In July, the National Association of Regulatory Utility Commissioners (NARUC) convened a town hall meeting for interested parties to begin to provide input on its draft “Manual on Distributed Energy Resources (DER) Compensation.”
NARUC is a nonprofit organization whose members are governmental agencies engaged in the regulation of utilities and carriers in the states and territories of the United States.
The final manual, scheduled for release in November 2016, could influence how regulators across the country design rates, and how the U.S. electricity sector evolves.
The draft manual is the result of a November 2015 resolution adopted by NARUC to create a staff subcommittee on rate design, to provide a forum for state commissioners to address rate-design challenges, with a focus on recognizing the increasing importance of rate design issues in state policy.
According to Travis Kavulla, president of NARUC and a Montana Public Service Commission commissioner, it is rare for NARUC to issue a manual at all. It is also the first time that NARUC has written a manual specifically on DER, and the first time it has sought input from outside parties.
“In the past, NARUC hasn’t taken this kind of feedback,” he said. “We just tasked our experts with writing a manual. But we realize this is a subject of some contention and wanted to give people an opportunity try to frame the issue and frame particular methodologies for our benefit.
“Once complete, the manual will be a practical tool to help state regulators manage the complicated issues associated with rate design for distributed energy,” Kavulla said.
For NARUC’s purposes, DER consists of solar photovoltaic, wind, combined heat and power (CHP), energy storage, demand response, electric vehicles, microgrids and energy efficiency. However, the main focus of the manual will be net-metered solar.
The draft manual is organized into five main sections. Section 1 describes the basic rate design process and how DER affects that process. Section 2 defines DER and its relevance for states. Section 3 identifies the challenges and questions raised by the details of rate design and compensation. Section 4 outlines a variety of DER compensation methodologies. Section 5 provides a description of advanced technologies that may assist regulators and utilities in planning and monitoring DER developments.
According to the draft manual, it is important to value both positive and negative factors for each of the categories of costs/benefits in order to ensure neutrality. This method attempts to recognize potential benefits to the grid, other customers or society.