The Infrastructure Investment and Jobs Act of 2021 (“The Act”) that was enacted November 15, 2021, contains two new federal standards that must be considered for implementation by all electric utilities with annual retail sales greater than 500 million kilowatt-hours during calendar years 2020 or 2021.
The new standards are an addition to the 19 standards previously set forth under the Public Utility Regulatory Policies Act of 1978 (“PURPA”) and are:
PURPA does not mandate that utilities implement these new standards, rather, it requires each affected utility to “consider” the standard and then “make a determination concerning whether or not it is appropriate to implement such standard.” 26 U.S.C. 2621(a). Under PURPA, Walton EMC is considered a non-regulated utility, meaning that our rates are not set by the Public Service Commission. Walton EMC, as a member-owned cooperative, is controlled by the member-elected Board of Directors (The Board).
As a non-regulated utility, the Walton EMC Board has the responsibility to make the determination of whether or not to implement the proposed standards. That determination must follow an appropriate consideration of the standards that includes input from the Walton EMC staff as well as input provided from the public during the public participation period.
The purpose of this post is to provide the public with the initial position taken by the staff of Walton EMC that it believes is appropriate for Walton EMC and the members of Walton EMC. The public will have a minimum of 30 days to review the initial position and provide written comments. At the conclusion of the public comment period, staff will consider all submitted comments and make any changes it deems appropriate. Staff will then present its final recommendation to the Board. The Board will make its determination with respect to each of the two PURPA standards no later than November 15, 2023. The Board may elect to implement the standard as stated in PURPA, implement a modification of the standard, or decline to implement the standard. If the Board declines to implement a standard, its reasons must be in writing and may be challenged by anyone with legal standing, including any member of Walton EMC. The Board’s final determination will be posted to the public on the Walton EMC website as soon as it becomes available.
The goals of PURPA are stated in the original Public Utilities Regulatory Policy Act of 1978, that is, to encourage (1) conservation of energy supplied by electric utilities, (2) optimal efficiency of electric utility facilities and resources, and (3) equitable rates for electric consumers. The first goal focuses on retail energy users and promotes conservation by end-use consumers. The second goal applies to the use of energy by the electric utility and the facilities they utilize to deliver energy. The third goal recognizes the need to balance achieving the stated goals with the cost to achieve the goals so as not to provide an undue burden on consumers. Over the years, there have been 19 previous standards that utilities had to consider. The two currently under discussion are standards 20 and 21.
The first of the two new PURPA standards that Walton EMC’s Board must decide whether to implement is the Demand-Response Practices standard, which states:
“Each electric utility shall promote the use of demand-response and demand flexibility practices by commercial, residential, and industrial consumers to reduce electricity consumption during periods of unusually high demand.”
Background. Walton EMC’s planning process considers appropriate supply and demand resources to meet the current and future load requirements of the Cooperative. Walton EMC’s resource planning process consists of several steps, starting with the identification of basic objectives such as reliability of service, quality of service, and meeting peak demand requirements and balancing such objectives with meeting the energy requirements of Walton EMC members at the lowest possible cost.
Data is collected to examine the electric system’s load patterns and trends. Based on that information and other data such as economic outlook, growth patterns, member adoption of high-efficiency appliances, and long-term weather patterns, an electric load forecast is prepared to determine the Cooperative’s future power requirements. To meet those forecasted power requirements, the resource planning process considers and evaluates the utilization of two types of resources, generally categorized as supply-side and demand-side.
Supply-side resources include participation in generating plants, contracts to purchase power from the wholesale market, and renewable resources. Demand-side resources can include active load management of customer appliances, while passive load management includes the use of time-of-use rates and coincident peak demand pricing, as well as energy efficiency and conservation programs.
Demand response can include offering time-based rates to provide a financial incentive in order to lower electric bills. By comparison, demand flexibility practices include demand-response, but also include new possibilities for managing load following the rapid emergence of consumer-oriented energy technologies such as AMI, smart appliances, electric vehicles, behind-the-meter battery storage, behavioral tools, and automated load control for large buildings.
Increased Efficiency. With end-user equipment such as machinery and appliances becoming ever more efficient, the average electric usage per residential Member has reduced. This reduction directly affects the amount of generation required to serve the growing population, so, increased efficiency is another way to reduce peak usage. Since 2016, an emphasis has been placed on increasing the efficiency of converting high voltage to low voltage in distribution transformers. Because oversizing transformers causes extra power consumption, through increased losses, Walton’s engineers analyze each member’s expected load to determine the appropriate transformer size for each service.
