COMMONWEALTH OF MASSACHUSETTS DEPARTMENT OF PUBLIC UTILITIES

) Investigation of the Department of Public Utilities, ) on its own Motion, Commencing a Rulemaking ) pursuant to G.L. c. 164, § 139A; G.L. c. 30A, § 2; ) D.P.U. 17-10 and 220 C.M.R. § 2.00 et seq., ) to Amend 220 C.M.R. § 18.00 et seq. ) )

REPLY COMMENTS OF NATIONAL GRID AND UNITIL

I. Introduction

On May 16, 2017, the Massachusetts Department of Public Utilities (“Department”) opened a proceeding and issued an Order instituting a rulemaking (“Rulemaking Order”), proposing to amend its net metering regulations at 220 C.M.R. § 18.00 et seq. in response to legislation, and requesting public input. Rulemaking on Net Metering, D.P.U. 17-10, at 2, 5

(2017).1 The Rulemaking Order set forth nine topics for discussion on implementing the provisions of Section 139A regarding hydroelectric power net metering.2 On June 30, 2017, seventeen parties submitted initial comments.3 Fitchburg Gas and Electric Light Company d/b/a

1 On August 8, 2016, Governor Baker signed into law Chapter 188 of the Acts of 2016, “An Act to Promote Energy Diversity (“Act”).” Among other things, Section 10(b) of the Act provides that the Department of Public Utilities (“Department”) “may require the electric distribution companies to amend the net metering tariff to create a program for small hydroelectric power net metering facilities in the commonwealth.” St. 2016, c. 188, § 10, establishing G.L. c. 164, § 139A (hereinafter, “Section 139A”).

2 Section 139A(a) defines “small hydroelectric power net metering facility,” which the Department has proposed to incorporate into several definitions within 220 C.M.R. § 18.02, including Class II Net Metering Facility and Class III Net Metering Facility. The proposed regulations also add a new net metering credit calculation for small hydroelectric power net metering facilities in 220 C.M.R. § 18.04(6A), instead of adding a separate definition for “small hydro tariff,” as provided in Section 139A(a). Finally, the proposed regulations amend 220 C.M.R. § 18.07(4) to define the capacity of all non-solar net metering facilities, including small hydroelectric power net metering facilities, as the facility’s nameplate rating in alternating current.

3 Commenters included: Ampersand Collins Hydro, LLC; Bay State Hydropower Association, L.P. Athol Corporation; Olson Electric; West Dudley Hydro; The Cadmus Group, Inc.; Chad W. Cox, P.E.; State Representative and Chairman Thomas A. Golden, Jr.; the Department of Energy Resources (“DOER”); D.P.U. 17-10: National Grid and Unitil Reply Comments

Unitil (“Unitil”) and Massachusetts Electric Company and Nantucket Electric Company, each d/b/a National Grid (“National Grid”) offer the following reply comments.

II. General Comments

To the extent that the Department deems it necessary and within the public interest to establish a program for small hydroelectric power net metering facilities, the Department should offer clarifications within its final decision as to whether the general net metering provisions, regulations, and guidance will apply to small hydroelectric power net metering facilities.4 If it was not the Department’s intent to apply the general net metering provisions to small hydroelectric power net metering facilities in the absence of statutory language to the contrary, then the Department should make its intent clear in its final order.

III. Comments on Specific Topics

1. Whether the phrase “anaerobic digestion net metering facility” in the statutory definition of “small hydro tariff” should be interpreted to be a legislative drafting error and therefore, the Department should not alter the anaerobic digestion net metering facility net metering credit calculation in 220 C.M.R. §§ 18.04(1), 18.04(5).

There was universal agreement among commenters who addressed this issue in their initial comments that the inclusion of the term “anaerobic digestion net metering facility” within the definition of “small hydro tariff” from Section 10(a) of the Act should be deemed a

Eversource; the Massachusetts Department of Agricultural Resources; the Massachusetts Water Resources Authority; National Grid; New England Hydropower Company, LLC; State Representative Daniel F. Cahill; State Senator Anne M. Gobi; Town of Springfield; and Thorndike Energy, LLC. In addition, State Representative Stephen Kulik filed comments on July 5, 2017.

