Local Power comments on Peregrine penultimate draft Dec 17 2019
Fr: Paul Fenn, Local Power LLC
To: Paul Gromer, Peregrine
Cc:Wayne Feiden, Project Manager
Re: Comments on Peregrine Penultimate Draft Document
Dt: December 17, 2019
Paul,
These are my responses to your penultimate draft document:
1. Page 3 second paragraph starting with "Opt-out enrollment" you mention that 80-90% of
customers are on Basic service. Please give the percentage of load that this represents on this
figure and the 75% of customers figure.
2. Page 6, Section 3-A, in the final paragraph "an easy experience for customers," is
unresponsive to Local Power’s previous comments on CCA changes with customer
engagement under the Massachusetts scenario section of the Equity Lens report.
3. Section 3 B subtitled "Customers can leave any time," is unresponsive to previous comments
regarding the use of customer consent with "opt up" in 3.0.
4. PP 6-7, 3-B below, "Market-based Basic Service prices," in the paragraph beginning
"Because the benchmark price is tied to short term market conditions, it is a challenge..., " this is
unresponsive to Local Power’s previous comments on achieving rate stability from shares and
physical supply transformation, and to the use of loan contracts based on a building occupant
and owner.
5. Page 7, "Competition from competitive retail suppliers," where you emphasizes the need for a
CCA to recognize competitive options, this is unresponsive to our previous comments
underscoring the importance of offering energy products not available on the market.
6. Page 8, just below in "Funding policy initiatives through a market-based service," where you
describe the key challenge for CCAs funding policy initiatives through a service that competes in
the competitive market, this is the problem with premium-based products versus a
savings-based approach: they don't get scale, and therefore do not provide a climate action
pathway.
7. Page 8 just below "Policy initiatives are not free...CCAs must charge more than it would
otherwise," is unresponsive to Local Power’s previous comments about the savings/equity
approach of 3.0, which proves the contrary of this assertion.
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8. Page 8 in the final bulleted paragraph on Renewable Portfolio Standard, where you say that
customers cannot avoid RPS "compliance costs," is unresponsive to our previous comment that
3.0 non-exporting/importing approach will materially reduce the size and shape of a CCA's
aggregate customer load, meaning the volume of energy required, and with this, will cease to
owe any compliance costs for unconsumed energy.
9. Page 9 in the following paragraph, your assertion that CCAs "seek to fund policy initiatives
through charges that customers can avoid" is unresponsive to Local Power’s previous comment
that 3.0 involves voluntary opt-up customer investment in DERs.
10. Page 9 under "Metering" several paragraphs here where you say lack of advanced metering
makes load management difficult, is unresponsive to our previous comment that CCA 3.0 will
pursue a different strategy of (data-based) targeting DERs to reform a CCA load duration curve
on an average operating basis, generating savings both for the opt-up customer and for the
future cost of service and associated rates of the aggregated customers.
11. Page 10 "Metering" below where you say very few residential advanced meters have been
deployed, this is unresponsive to Local Power’s comment that 3.0 would focus on contiguous
high energy use locations, installing advanced metering at those locations, and use IP-based
monitoring systems to administer loan agreements. Therefore there is no need for advanced
metering.
12. "Page 10 Electricity CCA only" where you mention that CCA opt-out enrollment does not
include natural gas service, is unresponsive to our previous comment that opt-enrollment is
allowed for natural gas service, and to the value of offering service to gas accounts for fuel
switching and HVAC/Hot water decarbonization.
13. Page 11 Section 4 "Funding Green Initiatives," defining funding sources for as payments for
services by the CCA and external sources such as distribution rates, is not responsive to the
comment already submitted to you that an additional kind of funding source, namely between a
municipality and a resident/business.
14. Page 13 "Operational savings by bringing functions in-house" in which you cite the Cape
Light Compact's "legal services" costs, you fail to mention that these legal services are almost in
the energy efficiency funds administration process with DPU, which is a $40M per year fund.
This would tend to make the percentage you state as 25% of Cape Light Compact's total annual
budget unremarkable given that this part of its activities generates virtually all of its operating
costs an integrated JPE. Thus this characterization is a bit confusing.
