RI Docket 4600 Working Group Meeting #5 November 21, 2016

Facilitator/Mediator: Dr. Jonathan Raab, Raab Associates, Ltd. Consultant: Paul Centolella, Centolella & Associates DRAFT High-Level Meeting Summary

Altogether there were 38 people in attendance at the fifth Working Group meeting. See attendees in Appendix I. See slide decks and documents used during this meeting HERE

Cost Effectiveness Framework for Rhode Island

Paul Centolella reviewed the changes to the Benefit Cost Framework matrix including 1) changes made based on feedback at the last full WG meeting; 2) changes made as a result of the WG call (both on the call and provided by others as assignments during that call); and 3) the addition of a new column at the request of the PUC staff entitled “Potential Visibility Requirements.”

During the course of the meeting, the WG agreed to make a few additional modifications to the matrix, including: 1. In the Societal Level bucket, collapsing Home Energy Security and Equity rows into a new row labeled Reduced Energy Burden. The group discussed several Attributes within this category: 1) The qualitatively different impacts of bill savings for low income and vulnerable customers, including: Greater marginal benefit of cost savings to low income and vulnerable customers, reductions in disproportionate suffering, equity in offsetting unequal access to capital; 2) Reductions in the cost of other social services; and 3) The greater economic impact of low income spending as low income consumers may spend a greater proportion of available income locally. Paul Centolella agreed to reflect these comments in a next version of the benefit / cost matrix. 2. Not just include Risk in the Societal Level bucket but in the Utility and Customer Level buckets as well. In the Power System Level bucket a new Risk row would absorb the current Investment Under Uncertainty row. Tim Woolf agreed to develop a proposal for Risk in the three buckets

The WG agreed that it would do one final review of the matrix ahead of the next meeting—particularly the Candidate Methodologies and new Potential Visibility Requirements columns.

The WG then turned its attention to how the matrix could and should be used by the PUC, National Grid, and stakeholders. Tim Woolf presented a proposal on how the matrix could be rolled out over time including: adopting it as the RI cost- effectiveness test; road-testing it right away on energy efficiency; and then applying

1 it to other resources (e.g., demand response and PV) and programs. He pointed out that initially single resources could be compared to avoided costs in more of a static analysis, but over time we should aim for a portfolio optimization approach. WG members were generally supportive of this approach to using the matrix.

The WG then discussed how applicable that this would be to National Grid’s evaluation of distribution investments. National Grid pointed out that the costs associated with ISR related investments only comprise about 25-30% of customers’ bills, that a significant portion of the ISR is related to investments (such as interconnections) that are not avoidable, and that increasing efficiency and DER penetration is already incorporated in its load forecasts. The WG still expressed desire to see the cost-benefit methodology applied to the portions of the ISR that were potentially avoidable, and that over time the ISR evolve beyond focus primarily on infrastructure and service reliability to a vehicle for accomplishing state policy goals.

The WG agreed that it would need to craft some language to accompany the matrix in the report to the PUC that would discuss its applications, how specifically the rows and each of the columns should be used, and how it can and should be updated over time. Jonathan and Paul volunteered to take a first shot at the packaging language for the WG to review at its next meeting.

Cost Recovery and Ratemaking

The WG began by looking at the Rate Design Guiding Principles Matrix which was compilation of the homework assignments submitted by 1) Acadia et al; 2) National Grid; 3) George Wiley Center; and 4) New Energy RI. The submitted principles were arranged into nine different categories, by consultant Paul Centolella. Paul explained he had to pick and choose among the New Energy RI principles as many were not directly rate design principles—which New Energy RI acknowledged; they were providing broader principles to address principles previously submitted by Scudder Parker, rather than the rate design principles HW.

During the discussion, the WG agreed to rename the “Economic Efficiency” category to “Efficient Price Signals.” After discussion on some of the proposed principles, the WG agreed to designate 1-2 representatives from each of the groups that submitted the principles to work with Dr. Raab in a 2 hour meeting/call prior to the next meeting to attempt to bring a consolidated set of principles back to the full WG at its next meeting.

National Grid then provided a background presentation on its current rates to all customer classes, as well as the structure of its net metering and Renewable Energy Growth tariffs. WG members asked a wide range of clarifying questions regarding National Grid’s current rates and tariffs.

