the

customer-generators operating within its service area until the date on which the cumulative capacity of all net

metering systems for which all utilities in this State have accepted or approved completed applications for net

metering is equal to 235 megawatts. 10

Subsection (b) provides, After the date on which the cumulative capacity requirement described in paragraph (a) is met, in accordance with the tariff filed by the utility and approved by the Commission pursuant to section

2.3 of this act.

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NEM2 in a transparent manner, the Companies will ask the Commission to permit billing of

the NEM2 rates at an appropriate point before December 31, 2015.

Because the date upon which the 235 megawatt limitation will be met was (and is)

uncertain, the May 20, 2015 version of SB 374 provided a bridge between the NEM1 and

NEM2 programs in the form of a temporary tariff to be applied in the event the cumulative

capacity of all net metering systems reached 235 megawatts prior to the final approval of

NEM2 tariffs. This approach was opposed by representatives of the largest competitors of the

solar industry.11

The final version of SB 374, which was expressly supported by TASC,

exchanged the temporary tariff transition mechanism described in earlier iterations of the bill

for a transition process to be determined by the Commission, should the Commission

determine that transition process is necessary.12

In the final version of SB 374, the Commission

is charged not only with approving the NEM2 tariff, but with establishing the mechanism for

transitioning between NEM1 and NEM2 in the event that the cumulative capacity of all net

metering systems reaches 235 megawatts before the final approval of the NEM2 tariff. In the

final version of SB 374 the Commission will make these assessments based on information

filed first by the NVE Companies on July 31, 2015, along with the information it receives from

participants in that proceeding, concluding no later than December 31, 2015.

TASCs proposal is inconsistent with the process and time table set forth in SB 374 for

determining whether and how, in the event that the cumulative capacity of all net metering

systems reaches 235 megawatts before the final approval of NEM2, to transition from NEM1

to NEM2. TASC asks the Commission to require NEM1 to continue even after the 235

11

Assembly Commerce and Labor, May 20, 2015. Written minutes of the hearing are not available from the

Legislative Counsel Bureau. Mr. Lyndon Rives remarks describing the industrys opposition to the temporary tariff transition mechanism begin at hour 3:17:00 at the following link:

http://nvleg.granicus.com/MediaPlayer.php?view_id=14&clip_id=4959 12

Subsection 1 of Section 4.5 provides that in lieu of the temporary tariff approach opposed and rejected by the

solar industry, the Commissions consideration of the process for transitioning from NEM1 to NEM2 will begin with the filing on July 31, 2015 of the NEM2 tariff and a cost of service study. Subsection 2 of Section 4.5

describes the minimum terms of the NEM2 tariff. Subsection 3 of Section 4.5 describes the role of cost of service

analysis to be used in determining rates for service in the NEM2 tariff. Subsection 4 of Section 4.5 describes the

review that the Commission will undertake in approving, modifying or not approving the NEM2 tariff, and

provides that the Commissions review will be completed no later than December 31, 2015.

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megawatt-limitation is reached, which is prohibited by subsection 5 of section 4.5 of SB 374.

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The relief requested by TASC is unnecessary, prohibited by SB 374, and inconsistent with

TASCs public statements describing SB 374.

IV. TASCS ASSERTION THAT SB 374 REQUIRES NEM1 TO REMAIN IN EFFECT UNTIL NEM2 IS APPROVED IS CONTRARY TO THE PLAIN LANGUAGE OF THE STATUTE, THE NEM1 TARIFF AND TASCS TESTIMONY BEFORE THE 2015 LEGISLATURE

TASC asserts that SB 374 provides that NEM1 will remain in effect and apply to all

new net metering applications, including net metering applications received after the 235

megawatt cap is reached. TASC argues that, in the absence of any new tariff, the applicable

tariff is the existing NEM tariff that has been filed by the Companies and approved by the

Commission.14 This argument is inconsistent with the plain language of SB 374, which

defines the single situation under which NEM1 rules will become effective after the 235

megawatt cap is reached.

TASCs argument also is inconsistent with the plain language of the NEM1 tariffs.

Those tariffs expressly provide that [t]his Rider will close when the cumulative generating

capacity of Net Metering Systems operating in Nevada equals three percent of the total annual

peak capacity of all Utilities in Nevada. As stated by TASC, SB 374 defines the existing 3

percent net metering cap to be 235 megawatts.15 By their own terms, the NEM1 tariffs close

when the Companies accept and approve applications from customer-generators for 235

megawatts.

13

Subsection 5 of section 4.5 of SB 374 provides:

Except as otherwise provided in subsection 6, if for any reason the Commission does not

approve a tariff as required by subsection 4 on or before December 31, 2015, and

notwithstanding the amendatory provisions of this act to the contrary, for the period beginning

January 1, 2016, and ending on the date on which the Commission approves a tariff pursuant to

section 2.3 of this act, a utility shall offer net metering to customer-generators in a manner

consistent with the provisions of NRS 704.773, 704.774 and 704.775 as those sections existed

before the effective date of this act.

