Montana to study customer-generator costs, benefits

Montana utility regulators are preparing to study the costs and benefits of distributed solar energy projects and other customer-generators.  The results could reshape the way net-metered customers are charged for electric service, including the creation of a separate service classification and rates for customer-generators.

Earlier this year, the Montana legislature enacted House Bill 219, a law requiring utility NorthWestern Corp. to "conduct a study of the costs and benefits of customer-generators," for submission to the state Public Service Commission to inform future ratemaking.  The law allowed the Commission to establish "minimum information requirements" for inclusion in the study.

On June 16, 2017, the Commission posted a Notice of Opportunity to Comment on potential benefit and cost elements and study questions.  That notice identified categories of potential benefits including avoided energy costs, avoided capacity costs, avoided transmission and distribution capacity costs, avoided system losses, avoided renewable portfolio standard compliance costs, avoided environmental compliance costs, market price suppression effects, avoided risk, avoided grid support services costs, avoided outages costs, and non-energy benefits.  It also identified categories of potential costs, including reduced revenue, administrative costs, interconnection, integration, and cost shifts in production, transmission, and distribution.

The Commission's notice also posed a series of questions relevant to cost-benefit studies, including:

• What, if any, assumptions regarding the adoption rate of solar or other net metering technologies should the Commission specify?
• What, if any, time frame for calculating benefits and costs should the Commission specify (e.g., 10 years, 20 years, etc.)?
• What, if any, assumptions regarding utility rates should the Commission specify (e.g., rate of increase, changes in rate design (time-of-use, other))?
• What, if any, methodology for cost-effectiveness tests should the Commission specify (e.g., standard practice manual or the Cost Benefit Framework developed by the Electric Power Research Institute)?
• What cost-effectiveness perspective(s) should the Commission require be evaluated (e.g., societal, utility/program administrator, ratepayer, participant)?
• Should the Commission specify the generating resource avoided by net-metered systems?  If so, what generating unit should be used?
• Should the Commission specify a particular locational attribute that counts as either a benefit or cost adder/subtractor?
• What, if any, other compensation approaches in addition to net metering should be assessed in the study NorthWestern is required to conduct?

The Commission invited interested persons to submit written comments addressing the potential benefit and cost elements and study questions identified above no later than July 7, 2017.  It also directed the utility to provide information on the scale and scope of data it has collected, or intends to collect, regarding variations in the usage profiles of customer-generators compared to other customers in the same rate class.

Yellowstone park proposes utility upgrades

The U.S. National Park Service manages over 84 million acres of land for both conservation and visitor use.  For wilderness parks, these joint objectives lead to the challenge of providing park facilities with electricity despite their remote location.  The Park Service has launched energy efficiency and sustainability programs, but many visitor and administrative facilities still need electricity for safety and comfort.  How should the Park Service balance conservation and development?

Old Faithful geyser erupts in Yellowstone National Park.

Yellowstone National Park, the nation's first park, highlights the difficulty.  Most facilities in the park receive electricity from transmission and distribution lines owned by utility NorthWestern Energy, but the park's rugged environment, challenging climate, and relatively old electrical infrastrucutre lead to frequent power outages - over 250 in 2012.  Unlike much of the electric grid outside the park, facilities in Yellowstone lack modern communication infrastructure - a Supervisory Control and Data Acquisition or SCADA system - that would let the utility diagnose and correct the cause of power outages from the utility's central offices in Montana.

As a result, Yellowstone and NorthWestern Energy have proposed to update the park's electrical distribution system.  Proposed upgrades include an automated, remote monitoring and control system, the installation of equipment buildings, back-up power generators and propane fuel tanks.  The proposed communication system would require the construction of seven towers for radio equipment within the park, generally located at existing electrical substation sites.

Under the National Environmental Policy Act, the Park Service cannot approve the plan without conducting an environmental assessment of the impacts of the proposed development.  The Park Service has released its Environmental Assessment (10.5 megabyte PDF), which is open for public comment until December 6.

The use of national park lands for energy infrastructure can be controversial due to differing philosophies on the level of development desirable in parks.  At the same time, the Park Service notes that the Yellowstone outages have had negative effects on park operations and visitor experience, creating health and safety concerns and lost revenue for concessioners.  How will this balance play out in Yellowstone?