May 1, 2017 To: Parties currently registered on Proceeding 22534 Distributed Generation Review Proceeding 22534 Application 22534-A001 Process for Proceeding 22534 1. On March 31, 2017, the Alberta Utilities Commission initiated Proceeding 22534, in response to Order in Council 120/2017 directing the Commission to inquire into and report to the Alberta Minister of Energy, on matters relating to electric distribution system-connected generation (DCG), in accordance with the terms of reference provided in the Schedule to the order-in-council. 2. In the Commission s notice of review, interested stakeholders were asked to file a statement of intent to participate by April 21, 2017. Forty-nine parties responded to the notice advising that they intend to actively participate in the proceeding and 10 parties registered as an observer. The registered participants include electric distributors, retailers, the Alberta Electric System Operator (AESO), rural electrification associations, First Nations groups, and various organizations and businesses with interests in DCG. 3. As set out in the amended Order in Council 148/2017, which has been filed with this letter as Appendix A, the Commission is required to issue an interim report by August 31, 2017, and a final report within nine months from March 29, 2017. In order to complete its inquiry and prepare its report to the Minister of Energy within this timeline, the Commission has established the following process steps and schedule: Process steps Deadline Commission questions to registered participants May 1, 2017 Responses from registered participants May 30, 2017 Evidence submissions from registered parties May 30, 2017 Confirmation from registered parties regarding participation in oral proceedings Commission supplemental clarification questions (if required) to registered participants Response evidence submissions from registered parties May 30, 2017 June 16, 2017 June 23, 2017
Alberta Utilities Commission May 1, 2017 Page 2 of 3 Process steps Responses to supplemental Commission questions from registered participants (if required) Deadline June 27, 2016 Oral proceeding AUC Edmonton hearing room July 4 to 7, 2017 Potential oral proceedings for other locations Week of July 10 Oral proceeding AUC Calgary hearing room July 17 to 20, 2017 Question process 4. The Commission s questions, issued concurrently with this letter as Appendix B, follow the terms of reference provided in the Schedule to Order in Council 120/2017. Evidence submissions 5. Participants will be given the opportunity to make submissions of evidence and response evidence to address issues that they may identify that are in addition to the scope of questions asked by the Commission through the question process. Those submissions are required to be filed before the oral proceedings in accordance with the process schedule set out above. 6. Participants should note that this review is Commission-led and is being conducted to fulfill the mandate set out in Order in Council 120/2017, therefore it is not adversarial in nature. For that reason and in order for the Commission to meet its deadlines, participants will not be invited to ask questions of other parties. However, the response evidence portion of the process may be used by participants to make response to the evidence submissions of other participants. Oral proceeding process 7. Oral proceedings have been scheduled in both of the Commission offices, Calgary and Edmonton. As well, if necessary, the Commission has tentatively set aside a week to hold additional oral proceedings outside of Edmonton or Calgary. 8. The oral proceedings have been scheduled to provide registered parties with an opportunity to summarize or expand upon their written submissions, and to allow for the Commission to question them to obtain a better understanding of their submissions. 9. Further detail regarding the scheduling and format for participation in the oral proceedings will be provided by the Commission in early June once the Commission has received the following information from registered participants on May 30, 2017: (a) Whether you intend to participate in the oral proceeding (if not already confirmed in your registration). (b) What issues as set out in Section 1 (a) through (g) of the terms of reference provided in the Schedule to the order-in-council, you intend to address.