Dr. Raab then asked WG members to describe some of the benefits and limitations of

2 current rate designs in Rhode Island. Points made during that discussion by one or more WG members:

 Having low fixed cost charges with the rest being variable is easy for customers to understand and enables individual customers to control their bills  Current rates don’t send great signals for overall system efficiency and not well aligned with system load and peaks—time varying rates would be better aligned  Discounts for low income customers are not high enough nor sufficiently flexible  Low fixed charges aren’t adequately covering distribution costs  Generation and transmission costs have greater variability than distribution costs

Finally, we discussed the proposed rate design HW put together by the facilitation/consultant team. The HW includes 6 categories of issues (e.g., TVR, recovery of fixed costs, etc.) with multiple options for each category. It asks WG members to check off all the options that are potentially acceptable to them, and to include any qualifying notes—and encourages WG members to work together. A refinement was made to the HW based on WG input (e.g., demand charges were separated out into a separate option under recovery of fixed charges.)

Planning for Next Meeting

The next meeting will focus on attempting to wrap up the cost-benefit matrix, and to continue the discussions about rate design and cost recovery.

Preparation work for the next meeting includes: 1. Review this meeting summary and send any corrections or suggested improvements in redline by Monday December 5th. 2. Rate Design Principles—Dr. Raab will be facilitating a 2 hour meeting/call with 1-2 representatives from 1) Acadia et al; 2) National Grid; 3) Wiley Center; and 4) New Energy Rhode Island (if they are not included in Acadia et al) to further consolidate the proposed rate design principles in the Rate Design Principles matrix. Please let him know by COB Tuesday November 29th who those representatives will be and their availability on both Monday December 12th (8:30 to 4:30) and Tuesday December 13th (8:30 to 3:00)— and we will schedule the meeting/call. This will then be reviewed by the full WG at the 12/16 meeting. 3. Rate Design Homework—Please fill out the Rate Design Homework matrix posted on the website and provide it to me (and Paul) by COB Monday December 12th. We will then compile them and repost for you to review ahead of our next WG meeting. You should identify all potentially acceptable

3 options and add any important explanatory/qualifying remarks. We strongly encourage you to work with other WG members on this. 4. Benefit-Cost Framework—Please do another review of the matrix, particularly the “Candidate Methodologies” and “Visibility” columns—and email Paul (copy me) with any suggested additions/changes by COB Monday December 12th. a. Tim Woolf also (was) volunteered to develop separate rows on Risk in each of the 3 buckets (and replacing the two options related rows in the Power System Level bucket) in consultation with Paul. If anyone wants to work w/Tim/Paul on this let Tim know. Due COB Monday December 12th.

4 Appendix I: Attendees

RI Docket 4600 Work Group Attendance 9/23 10/27 11/21 Acadia Center Abigail Anthony X X X Leslie Malone (alt) X X Mark Lebel Conservation Law Foundation Jerry Elmer X X X Direct Energy Marc Hanks X X X Pamela Rutkowski Division of Public Utilities & Carriers Macky McCleary X X Steve Scialabba X X X Jonathan Schrag X Jon Hagopian X Christy Hetherington X Joel Munoz X Tim Woolf (Synapse) X X X E4TheFuture Jenny Weissbourd EERMC Marisa DeSautel Scudder Parker X X X Kate Desrochers X Mike Guerard X Energy Development Partners Frank Epps Russell Maymon X Willumsen- George Wiley Center John Friedman X X X Camilo Viveiros (alt) X X X Chloe Chassaing X National Grid Tim Roughan X X X Celia O’Brien X X X Jim Patterson X Jennifer Hutchinson X X X Mary Coleman X X X Meghan McGuiness X Ryan Constable X X X Alan LaBarre X X X

5 Courtney Lane X X Tamela Bailey X X Jeanne Lloyd X NECEC Janet Besser X X Jamie Dickerson (alt) X X X New Energy, LLC Seth Handy X X X Karl Rabago (alt) X X X Office of Energy Resources Danny Musher X X X Office of Lt. Governor Leah Donaldson John Farley Mike McElroy Erika Niedowski People’s Power & Light Kat Burnham X X X RI Manufacturers Assoc William McCourt RI PUC Todd Bianco X X X Cynthia Wilson Frias X X X Linda George X X Solar City Carine Dumit Brendan Reed (alt) Thad Culley TEC-RI Doug Gablinske Utilidata William Pratt X Jesse Reyes (alt) RI PUC’s Mediator/Consultant Jonathan Raab X X Paul Centolella X X Observers Fred Unger X X Julie Michals X Michelle Carpenter X X Kate Grant X X Michele Leone X Kayte O’Neill X Doug Sabetti X X Alan Nault X Aaron Regenberg X Dan Garvey X

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