(Emphasis added) 14

TASC Emergency Petition, p. 10, lines 18-19. 15

Assembly Commerce and Labor, May 25, 2015. Written minutes of the hearing are not available from the

Legislative Counsel Bureau. Please refer to Mr. Uithovens introduction of the final version of SB 374 beginning at minute 11:42 at the following link: http://nvleg.granicus.com/MediaPlayer.php?view_id=14&clip_id=5022.

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Finally, TASCs position is inconsistent with TASCs description of the operation of

the final version of SB 374. On May 25, 2015, TASC representative Robert Uithoven appeared

before the Assembly Committee on Commerce and Labor to support the ultimate version of SB

374, a consensus version to which TASC expressly agreed. On behalf of TASC, Mr. Uithoven

introduced the compromise legislation and stated unequivocally that the current net metering

program and tariff would apply only up to the 235 megawatt cap.

In a sense this amendment will one, define the existing 3 percent net metering cap to be 235 MW. This 235 MW will be the maximum amount of net metering permitted under the current net metering rules until December 31

st of this year, 2015. The amendment will also require that

the Public Utilities Commission of Nevada design a future net metering tariff with wide latitude for the Commission to structure that new tariff. And finally the amendment will require the Commission to finalize the new tariff by the end of this year December 31, 2015. Should the Commission not meet this deadline the existing net metering tariff will remain in place until the Commission finalizes the new tariff.

16

A few moments later Assemblyman Nelson asked Mr. Uithoven you said you know

what you are agreeing to . . . if you bump up to that [235-MW limitation], youre going to live

with that right?17 Mr. Uithoven stated that there was disagreement between the parties

presenting the compromise version of SB 374 as to whether 235 megawatts represented three

percent of load, and when the cap would be reached. Mr. Uithoven then stated, We are

confident in our agreement, and we are here testifying in favor of the agreement we made with

NV Energy. Finally, Mr. Uithoven agreed that, if a tariff were in place, then the limitation

would be academic.18 The compromise that resulted in the final version of SB 374 did not

eliminate the need to establish a plan for transitioning between NEM1 and NEM2: it left the

responsibility for establishing the transition plan to the Commission.19

16

Id. (emphasis added). 17

Id. 18

Id. 19

If the Commission does not have the power to establish a transition plan, then, as TASC stated, 235 MW is the maximum amount of net metering that will be installed under NEM1.

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V. NVE DID NOT MISLEAD THE LEGISLATURE, THE INDUSTRY, OR THE

PUBLIC

NVE did not mislead the Legislature, the industry, or the public with respect to when

the 235 megawatt-cap would be reached. During the 2015 legislative session, the renewable

distributed generation industry and NVE disagreed about when the three percent cap on

installed net metering capacity, which had been in place since 2013, would be reached. Even

though the industry acknowledged that it was experiencing massive growth,20 and believed

the cap might be reached before December 31, 2015, the industry also stated that reaching the

limitation was unlikely.21

Notwithstanding this understanding, the industry agreed that no more

than 235 megawatts of customer-generators would be served under NEM1, indicated that it

understood its agreement, and committed to live with its agreement.

NVE presented its estimate to the legislature based on both the then existing rules,

which focused on installed capacity, as well as the growth rates applicable in 2014 and early

2015. The concept of a cap based on reserved or pipeline capacity was not established until

SB 374. The previous version of NRS 704.773 established a three percent net metering cap for

operating projects, not reserved projects. Thus, NVE had systems in place to report operating

capacity. NVE first attempted to calculate pipeline capacity for reserved projects during the

week of April 27, 2015. As the discussion evolved through the session, NVE continued to

refine the calculation procedure for pipeline projects in order to provide the best estimate

possible. Throughout the entire process, NVE provided these numbers based on the best

available information it had at the time.

The 17.5 megawatt counting error that was discovered and reported to the industry by

NVE on or about June 22, 2015 consisted entirely of pipeline projects. Over the last several

months, the pipeline has been fluid and rapidly growing. NVE had robust reporting systems in

place to report operating capacity.

20

Testimony of Lyndon Rive, http://nvleg.granicus.com/MediaPlayer.php?view_id=14&clip_id=4959 21

Id. at approximately 3:24:45 (lets just say in the unlikely event the industry hits the cap in call it October) & 3:36:30.

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The Petition references the information provided by NVE as part of Docket 14-06009.

There, NVE provided a projection based on installed capacity, not pipeline capacity, and the

plain language of that response denotes this fact. The same reporting systems were not in place

for pipeline capacity because this capacity had not previously been a part of any reporting

requirement for compliance. This new pipeline reporting process was being developed

concurrently with the discussions occurring around SB 374. It is consequential to note that

prior to the deliberations around SB 374, the projected number of projects and associated

energy was of virtually no consequence. The notion that NVE hid numbers that heretofore had

no meaning or consequence is incorrect.

