The Rise of Residential Advanced DER Rates Lon Huber November, 2017

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Advanced DER Rates? What? Why? Where? Definition: Residential retail tariffs designed to send time varying and demand related price signals to drive a combination of DER adoption. Also known as “Smart Home” rates Why? To send more sophisticated price signals to DER devices in order reduce grid costs for all ratepayers Where? From Hawaii to New York

Snapshot of Residential Advanced DER Rates All Volumetric Hawaii New Hampshire* N-Grid/Central Hudson Demand Based Daily Con-Ed/O&R TEP and NV* Standard Demand Charge APS SRP HECO* *Proposed or soon to be proposed

TOU & Export Charge Proposal - New Hampshire Volumetric TOU rate Customer Charge (no change from current utility tariffs) Energy Supply Charge TOU Delivery Charge (charge for imported energy, credit for hourly exported energy) Export Charge (charge for real-time exported energy) Partial Non-bypassable Transmission Charge Other Non-bypassable Charges

TOU Proposal - New Hampshire

Hawaii Hawaii Time of Use rate plus advanced inverter settings and export options: Grid supply plus – 10 cents/kWh export with curtailment Smart export – 12-9 a.m. (14.97 cents/kWh) 9-4 a.m. (0 cents/kWh) 4 p.m. – 12 a.m. (14.97 cents/kWh) Locked for 5 years – prices for Oahu

N-Grid/Central Hudson – Smart Home Pilot New York N-Grid/Central Hudson – Smart Home Pilot N-Grid - Standard TOU rate with four hour peak – including a summer super peak price Central Hudson - Standard TOU rate with five hour peak – LMP+D (V- DER) for exports

New York’s V-DER Tariff Value of environmental attributes of the generation Value of avoided delivery system costs due to demand reduction Value of avoided capacity costs Each utility shall use the methodology adopted by Orange and Rockland to choose the appropriate service class for Alternative 1 and 2. Reflects the avoided cost of energy purchases (and avoided line losses). Based on actual Day Ahead NYISO LBMP Energy Prices (varies by hour and location). * Storage paired with solar was not included as an eligible resource in Phase 1 . Inclusion will likely occur in Q1 of 2018 

Tucson Electric Power TEP and UNSE Phase 2 GRC - E-01933A-15-0322 Arizona Tucson Electric Power TEP and UNSE Phase 2 GRC - E-01933A-15-0322 EFCA is proposing a daily demand charge constrained to five hours on weekdays Other parties are proposing a standard monthly demand charge storage rate Consumer advocate is proposing a TOU “buy-all, sell-all”

TEP Advanced DG Rate Proposal - Buy-all – Sell-all Arizona TEP Advanced DG Rate Proposal - Buy-all – Sell-all Monetary bill credits linked to the entire production of the PV system (self consumption and exports). Illustrative Illustrative Step downs can occur at a preset pace Mid-day pricing can also be dynamic

Nevada Nevada Nevada - Assembly Bill 405 Utilities must file with the Commission a time-variant rate schedule that would utilize customer-generators’ energy storage systems and aim to expand energy storage systems NV Energy is proposing a 4-part rate: Customer charge 24/7 primary distribution demand charge ($2/kW) On-peak generation & transmission demand charge ($11 kW) Volumetric TOU energy charges (6-12 cents/kWh) Best Bill guarantee Daily demand charges will likely be proposed The daily demand charge would apply each and every day to the highest 60-minute demand during the on-peak period (for example, 1 p.m. to 7 p.m. in the summer season)

APS settlement Global settlement Arizona Source: APS Rate Application, ACC Docket No. E-01345A-16-0036

APS GRC – R-Tech Experimental Rate Arizona APS GRC – R-Tech Experimental Rate Rate initially available to 10,000 participants On-peak hours: 3 – 8pm weekdays Off-peak demand charges for customers with 5kW of demand and above (non-holiday weekends) Requires at least two primary technologies: Rooftop solar (2kW min, 150% of load max) Chemical storage systems (4kWh min, no max) Electric Vehicles Participants may also combine two secondary technologies Variable speed motors Grid-interactive water heating Smart thermostats Automated load controllers Exports at resource comparison proxy rate R-Tech Pilot Rate Basic Service Charge $/mo $15.00 Summer kW $20.25 Summer On-peak kWh 0.0575 Summer Off-peak kWh 0.0475 Winter kW $14.25 Winter On-peak kWh Winter Off-peak kWh Off-peak kWh, above 5kW only $6.50

Resource Comparison Proxy Arizona Resource Comparison Proxy In the matter of the Commission's Investigation of Value and Cost of Distributed Generation (Docket No. E-00000J-14-0023) Decision issued January 3, 2017 (Decision 75859) Resource Comparison Proxy (RCP) Methodology Compensation rate based on a five year rolling average of utility scale project costs Resulting figure adjusted for losses and transmission Real-time netting Separate treatment

SRP’s Current DG Rate Arizona Rates took effect in April 2015 Mandatory demand charge (30 min) for solar customers (E-27 rate) Optional for other residential customers Source: SRP Pricing Proceeding, http://www.srpnet.com/prices/priceprocess/pricingfaq.aspx

NY REV Smart Home Rate Pilot: New York NY REV Smart Home Rate Pilot: ConEdison Supply Charge $ / kWh Hourly NYISO LMP Zones H, I, J Embedded Delivery Charge (12pm-8pm) $1.10 / max daily kW Coincident Event Incremental to daily demand charge; 24-hr advance notice for events; hours vary by event Generation $11.34 / max event kW Transmission $1.15 / max event kW Distribution $4.61 / max event kW Monthly Customer Charge $15.76 Adjustments and Surcharges $ / kWh; includes System Benefit Charge, MAC, RDM, etc. Orange & Rockland Supply Charge $ / kWh Hourly NYISO LMP Zones G Embedded Delivery Charge (12pm-8pm) $0.88 / max daily kW Coincident Event Incremental to daily demand charge; 24 hr advance notice for events; hours vary by event Generation $7.70 / max event kW Transmission $0.95 / max event kW Distribution $3.77/ max event kW Monthly Customer Charge $15.76 Adjustments and Surcharges $ / kWh; includes System Benefit Charge, MAC, RDM, etc. 10 generation events, 10 system level transmission events, and 10 distribution events No V-DER on exports

Observations Advanced DER rates may be coming to a proceeding near you! Likely in the form of a pilot Successful advanced DER rates could inform solutions to the net metering debate Daily demand charges are a mix between volumetric TOU and hourly demand charges The daily use of the battery can help mitigate RE overgen issues Daily demand charges do not penalize excess usage like a standard demand charge Safe guards, especially during the peak months, would need to be put into place to ensure proper alignment to cost of service

Thank you! Lon Huber Senior Director Strategen Consulting, LLC Email: lhuber@strategen.com Phone: 928-380-5540 71

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