Alberta Utilities Commission May 1, 2017 Page 3 of 3 (c) For each of the issues identified in (b) above, whether you intend to present your views individually or as part of a joint-submission group. (d) The number of witnesses you anticipate bringing to address the issues identified in (b) above. (e) Whether you prefer to attend in either Calgary or Edmonton, or other location (please include the location). If you have indicated a preference to appear outside of Calgary or Edmonton, please advise why you would be unable to attend in either the Calgary or Edmonton locations. 10. If you have questions regarding the above process, please contact Maria Baitoiu at 403-592-4490 or by email at maria.baitoiu@auc.ab.ca or Rose Ferrer at 403-592-4379 or by email at rose.ferrer@auc.ab.ca. Sincerely, Maria Baitoiu Lead Application Officer, Market Oversight and Enforcement Attachments: Appendix A Order in Council 148/2017 Appendix B Commission questions to registered participants
Introduction On March 29, 2017, the lieutenant-governor for the province of Alberta issued Order in Council 120/2017 ordering the Alberta Utilities Commission to inquire into, and report to, the Minister of Energy on matters relating to alternative and renewable Electric Distribution System-Connected Generation (hereinafter referred to as distribution connected generation or DCG). A terms of reference was included in the Schedule to the order-in-council. It defines alternative and renewable energy as follows: Alternative energy refers to energy obtained from non-conventional energy resources (i.e., not fossil fuels) or obtained from low-carbon intensity conventional sources of energy in a more efficient manner (e.g., combined heat) and power applications. Renewable energy refers to energy obtained from resources that can be naturally replenished within a human lifespan, such as solar, wind, hydro, geothermal, and biomass. The questions that follow correspond to the terms of reference provided. Instructions Please answer all questions unless otherwise specified. If you are unable to answer, please leave the question blank. (a) The current status of alternative and renewable distribution-connected generation in Alberta; Distribution utilities only 1. Please describe the current state of alternative and renewable DCG in your distribution system, and how it is evolving over time including, if applicable, the technologies and devices you deployed on your system to monitor and control alternative and renewable DCG. In your response, please use the definitions for alternative and renewable energy set out in the terms of reference provided in the Schedule to the order-in-council. Alternative energy and renewable energy are also defined in Section 1(1)(l) of the Micro-Generation Regulation. Please indicate if or how your response to question 1 may be different using the definitions set out in the Micro-Generation Regulation. 2. Please complete the following table and provide any explanations of unique circumstances (such as locational or system issues) that you consider important for the Commission to understand in order to provide the government with a more comprehensive report on the state of DCG in Alberta: Page 1 of 13
DCG units on your system with nameplate capacity less than 150 kw with nameplate capacity greater than 150 kw and less than 5 MW Fuel source Solar Wind Hydro Biomass Other. Please explain. Solar Wind Hydro Biomass Other. Please explain. Aggregate number of DCG units on your system as of December 31, 2016 Aggregated nameplate capacity (kw) as December 31, 2016 Aggregate amount of electrical energy exported to your system (2016 monthly average) (kw) with nameplate capacity greater than or equal to 5 MW Solar Wind Hydro Biomass Other. Please explain. 3. Please describe the current state of alternative and renewable DCG in Alberta, and how it is evolving over time including, if applicable, the technologies and devices that could be deployed on the distribution system to monitor and control alternative and renewable DCG. In your response, please use the definitions for alternative and renewable energy set out in the terms of reference provided in the Schedule to the order-in-council. Alternative energy and renewable energy are also defined in Section 1(1)(l) of the Micro-Generation Regulation. Please indicate if or how your response to question 3 may be different using the definitions set out in the Micro-Generation Regulation. Page 2 of 13
(b) The current state of Alberta s distribution systems, billing and settlement systems, and supporting Acts, Regulations and rules, to enable alternative and renewable distribution-connected generation. Distributors or distribution utilities (wire owners) own the electric distribution systems that deliver electricity directly to customer homes within designated service areas. They are responsible for things such as connecting and disconnecting customers, building new services, operating and maintaining the distribution systems and information systems, and providing meter reading services. The costs incurred by the wire owner to provide these services are recovered through a distribution tariff, which is billed by the retailer on customer bills. Distribution tariff charges for electric utilities remain fully regulated by the Alberta Utilities Commission. Distribution utilities only 4. Could your current billing and load settlement systems accommodate an increase in data and transactions related to the connection of additional alternative and renewable DCG, without the need for additional investment or major system enhancements? Please explain. 5. Please identify all acts and regulations (both provincial and federal), bylaws and rules that you consider enable the establishment of alternative and renewable DCG in Alberta. Please identify specific sections of the legislation in your response. 6. The Alberta Utilities Commission has approved an operational document to define the business processes and mechanics of how electrical energy settlement is to be carried out at the retail electricity market level in Alberta in AUC Rule 021: Settlement System Code Rules. It has also approved an operational document that defines the business processes and mechanics of how timely and accurate tariff bill-ready information is to be produced and transmitted to retailers by electricity distributors for distribution and system access service in Alberta in AUC Rule 004: Alberta Tariff Billing Code Rules. Please identify any changes that you would consider necessary to allow the current billing and load settlement systems to accommodate alternative and renewable DCG. Page 3 of 13