Time-Of-Use (“TOU”) Pricing. Walton EMC offers TOU pricing for its members possessing an electric vehicle. The rate is characterized by defined on- and off-peak periods with fixed, kWh-based energy pricing for each period. Individual members can decide whether to shift load away from higher-cost on-peak periods to lower-cost off-peak periods. The shift in load away from on-peak periods provides a “passive” demand response under the TOU rate alternative. The on-peak periods have been developed to coincide with the times that Walton establishes its generation capacity and transmission billing demand requirements. The shift in energy consumption creates benefits for the Cooperative in the areas of reduced generation, transmission, and distribution capacity requirements. Walton will consider expanding its TOU rate to include more classifications of customers as well as investigating any other rate-based mechanisms to encourage lower usage during times of high demand.
Distributed Generation. Walton EMC owns and operates a generation facility consisting of three, 5 MW (15 MW Total) simple-cycle combustion turbines that are operated on a limited basis during times of high peak loads. Over the past three years, the resource has operated, on average, approximately 8 hours each year. The facility is located on the Cooperative’s distribution system. The operation of the generators reduces Walton EMC’s system demand requirements and thus reduces generation capacity requirements, as well as transmission charges.
Walton also owns and maintains 6.5 MW of solar facilities on its distribution system. The solar facilities serve Walton’s “Cooperative Solar” program. Customers can opt into “blocks” of energy generated by the solar arrays at a cost of $25 per month. Each block consists of just under 2kW of solar capacity and will generate, on average, approximately 200 kWh per month. The solar arrays also have the effect of reducing Walton’s peak summer demand as the solar panels produce energy during peak periods.
Member Education. Walton EMC uses a variety of methods to educate its members on the benefits of both energy efficiency and peak-load shifting. The implementation of energy efficiency measures promotes reductions in energy consumption during all hours of the year, including periods of unusually high demand. Encouraging members to shift load away from peak demand times, such as using a timer for dishwashing and clothes drying, also helps to reduce Walton’s demand during peak times.
The second of the two new PURPA standards that the Board must decide on is the Electric Vehicle Charging Programs standard, which states:
“Each State shall consider measures to promote greater electrification of the transportation sector, including the establishment of rates that:
26 U.S.C. ¤ 2621(d)(21).
This standard is directed at the “State” and not the utility, because the scope of the standard exceeds the capabilities of individual utilities to carry out on their own. Instead, Walton EMC will consider its role in this statewide directive and analyze to what extent it can contribute to the stated goals.
The primary stated goal of this standard is to promote greater electrification of the transportation sector. This goal is in the best interest of Walton EMC because additional use of electricity, if it is done during non-peak times, will help by improving electric grid stability and providing opportunities for demand flexibility.
There are many types of “measures” that could be considered, including consumer education (website, presentations, demonstrations), participation in statewide initiatives with other Georgia distribution cooperatives (programs, feasibility studies), partnerships with third parties (businesses, dealerships), incentives (rebates, loans), and as identified in the standard, rates. The standard, however, focuses on the setting of rates as the primary means to encourage a response.
In 2023 Georgia enacted SB 146, which provided guidance and structure to the EV charging industry. Among the key points are:
Given the provisions of the law, it is clear that the State has the intention to set rates in order to encourage the deployment of vehicle chargers.
For its part, Walton EMC has made available a time-of-use rate for EV owners. The time-of-use rate provides for lower energy rates during non-peak times in order to encourage charging in the evenings. This helps the customer with lower rates and helps Walton EMC avoid higher peak demands. At this time, staff believes that Walton EMC should not directly enter the business of vehicle charging, but rather, to help facilitate the installations of those who do seek to enter that market.
Based on the foregoing, Walton EMC staff make the following recommendations on the two new PURPA standards to the Board for their consideration:
The staff recommends that the Board adopt the PURPA goal of seeking ways to reduce electricity consumption during periods of unusually high demand. Walton has already taken steps through rate design, system improvements and installation of distributed generation to either directly (through decreased consumption, increased local generation) or indirectly (through increased efficiencies and public education) to reduce electricity consumption during periods of unusually high grid demand. It is recommended that the Board continue to evaluate all opportunities to implement other cost-effective means to reduce peak demand on Walton’s distribution system.
The staff recommends that the Board make a determination to not adopt the PURPA standard as written in the law, as it is directed at the State, not the utilities. Instead, staff recommends the Board adopt the goal of the standard to the extent it is able to do so as an electric distribution utility. The recommendation is then to implement programs (including public education), and/or rates that will have the effect of promoting greater electrification of the transportation sector. Additionally, Walton EMC should continue to evaluate additional measures to promote this standard, subject to such measures not unreasonably affecting Walton EMC members.
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