4 Some examples of implementation issues would include, at a minimum, whether the Department’s “single parcel rule” for net metering facilities applies to small hydroelectric power net metering facilities, whether the appropriate form of compensation for small hydroelectric power net metering facilities is bill credits or checks, and other issues decided as part of the Department’s orders and guidance interpreting and applying the net metering statute and regulations.

-2- D.P.U. 17-10: National Grid and Unitil Reply Comments legislative drafting error.5 National Grid and Unitil agree that this is the most reasonable interpretation of its inclusion.

2. Whether the Department should use the System of Assurance of Net Metering Eligibility or another process to track the aggregate capacity of small hydroelectric net metering facilities for the purpose of ensuring that no more than 60 MW be permitted to participate in the small hydro tariff program.

There was broad agreement among commenters who addressed this issue in their initial comments that the Department should require small hydroelectric power net metering facilities to obtain a net metering cap allocation from the System of Assurance of Net Metering Eligibility

(“System of Assurance”) rather than developing a new process for the small hydroelectric power net metering cap.6 However, some commenters recommended minor changes to the System of

Assurance, and other commenters suggested a different “initial reservation period” for applicants than the timeframe that is currently found in Appendix A, “System of Assurance of Net Metering

Eligibility,” adopted pursuant to the Department in Net Metering and Interconnection of

Distributed Generation, D.P.U. 11-11-A (2012), for “all other net metering facilities.”7 If the

Department does intend to direct small hydroelectric power net metering facilities to use the

System of Assurance to obtain net metering cap allocations, it should also clarify the applicable initial reservation period.

5 These commenters were: Ampersand Collins Hydro, LLC; Bay State Hydropower Association, L.P. Athol Corporation; Olson Electric; West Dudley Hydro; the Department of Energy Resources; Eversource; National Grid; and New England Hydropower Company, LLC.

6 These commenters were: Ampersand Collins Hydro, LLC; Bay State Hydropower Association, L.P. Athol Corporation; Olson Electric; West Dudley Hydro; The Cadmus Group, Inc.; the Department of Energy Resources; Eversource; National Grid; and New England Hydropower Company, LLC.

7 These commenters were: Ampersand Collins Hydro, LLC; Bay State Hydropower Association, L.P. Athol Corporation; Olson Electric; West Dudley Hydro; The Cadmus Group, Inc.; and New England Hydropower Company, LLC.

-3- D.P.U. 17-10: National Grid and Unitil Reply Comments

3. Whether small hydroelectric net metering facilities may obtain a cap allocation under the existing net metering caps once the 60 MW capacity cap is reached for the small hydro tariff program.

a. If so, how the Department should define “units” for a small hydroelectric net metering facility. See e.g. D.P.U. 11-11-C at 16-19.

Please refer to the response to # 4, below.

4. Whether existing small hydroelectric net metering facilities should be transferred to the small hydro cap of 60 MW.

Several commenters addressed whether the existing small hydroelectric net metering facilities should be transferred to the small hydropower net metering cap of 60 MW. The DOER,

Eversource, and National Grid asserted that such capacity should be transferred to the new cap.

Other commenters thought that such facilities should not be transferred, or should only be transferred upon their request.8

Based on the plain language of the statute, the Legislature intended to provide 60 MW of aggregated net metering capacity to small hydroelectric generating facilities, at a new rate, both of which would warrant including all such facilities within the new special cap.9 Accordingly, the Department should direct that all such facilities currently included within the private cap be identified and attributed towards the special 60 MW cap. In addition, in its proposed regulations, the Department has included Small Hydroelectric Net Metering Facility within its definitions of

8 These commenters were: Ampersand Collins Hydro, LLC; Bay State Hydropower Association, L.P. Athol Corporation; Olson Electric; West Dudley Hydro; The Cadmus Group, Inc.; and New England Hydropower Company, LLC.

9 When the Legislature created a definition of “Net Metering Facilities of a Municipality or Other Governmental Entity” (“public net metering facilities”) and a special cap for them in 2010, the Department defined the new cap as the “public cap,” and referred to the cap on all other net metering facilities (“private net metering facilities”) as the “private cap.” In designing the System of Assurance, the Department established rules that prevented public net metering facilities from applying to the private cap, and prevented private net metering facilities from applying to the public cap. Accordingly, all public net metering facilities that interconnected and were receiving net metering service prior to the establishment of the two caps were identified and allocated towards the public cap.