(c) enablers and barriers to developing alternative and renewable distribution-connected generation, in Alberta; including but not be limited to: (i) Alberta s electric distribution systems, (ii) billing and settlement systems, (iii) Acts, Regulations and rules governing distribution and retail, (iv) rate design and tariff structures, including net metering, (v) terms and conditions of service, and (vi) the Alberta Interconnected Electric System; (i) Alberta s electric distribution systems 7. What do you consider to be the enablers and barriers in Alberta s electric distribution systems to developing alternative and renewable DCG? Please provide us with your suggestions or solutions regarding how potential barriers could be addressed. 8. What investments may be required to accommodate a greater penetration of alternative and renewable DCG? When and to what extent should these investments be required (i.e., across all distribution systems in advance of any demand for alternative and renewable DCG connections or in response to demand for alternative and renewable DCG connections)? (ii) billing and settlement systems Distribution utilities, retailers and the Alberta Electric System Operator (AESO) only 9. How flexible are your billing and settlement (load and financial) systems in accommodating the potential for new rates and new rate classes, new transactions, and new business processes such as net metering (virtual or otherwise), including community-scale generation? 10. Please identify any limitations in Alberta s current billing and load settlement systems that you consider may have an effect on the development of alternative and renewable DCG. Please provide your suggestions or solutions regarding how these potential limitations could be addressed. 11. Should an existing participant (i.e., retailer, distribution utility) or a new entity be responsible for managing billing and load settlement or is there a market solution for managing billing and financial settlement? 12. Should the information provided on the bill for alternative and renewable DCG customers be different than the information currently provided to existing retail customers? For example, should the bill indicate both the amount of electricity sent into the grid and the amount received from the grid? Are there any other changes to the bill that may be required? Page 4 of 13
(iii) Acts, Regulations and rules governing distribution and retail 13. Further to your response to question 5, for the acts, regulations and rules that you identified, do you consider that amendments must be made to the legislation or rules to enable alternative and renewable DCG? If so, please specify what amendments would be necessary and why. 14. The introduction of information and communication technologies that can accompany alternative and renewable DCG, particularly as distribution utilities gather more detailed information about distribution network users, may heighten privacy concerns. Do you consider the current privacy legislation to be sufficient to protect any heightened privacy concerns? Please explain. 15. The North American Electric Reliability Corporation (NERC) has developed cyber security regulations at the bulk power and transmission levels. Through Section 19 of the Transmission Regulation, the Alberta Utilities Commission has approved the AESO s adoption of Critical Infrastructure Protection Reliability Standards which are based on NERC s Critical Infrastructure Protection requirements and include cyber security matters. With the introduction of information and communication technologies that can accompany alternative and renewable DCG, is there a requirement to develop cyber security standards for the distribution networks? Does the absence of these standards create a barrier to advancing alternative and renewable DCG in Alberta? (iv) rate design and tariff structures, including net metering Distribution utilities only 16. Please explain whether the features of your rate design and tariff structure enable or create barriers for the development of alternative and renewable DCG. For example, please comment on the effect that the rate design has on promoting long-term innovation which may be critical to the increased deployment of alternative and renewable DCG. Regulated Rate Option Providers only 17. Regulated Rate Option (RRO) providers are regulated under a forecast cost of service model in which the use of deferral accounts is legislatively prohibited. Please explain whether the features of your rate design and tariff structure can accommodate or would limit the development of alternative and renewable DCG. Page 5 of 13