15. Page 13, fourth paragraph, in which you cite a case where the DPU mentioned use of a
broker to give a finding that CCAs had technical expertise necessary to operate the program,
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this is also somewhat confusing because DPU has done exactly the same for Cape Light
Compact's program which does not outsource to a broker.
https://fileservice.eea.comacloud.net/FileService.Api/file/FileRoom/10479168
a.Watertown:
Reliability
“A municipal aggregation plan must provide for reliability. G.L.c.164,§134(a). The
contract that Watertown will enter into with the competitive supplier contains provisions
that commit the competitive supplier to provide all-requirements power supply, make all
necessary arrangements for power supply, and use proper standards for management
and operations (Petition, Exh. 2, at 10).
In addition, Watertown will use the services of the Consultants, who are licensed
electricity brokers, to ensure that Watertown has the technical expertise necessary to
operate the Program (Plan at 3). After review, the Department concludes that Watertown
has satisfied the requirements of G.L.c. 164, § 134(a) regarding Reliability. See D.P.U.
14-69, at 45;D.P.U.13-131, at 20; D.P.U.12-124, at 46”
b.Worcester:
https://fileservice.eea.comacloud.net/FileService.Api/file/FileRoom/11257306
“In addition, Worcester will use the services of MassPowerChoice, a licensed electricity
broker, to ensure that the City has the technical expertise necessary to operate the
Program (Plan at 4). After review, the Department concludes that Worcester has
satisfied the requirements regarding reliability. See D.P.U. 14-69, at 45; Town of Natick,
D.P.U. 13-131, at 20 (2014); D.P.U. 12-124, at 46. The Department’s findings above
regarding reliability are premised on the City’s use of a licensed electricity broker with
the technical expertise necessary to operate the Program. The City’s current contract for
municipal aggregation consulting services expires in five years, with two, two-year
options to renew (Exh.DPU 1-39). Prior to the expiration of its contract with
MassPowerChoice, the City states that it will issue a request for proposals if it intends to
continue to use the services of an aggregation consultant (Exh.DPU 1-39).
If Worcester engages the services of a different municipal aggregation consultant that is
also a licensed electricity broker in Massachusetts, the City shall notify the Department
in writing in advance of such change. Alternately, in the event that the City intends to (1)
forgo the services of a municipal aggregation consultant or (2) engage the services of a
consultant that is not a licensed electricity broker in Massachusetts, Worcester will be
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required to demonstrate that, after such change, it will continue to have the technical
expertise necessary to operate the Program.”
c.The Cape Light Compact’s updated plan of 2015 - D.P.U 14-69
https://3jy14ha9u771r7qzn35g0s6c-wpengine.netdna-ssl.com/wp-content/uploads/2015/
05/DPU-14-69-Order-5-1-15.pdf
Page 36:
In regards to reliability, the Compact states that the Plan provides for ESA provisions
that commit the competitive supplier to provide all-requirements power supply, make all
necessary arrangements for power supply, and use proper standards of management
and operations (Compact Brief at 14, citing Plan at 20; Exhs. DPU - 1-2, DPU - 1-12).
On page 45:
In D.T.E. 04-32, at 16-17, the Department concluded that the 2004 Plan satisfactorily
provided for reliability because the plan’s ESA (1) called for all-requirements power
supply, and (2) included sufficient financial assurance provisions. In the instant
proceeding, the Plan and the model ESA contain provisions that commit the competitive
supplier to provide all-requirements power supply, to make all necessary arrangements
for power supply, and to use proper standards of management and operations (Plan at
11-12,20, 22; Exh. DPU - 1-2, Att.). In addition, the Plan provides an organizational
structure (including staff and consultants) to ensure that the Program has the technical
expertise necessary to operate a municipal aggregation program (Plan at 8,12).
Accordingly, the Department finds that the Compact has satisfied the statutory
requirement regarding reliability.
Thus, it is misleading to imply that DPU values a broker over JPE staff/consultants to provide
this expertise. A preference is not given or implied in the referenced DPU documents Worcester
and Watertown CCAs, and should not be phrased to make brokers seem necessary or even
desirable under Massachusetts DPU policies.
16. Page 13, final paragraph in "Consulting/Brokerage/Legal" where you suggest an adder
alone (excluding the broker fee) can suffice to fund CCA staff, is unresponsive to previous
comment on adder being inherently too limited to build up capacity for a locally focused
program.
17. Page 13, "Retail supply functions," where you characterize California's CCA market
structure as being essentially different from Massachusettts because "there is no competitive
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retail market for small customers," is unresponsive to Local Power’s comment clarifying that
California CCAs serve all customers, including large commercial customers, which do have a
competitive retail market, and actively engage those entities to participate in CCAs, making the
contrast in market structure here quite overstated. Given that large commercial customers
consume large portions of the energy consumed within CCAs, serving them is materially
important for a climate-impactful CCA program.
