Memo
To: / NYSERDADate: / August 29, 2017
From: / J. Falk, W. Geffert, J. Rush
Subject: / Meeting of VDER Working Group Regarding Value Stack, 17-01276
Copy:
Meeting Summary
1. Process and Procedural
Staff began the meeting by clearing up confusion about dealing with DMM. Anything discussed in the WG should be submitted to the Value Stack matter 17-01276.
It was decided that the Rate Design WG and Value Stack WG have sufficient overlap such that their meeting schedules should be planned in tandem – the WG’s will continue to meet on the same day or back-to-back days. The next meeting will take place on September 8th, tentatively in NYC.
2. Interzonal Crediting
The topic of interzonal crediting is no longer an LMI WG topic, but a Value Stack WG topic.
This topic is broken into two parts: it is fairly uncontroversial that credits can cross LBMP zones within a utility. Crediting across a utility boundary is more difficult.
3. “Fast Track” Process
Fast Track items are intended to be those that require little to no additional discussion which can therefore be put in front of the Commission quickly. Interzonal crediting within a utility’s territory is an example of this. While it was proposed that VDER eligibility through redefinitions of eligibility would be another, there was pushback, as expansions of technology types may all require new rules as to which VDER payments they get (the E payment is particularly controversial) and whether some technology-based rulemaking is required.
Staff agreed but still posited that technologies which were not NEM Eligible but were Tier 1 REC eligible ought to have little additional issues. A vigorous discussion then proceeded on a number of these issues.
At this point there was agreement that creation of a Fast Track list is probably premature; that the WG should discuss the issues and decide what goes on the Fast Track list instead of just pre-identifying issues. It was proposed that there should be an official fast track mechanism for the WG. There should be a concrete process for deciding whether to fast track an issue, e.g., some test a policy needs to pass in order to make it through the fast track process. Staff assigned themselves the task of putting together a straw proposal of the fast track process steps for next meeting, and asked if some party would also create a list of principles for deciding what goes on the Fast Track.
4. Topics for Studies and Analysis
4.1. Improving DRV/LSRV components of the value stack
Staff currently has other marginal cost studies but they were largely done at the utility level. Our specific focus is distributed resources, which bring a unique value to a utility depending on where the DER is located in a service territory and when it generates. Given that the studies we presently have were not designed for our specific focus, we need to plan studies that will do a better job, i.e. more granular and more dynamic marginal cost studies that arrive at better avoidable cost numbers. Staff invites the utilities to bring in experts to talk about how to improve the granular value of the distribution system modelling avoidable cost.
There was general agreement that the existing marginal cost studies and methodologies are not perfectly suited to create a fully disaggregated DRV/LSRV value. Staff is working with E3 to make a presentation on their work in this regard in California and solicited more presentations from other market participants.
As an example of one of the issues, Staff was asked about a scenario in which a facility retires that could have been LSRV eligible and so the retirement results in the creation of a new LSRV area. But this new LSRV area is an inefficiency that ratepayers must absorb when they pay the LSRV credit to a potentially more expensive new facility in that vacated area. Staff acknowledged that they needed to make a roadmap for dealing with the creation and destruction of LSRV areas.
4.2. Improving the E value component of the value stack
The WG needs to determine the list of externalities they want to monetize in a VDER tariff that values injections of power at a time and place. Staff suggested that dealing with carbon is easier than dealing with other externalities, because you don’t have to worry about the location when talking about the damage costs. When it comes to other externalities, it may not be as straightforward to come up with a number to monetize them. It should also be noted that just because an externality isn’t monetized that doesn’t mean utilities shouldn’t consider it.
A participant mentioned a recent report released by the Lawrence Berkley National Lab that monetized all of these benefits – she will post the report to the matter number.
Another mentioned that in NYC, groups have made productive use of BenMAP, which is the EPA’s tool for evaluating the impact of pollutants that come from the generation of electricity. BenMAP shows that in terms of raw dollars, the near term effects on health from PM2.5 completely wash out the longer term costs of CO2 – PM2.5 has a greater impact on our economy than CO2 especially in areas similar to NYC. Staff expressed caution due to the fact that federal models can produce very different results depending on the locality, and due to the uncertainty of translating those economic impacts into a tariff. The participant suggested that formal tools such as BenMAP could be helpful in pinning down location-based results, and acknowledged that while mapping the results of impact to rate zones is difficult, he believed it was doable.
Another participant introduced the concept of state-mapped environmental justice areas. She described potential positive environmental impacts if we were to overlap or expand LSRV zones with respect to these environmental justice areas, and she will post the relevant resources to the matter number.
Among the other E value studies which still need to be performed are the locational and time-based value for capturing CO2 emissions related to storage.
5. Next Steps
Parties should submit to the matter number their earlier suggestions about what this WG should view as priorities.
WG/Staff need to map out the process of fast-tracking. In particular, WG/Staff must put together a list of principles for what makes an issue fast-trackable. Utilities should put together a road map for integrating the DRV/LSRV valuation through the value stack and through DSIPs. Staff also asked for a protocol for managing the overlap between NWA value impacts and VDER valuing and value impacts. Staff will create a roadmap for the creation and destruction of LSRV areas.
Staff will check if E3 can present to the WG about how they are doing locational distribution value in California. Participants should also check to see if their consultants are working on any similar issues and can come present to the WG. Parties will also look into bringing in outside experts to present on the issue of monetizing externalities, and Staff will ask if NYSERDA has any suggestions.
The next meeting will be held on September 8th. Staff will look into the NYSERDA facilities and send out updates about the meeting’s location, but the current plan is to meet in NYC. In the future, Staff will try to schedule meetings more than one meeting in advance. Staff will also post an agenda in the matter number prior to the next meeting.