AESO, distribution utilities, retailers and RRO providers only 18. Please identify and describe all the current credits provided to alternative and renewable DCG. Please describe the mechanism by which the credit is applied. 19. Please comment on whether the features of the distribution companies, RRO providers and the AESO s rate design and tariff structure enable or create barriers for the development of alternative and renewable DCG. For example, please comment on the effect that the rate design has on promoting long-term innovation which may be critical to the increased deployment of alternative and renewable DCG. 20. Please comment on whether new alternative and renewable DCG customer classes, with their own tariffs, should be introduced. Please explain. 21. Considering your responses to questions 19 and 20, what recommendations would you make to alter the rate design and structure of any of the distribution companies, RRO providers or AESO tariffs? How would any changes in rate design that you recommend balance the interests of non-alternative and non-renewable customers and alternative and renewable DCG customers? 22. Does the availability of the RRO depress demand for the adoption of alternative and renewable DCG? (v) terms and conditions of service Distribution utilities only 23. Terms and conditions of service (T&Cs) for regulated distribution providers and transmission utilities provide guidelines and rules for the utility, the retailer and the customer to adhere to respecting the non-rate aspects of service. Please comment on how the provisions in your terms and conditions of service enable or act as a barrier to the development of alternative and renewable DCG. In your response, please identify the specific provisions. 24. Please identify any distribution utility or other entity s (AESO, transmission facility owners, retailers, RRO providers) terms and conditions of service that you consider enable or act as a barrier to the development of alternative and renewable DCG. Please provide us with your suggestions or solutions regarding how any identified barriers could be addressed. 25. Do the terms and conditions of all distributors, retailers and RRO providers that address the development of alternative and renewable DCG need to be standardized to remove barriers to enable alternative and renewable DCG? Please explain. Page 6 of 13
26. Do the technical standards for connections and operations of all distributors, retailers and RRO providers that address the development of alternative and renewable DCG need to be standardized to remove barriers to enable alternative and renewable DCG? Please explain. (vi) the Alberta Interconnected Electric System The AESO is responsible for the safe and reliable operation of the Alberta Interconnected Electric System (AIES). AESO only 27. Section 8(b) of the Transmission Regulation requires the AESO, when forecasting the needs of Alberta to make assumptions about the timing and location of future generation additions, including areas of renewable or low emission generation, to support transmission system planning. As well, Section 10(a)(iii) of the Transmission Regulation requires the AESO to prepare and maintain a transmission system plan that projects, for at least the next 20 years, the timing and location of future generation additions, including areas of renewable or low emission generation. Further, Section 10(a)(vi) of the regulation requires the AESO to include within its plan, the transmission facilities required to meet the forecast load, imports and exports of electricity and anticipated generation capacity, including appropriate reserves and facilities to serve areas of renewable or low emission generation, in a timely and efficient way. What are the AESO s current assumptions regarding the development of alternative and renewable DCG? Please provide the provisions in your current plan related to the timing and location of future areas of alternative or renewable DCG. 28. Please provide the most recent micro-generation report that is produced by the AESO for the Alberta Utilities Commission and the Department of Energy. 29. Assuming there is an increase in alternative and renewable DCG, what additional physical monitoring or reporting, if any, would be required by the AESO to track alternative and renewable DCG? 30. Please describe any AIES grid stability or other concerns that may arise from an increased development of alternative and renewable DCG connected to the distribution system. At what level of connected alternative and renewable DCG is instability created and what steps are required to address the effect? Page 7 of 13
(d) methods for assessing costs and benefits of infrastructure investments that may enable and facilitate broader deployment of alternative and renewable distribution-connected generation and efficient energy use; this assessment should include but not be limited to: (i) billing and settlement systems, (ii) smart meters, (iii) energy storage, (iv) demand response, (v) rate impacts to consumers, and (vi) the potential for stranded infrastructure; 31. Please describe the method that should be used to analyze the cost and benefits of infrastructure investments that may enable and facilitate broader deployment of alternative and renewable DCG and efficient energy use. Please describe and justify all of the elements that should be included in this analysis. Page 8 of 13
(e) current and potential regulatory approaches to consider alternative and renewable distribution-connected generation when planning the development of distribution networks; 32. What current and potential regulatory approaches (including the withdrawal of regulatory barriers) regarding alternative and renewable DCG should be considered when planning the development of distribution networks? Page 9 of 13
(f) opportunities to improve processes for connecting alternative and renewable distribution-connected generation, not currently captured under the Micro-Generation Regulation; 33. Please identify any opportunities to improve the processes for connecting alternative and renewable DCG not currently captured under the Micro-Generation Regulation. In your response please address the following matters: application process (including the AESO application process for qualified units) permitting process (including municipal and provincial oversight) connection process compensation mechanisms billing process compliance other opportunities Page 10 of 13