18. Page 14, Retail supply functions," where you say engaging the wholesale market could
bankrupt a CCA in the manner of the energy retailer Agera Energy, is unresponsive to comment
already made that the proposed method of engagement "direct retail" would in fact engage retail
suppliers, whether by providing credit/collateral or purchasing the service from an underwriter.
Thus, the risk portrayed here is inadequately articulated/differentiated, and seems alarmist.
19. Page 15, "Manage the CCA's load profile to reduce the cost of electricity supply," the
description of demand response is incomplete as it is unresponsive to previous comment about
alternative method of load reform through site targeting.
20. Page 15, in the paragraph starting "First, CCAs are typically made up of very large numbers
of small customers," in which you say it would be expensive to modify many load profiles, is
unresponsive to Local Power’s comment about focusing DERs on high energy use locations
and the importance of including opt-out municipal loads and opt-in commercial loads, to
facilitate this process. Thus, DER and load reform measures would concentrate on high impact
locations such as multi-use environments (e.g. multi-res, commercial, government).
21. Page 15, following paragraph where you say the absence of meters creates a barrier to
paying customers who participate in DERs that confer load benefits, ignores Local Power’s
comment about customer ownership benefits and aggregate load duration curve cost of service
benefits to all CCA customers.
22. Page 15, bottom where you discuss declining value of load shifting,does not respond to our
previous comment on the difference between this approach, based on trading of the benefits,
versus targeting and not monetizing the benefits, but creating the customer value through
ownership benefits.
24. Page 16, 4-A2, "Operational Adders," where you list the MA Supreme Judicial Court criteria
for program fees: again, the voluntary investment mechanism is an opt-op, not opt-in, is paid by
choice, and falls under receiving benefits for what a customer has paid, according to
agreements with municipalities and/or cooperatives of neighbors.
25. Page 17, "4-B1 "Energy efficiency programs," where you describe Massachusetts' programs
as the national leader, this should be tempered by the fact that so few states have any such
programs, and almost all of those that do are still, like Massachusetts, under monopoly utility
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administration. Too much needs to be done for Massachusetts to justify discouraging innovation
by CCAs. I think you would agree that Massachusetts' program is not perfect, needs
improvement, particularly related to serving smaller residential and business customers, and
particularly in regard to enhanced services, specifically for under-served customer types.
26. Page 18 4_C "Funding comparison," please add estimated figures for potentially larger JPE
scenario that includes all municipalities in Hampshire County, and another in all of Franklin
County.
27. Pp.18-19 5-A "Energy manager," which recommends an adder only to funds staff, is
unresponsive to comment already made by Local Power that this funding is inadequate for a
3.0-type program.
28. Page 19, 5-B "Annual REC purchases" where you say the "most popular strategy for green
CCAs is to include additional RECs" should be tempered by the admission that it is all that
brokers and retailers have really offered to CCAs, leaving even more popular programs, such as
local renewables, with few channels for expression. Many customers are frustrated by the
limitations of RECs to deliver results for climate action, so "most popular" falls a bit flat.
29. Page 20, "Annual REC purchases," where you address CCAs that prefer to promote direct
additionality over REC market incentives, you say that direct additionality strategy is no better at
creating a specific new renewable energy generator in the current year, falsely implies that there
is no material difference between them, which is an over-statement, and also is unresponsive to
our previous comment about the "subtractionality" strategy of CCA 3.0 and the huge material
carbon benefits of transforming actual power content, not merely mitigating conventional supply
with incentive mechanisms.
Further, the statement that REC approaches of all kinds "will lead to the development of new
projects over time to meet that demand" overstates the certainty of the impact of a market
incentive on actual investment, which in truth is indeterminate in occurrence, location and
carbon impact, and not coincidentally subject to much policy debate, leading to these CCAs to
prefer physical results to assumed upstream outcomes. Given the carbon-centric goals of this
project, these are extremely important distinctions, not technical details to confuse or belittle.
Additionality represents one big leap in "realness" of impact: subtractionality represents yet
another leap, as articulated in the CCA pathways report and our comments on your previous
draft.
30. Page 21, 5-C "Long-term contracts with renewable generators," where you point out
questions about a CCA commitment being adequate to obtain financing by providing a secure
long term revenue stream to a project, is unresponsive to Local Power’s previous comment on
the use of JPE, municipalities, and customers themselves as financial counterparties,
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31. Page 21, next paragraph, you say a "CCA, however, is effectively an energy seller," is
unresponsive to Local Power’s comment that CCA is not a seller but a buyer of energy. While a
full wholesale model would come closer to an energy seller, no other model for CCA does.