-4- D.P.U. 17-10: National Grid and Unitil Reply Comments

Class II Net Metering Facility and Class III Net Metering Facility, which it need not do. See

220 C.M.R. § 18.02. The Department’s amended definitions suggest that both the private cap and the public cap could contain Class II and Class III small hydroelectric power net metering facilities, confusing the question of what rate applies and whether such facilities may exceed a maximum facility capacity of 2 MW – two points on which Section 139A is specific and clear.

Because all small hydroelectric power net metering facilities are to receive the same rate and are subject to the same maximum capacity, it is unnecessary to amend the Department’s definitions of Class II Net Metering Facility and Class III Net Metering Facility. In addition, basic principles of fairness suggest that, because other technologies do not have special caps for their technology, if and when the 60 MW small hydroelectric power net metering facility cap is fully subscribed, such facilities should be prevented from applying to either the private cap or the public cap for cap allocations.10

In addition, the Department has expressed interest in the status of hydroelectric power facilities that are currently receiving net metering services, and sought further information from the Distribution Companies.11 Based on these data, it should be relatively simple to transfer all such facilities to the special 60 MW cap for hydroelectric power net metering. Additionally,

10 Further, as discussed in response to topic # 8, below, a hydroelectric power facility may be assumed to be able to qualify as “Cap Exempt,” under G.L. c. 164, § 139(i), “and may net meter and accrue Class I net metering credits if it is generating renewable energy and the nameplate capacity of the facility is (1) equal to or less than 10 kilowatts on a single-phase circuit or (2) 25 kilowatts on a 3-phase circuit.” However, the definition of “Class I net metering credit” within G.L. c. 164, § 138 states that “credit for a Class I net metering facility that is not an agricultural net metering facility or that is not using solar, anaerobic digestion or wind as its energy source shall be the average monthly clearing price at the ISO-NE.” Accordingly, if a hydroelectric power net metering facility were to state that it is “Cap Exempt” under G.L. c. 164, § 139 (i), the credits it would earn would be equal to the wholesale rate of electricity.

11 National Grid currently provides net metering services to two hydroelectric facilities in Massachusetts: one 5 kW system, and one 49 kW system. Neither one of these facilities is designated as an “agricultural net metering facility.” At present, Unitil does not provide net metering services to any hydroelectric facilities in Massachusetts.

-5- D.P.U. 17-10: National Grid and Unitil Reply Comments transferring existing hydro facilities to the new special 60 MW cap would be to the benefit of those facilities by making them eligible for a higher rate of compensation, and it will not consume an unreasonable amount of the newly available capacity.

5. Whether an electric distribution company should be required to revise its existing net metering tariff to incorporate the small hydro tariff program or seek Department approval of a separate tariff related solely to small hydroelectric net metering facilities.

Many hydroelectric power companies and advocates recommended a separate tariff to provide net metering services to hydroelectric power net metering facilities, whereas the electric distribution companies recommended adapting the current net metering tariff.12 If the

Department’s view is that such facilities must also meet the general requirements that apply to all other net metering facilities, then it would be simplest and best for the Department to direct the electric distribution companies to amend the current model net metering tariff to accommodate small hydroelectric power net metering facilities, rather than adopting a different tariff for such facilities (see Eversource Comments at 9; National Grid Comments at 7-11). Specifically, the

Department should clarify that there is an inherent conflict between the new definition of a

“small hydroelectric power net metering facility” and a special cap, versus the “unit exception” that applies to the so-called “public facilities” within the “public cap.” Also, the Department should clarify that electric distribution companies are the party with discretion to elect to provide payments to small hydroelectric power net metering facilities of any size in exchange for their electricity exports or net metering credits (see National Grid Comments at 10-11).

12 These commenters were: Ampersand Collins Hydro, LLC; Bay State Hydropower Association, L.P. Athol Corporation; Olson Electric; and West Dudley Hydro.