The Petition also references the legislative testimony and an exhibit provided on May

20, 2015. This exhibit provides an update to the forecast of operating capacity provided in

Docket 14-06009. Again, the update revised the forecast of operating capacity using the then-

current installation rate. This rate was lower than the installation rate forecasted in Docket 14-

06009 operating capacity forecast. NVE considered this reasonable; in large part because

industry leaders had indicated that it could not sell systems any faster.22

The actual operating

capacity additions from January through April are denoted on that forecast.

NVE provided information regarding projects in the pipeline in the footnote,

indicating that a reservation capacity could be hit in March 2016. The 6.8 megawatts per

month growth rate assumption is stated. The assumption was based on historical information

and supported by the chart shown in the exhibit.

Forecasts necessarily are based on assumptions, and assumptions may prove to be

wrong. But NVE presented the assumptions used to create the forecast attached to the Petition

a clear and transparent manner for Legislators and stakeholders. The Petition highlights the

nature of the difference between the forecast growth and actual growth rates seen over the

previous several weeks. The error that was later found plays a minor role in when the cap will

22

See id. at approximately 3:33:50.

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be hit in comparison to this growth rate.

23 The forecast assumption of May 20, 2015 was 6.8

megawatt per month, spelled out by NVE and part of the public record for TASC members to

consider. The point is that the 17.5 megawatt counting error is not material to the forecast

discussion. Given the current rate of applications being received by the Companies, with or

without the 17.5 megawatt of additional capacity, the industry will hit the 235 megawatt limit

well before that date the NEM2 tariff is required by statute to be put in place by the

Commission.

Finally, NVE has no control over the sales rates of the industry.24

The industry controls

the pace at which sales grow and, as it acknowledged during the 2015 Legislation session, has

the option of plateauing and avoiding the cliff.25 Instead, the industry has rushed forward

making sales at approximately 20 megawatt per month. Any assertion that NVE acted in a

deceptive or misleading manner is short on the facts. The industry has actual knowledge of the

current and future growth rate. That knowledge should have been a critical factor in deciding

whether or not to support SB 374 and agree that no more than 235 megawatt of customer-

generators would be served under NEM1 in light of the clearly stated assumption that NVE

based its forecast on 6.8 megawatts per month.

VI. CONCLUSION

The relief requested by TASC bypasses the procedure established in SB 374 pursuant

to which the Commission will determine whether and how to transition from NEM1 rules to

NEM2 rules. The relief requested by TASC is contrary to the plain meaning of the statute,

Nevada Power and Sierra Pacifics NEM1 tariffs, and TASCs testimony before the 2015

Nevada Legislature and public statements. The emergency petition filed by TASC on July 8,

2015 is procedurally deficient. The emergency petition filed by TASC should be rejected.

23

The difference between the industrys actual growth rate from May 1, 2015 on, and its historical growth rate of 6.8 MW of additions per month eclipses the 17.5 MW error in a few weeks 24

The industry, which controls the level of sales and sales growth, called its recent growth massive. http://nvleg.granicus.com/MediaPlayer.php?view_id=14&clip_id=4959 at approximately 3:18:30. 25

Id. at approximately 3:33:00

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Dated this 22nd day of July, 2015.

Respectfully submitted, NEVADA POWER COMPANY SIERRA PACIFIC POWER COMPANY

/s/Elizabeth Elliot Elizabeth Elliot Associate General Counsel Nevada Power Company 6100 Neil Road Reno, NV 89511 775-834-5694 belliot@nvenergy.com

ANSWER EXHIBIT A

CERTIFICATE OF SERVICE

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CERTIFICATE OF SERVICE

I hereby certify that I have served the foregoing NEVADA POWER COMPANY D/B/A NV

ENERGYS AND SIERRA PACIFIC POWER COMPANY D/B/A NV ENERGYS

COMMENTS in Docket No. 15-07021 upon the persons listed below by the following:

Tammy Cordova Public Utilities Comm. of Nevada 9075 West Diablo Drive Suite 250 Las Vegas, NV 89148 tcordova@puc.nv.gov

Staff Counsel Division Public Utilities Comm. of Nevada 1150 E. William Street Carson City, NV 89701-3109 pucn.sc@puc.nv.gov

Eric Witkoski Michael Saunders Attorney Generals Office Bureau of Consumer Protection 10791 W. Twain Ave., Ste. 100 Las Vegas, NV 89135-3022 bcpserv@ag.nv.gov msaunders@ag.nv.gov

Attorney Generals Office Bureau of Consumer Protection 100 N. Carson St. Carson City, NV 89701 bcpserv@ag.nv.gov

Jacob Schlesinger (TASC) Keys Fox & Wiedman LLP 1400 16th St. 16 Market Sq. Ste. 400 Denver, CO 80202 jschlesinger@kfwlaw.com

DATED this 22nd day of July, 2015. /s/ Janice Baldarelli Janice Baldarelli Legal Assistant Nevada Power Company Sierra Pacific Power Company

Comments - TASC Petition-jb_grayTAB answer exh AAnswer Exhibit A_resized_grayTAB CERTcert of svc