32. Page 21, next paragraph, where you describe the downside of committing revenue to a
single project in year one and deprive itself of the ability to finance more projects for a decade,
ignores Local Power’s comment that a 3.0 model involves customer investment in projects, not
just the CCA program or JPE, which will require years to get a credit rating, etc. so that it does
not consider new ways to make these investments.
33. Page 21, just below where you say CCAs cannot buy power directly from a generator, and
that only qualified Market Participants are allowed to meet ISO New England requirements, is
unresponsive to comment that CCA 3.0 model uses qualified Market Participants.
34. Page 22, 5-D" Modular investments in new renewable generation," where you include the
option of making commitments "for RECs and/or electricity generated by the project," the REC
purchase option is not appealing to the localization scope of this project.
35. Page 22, "Community empowerment," this is unresponsive our previous comment that this
describes legislation, which not being implementable under current law is not in scope of this
project, which concerns advising CCAs and municipalities on currently available pathways. It
should be removed or placed in a special section on recommended legislation, but not
embedded in a narrative on implementable policy options.
36. Page 23, same section, the process described here, if it is ever adopted by the legislature,
will not cause a change in CCA power supply content.
37. Page 23, same section, where you say the advantage of the approach is that it avoids the
risk that a CCA would face customers opting-out, this is unresponsive to comment we’ve
already made clarifying the use of customer loans and municipal bills to secure DER investment
customers, meaning there is no opt-out problem to solve, and not advantage actually offered.
38. Page 25, 5-H "Price options," where you suggest CCAs can charge different prices to
different customers, such as a lower rate to someone who owns an electric vehicle or electric
heat pumps, this is problematic because CCAs are required to treat customers equitably as per
statute and CCA Plan requirements. They are also not necessary, as the benefits to customers
from heat pumps and EVs will come from reduced consumption of expensive gasoline and
heating fuels, not a marginally lower price of electricity in heat pumps or EV chargers.
39. Page 26 5-H1, "Energy efficiency programs," where you say CCAs cannot use ratepayer
energy efficiency funds for "enhanced EE" programs, is unresponsive to Local Power’s
comment that these funds should be used for standard programs, and EE finance used to fund
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enhanced programs; and that in the long term, CCAs should work to persuade the DPU to allow
greater autonomy in local program design. There is the short term strategy and the long-term,
and they should be different.
40. Page 27, 6-B "What's in the CCA plan?," the discussion of whether DER services are tied to
their CCA or not, and implying "rigorous state scrutiny" if so, is unresponsive to previous
comment on customer loan arrangement through municipality, which was designed explicitly to
address this. Thus an overly narrow choice is implied that fails to consider the solution
referenced in our comment.
41. Page 28, 6-C "Summary of approach," the recommended setup is traditional and ill-suited to
accelerating local development. Given that local towns have declared climate emergencies and
adopted acceleration targets, we should be adopting an accelerated schedule, not a
conventional one. This is unresponsive to Local Power’s comment that the Energy Plan should
be prepared in parallel to avoid unnecessary delays and expedite processes. Where delays are
required, such as waiting for a DPU process, constitutes a separate issue from the CCA's
planning process, which should minimize waiting, as such waiting can lead and has led CCAs to
years of delays, not months. And years become elections and elections loss of policy
consensus. This largely explains the low rate of energy efficiency funds administration by CCAs
in Massachusetts and California. Incrementalism can undermine the planning and
implementation of transitions in this way.
42. Page 28, same section, below, where you recommend dealing with non-standard elements
later in an amended plan is unresponsive to comment we’ve already made underscoring the
need to file the amended plan shortly after launch so that its approval does not delay/threaten
CCA contracting schedule, which was raised as an issue in our Massachusetts interviews and
was articulated in the CCA Pathways report.
43. Page 30, 6-E, "CCA administration of ratepayer-funded energy efficiency programs," where
you explain that the three-year statewide planning process means 1-3 years to get approval and
1-3 years to wait for the next cycle to begin, underscores the importance of starting the process
earlier, not waiting even more. It would be appropriate here to actually reference the current
DPU schedule rather than speak of it in the abstract, and suggest a CCA schedule within the
actual schedule, as this is pertinent to CCA planning.
This concludes Local Power’s comments.
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