(g) the potential to align the planning and development of Alberta s distribution systems and broader deployment of alternative and renewable distribution-connected generation with the Government of Alberta s objectives of providing clean, affordable and reliable energy to Albertans. As set out in the order-in-council, the Government of Alberta has set a firm target for 30 per cent of electric energy produced in Alberta to be generated from renewable sources such as wind, hydro, and solar by 2030. 34. Is there anything that the government needs to do to instruct Alberta s distribution utilities to align their planning and development with the government s objectives of providing clean, affordable and reliable energy to Albertans? Please explain. 35. What processes or information would you require from distribution utilities to be able to plan and connect alternative and renewable DCG in a more timely and feasible manner? 36. How will the design and operation of the Alberta capacity market affect the deployment of alternative and renewable DCG, and how will any increase in alternative and renewable DCG affect the design and operation of the Alberta capacity market? 37. How will the design, operation and outcome of the Alberta renewable electricity program (REP) affect the deployment of alternative and renewable DCG? How will future rounds of REP auctions be affected by any increase in alternative and renewable DCG? Page 11 of 13
(h) Regulatory Bargain and other rights, responsibilities and obligations: The provision of electric services to Albertans is supported by the rights, responsibilities and obligations between the providers of these services and the customers who receive them. Matters that affect these rights, responsibilities and obligations concern many of the specific matters previously identified in items 1 (a) through (g) of the terms of reference. The questions below address these overlapping matters in the context of their effect on these rights, responsibilities and obligations, including the regulatory bargain. 38. Each of the participants in the electricity industry in Alberta has statutory obligations to fulfill. For example, with limited exceptions, distribution utilities have the exclusive right to serve customers within their service territory and an obligation to serve all customers seeking service. (i) (ii) (iii) Please describe the rights, obligations and other responsibilities of retailers, RRO providers, distribution companies, transmission facility owners and the AESO in the provision of electricity services to Albertans. Please include in your answer any common law rights, obligations or other responsibilities and any federal Competition Act provisions that you consider might limit provincial government policy initiatives. Please explain. Please describe how the rights, obligations and responsibilities identified in question 38(i) above have changed and may be required to change in order for alternative and renewable DCG to make a meaningful contribution to the government s target of 30 per cent of electric energy produced in Alberta to be generated from renewable sources by 2030. What changes to the distribution rate design or the transmission rate design might be required to enable distribution utilities and transmission facility owners to have a reasonable opportunity to recover their prudently incurred costs of service in a way that allows alternative and renewable DCG to make a meaningful contribution to the government s target of 30 per cent of electric energy produced in Alberta to be generated from renewable sources by 2030. In what circumstances and for which customer classes should these rate design changes be applied? Examples of rate design changes could include, but are not limited to: (a) the mix between fixed and variable charges, (b) stand-by charges to stand ready to serve alternative and renewable DCG customers that do (or do not) typically receive energy from the system, (c) the determination of energy charges to be credited to alternative and renewable DCG customers with net exports onto the system, (d) the establishment of new customer classes specific to alternative and renewable DCG, and (e) other rate design options. Page 12 of 13
(iv) Are any changes required to the RRO rate design or the AESO s tariff design in order for alternative and renewable DCG to make a meaningful contribution to the government s target of 30 per cent of electric energy produced in Alberta to be generated from renewable sources by 2030? If so, what changes would be required? 39. Describe your understanding of what small-scale community generation operations would look like. Should a definition of small-scale community generation be adopted? How might the adoption of a definition affect incentives to invest and innovate? Please explain. 40. Should there be a requirement that the property of participants in a small-scale community generation operation be adjacent, as that term is used in the Micro-Generation Regulation? Why or why not? 41. Would it be necessary to change municipal franchise agreements with distribution companies, or the legislative provisions governing the establishment of service territories, in order for a small-scale community generation operation to be established? Please explain. 42. Would it be necessary to change municipal franchise agreements, or the legislative provisions governing the establishment of service territories, in order for small-scale community generation operations to be established in new subdivisions within municipal boundaries using their own distribution wires to connect their customers to one another? Please explain. 43. Should all members of small-scale community generation communities have an option to be supplied by the incumbent distribution utility and who should bear the cost of providing stand-by service? 44. Should an individual member residing among a small-scale community generation community have an option to be supplied by the incumbent distribution utility (i.e., not assimilated into the collective entity) rather than from the small-scale generation community? Page 13 of 13