-6- D.P.U. 17-10: National Grid and Unitil Reply Comments

6. Whether the net metering credit value for an agricultural net metering facility should be based on the fact that the net metering facility is agricultural or based on the type of renewable energy technology.

a. For example, whether a new solar net metering facility that is also an agricultural net metering facility should receive the net metering credit value in 220 C.M.R. §§ 18.04(1)/(5) or in 220 C.M.R. § 18.04(3).

b. For example, whether a small hydroelectric net metering facility that is also an agricultural net metering facility should receive the net metering credit value in 220 C.M.R. §§ 18.04(1)/(5) or in 220 C.M.R. § 18.04(6A).

During 2016, the Legislature addressed the net metering provisions of state law twice.13

In both instances, it considered the appropriate rate of compensation for certain specific energy sources: solar and hydroelectric power. Even if a solar net metering facility or small hydroelectric power net metering facility is being hosted at an agricultural site, its net metering credit value should not result in the so-called “retail rate” of compensation.14 The most reasonable interpretation of last year’s legislation is the one that prevents any circumvention of its intent. Therefore, a facility that qualifies as a solar net metering facility should be compensated as provided in G.L. c. 164, § 139(b½), and a facility that qualifies as a small

13 The Solar Energy Act was enacted on April 11, 2016, and the Energy Diversity Act was enacted on August 8, 2016. St. 2016, c. 75, § 12, and St. 2016, c. 188, § 10.

14 As provided in G.L. c. 164, § 138, Class I, Class II, and Class III net metering credits are calculated by taking a net metering facility’s excess kilowatt-hours by time of use billing period, if applicable, multiplied by the sum of the distribution company’s: (i) default service kilowatt-hour charge in the ISO-NE load zone where the customer is located; (ii) distribution kilowatt-hour charge; (iii) transmission kilowatt-hour charge; and (iv) transition kilowatt-hour charge; provided, however, that this shall not include the demand side management and renewable energy kilowatt-hour charges set forth in sections 19 and 20 of chapter 25. However, in enacting G.L. c. 164, §§ 139(b½) and (k), the Legislature specifically dictated a new method of calculating net metering credits for solar facilities subject to the private cap, which involves further multiplying the credit value of the excess kilowatt-hours by 60%, thereby reducing the value of their individual credits immediately or 25 years after interconnection. In doing so, the legislation specifically states that such calculations should not be altered for facilities subject to the public net metering cap or the so-called “cap exempt” facilities. See G.L. c. 164, § 138, definition of “market net metering credit” part (ii), and § 139(i). Therefore, a designation as an “agricultural net metering facility” should not frustrate the Legislature’s specific intent to adjust the compensation available to solar net metering facilities subject to the private cap.

-7- D.P.U. 17-10: National Grid and Unitil Reply Comments hydroelectric power net metering facility program should be compensated for its output as provided in Section 139A(a).

7. In defining the process for calculating net metering credits for the small hydro tariff program in 220 C.M.R. § 18.04, whether the term “basic service” should be used rather than the term “default service.”

Some commenters have recommended that the Department go beyond its authority within the statute and compensate small hydroelectric power net metering facilities for their energy exports with the basic service rate, the transmission rate, and the transition rate.15 If the

Department believes that it is in the public interest and convenience to establish a hydroelectric power net metering program, it specifically should consider how to lessen the associated cost burden for electricity customers. At the very least, the Department should not offer payments any greater than the basic service rate. In fact, National Grid has suggested that the Department may wish to define this new “rate” as exclusive of any RPS compliance costs and as only the cost of energy supply for basic service customers. There is no question, however, that it would contravene the statute to provide either the transmission rate or the transition rate as further compensation to small hydroelectric power net metering facilities for their energy exports.

8. Whether a hydroelectric facility must qualify as a Class I or Class II renewable energy generating source under M.G.L. c. 25A, § 11F to be treated as a small hydroelectric net metering facility.

With some exceptions, there was general agreement that a small hydroelectric power net metering facility need not also meet the eligibility requirements for a Class I or Class II renewable energy generating source under G.L. c. 25A, § 11F.16 However, if the Department’s

15 Specifically, Chad W. Cox, P.E. and Thorndike Energy, LLC provided such comments.

16 These commenters were: Ampersand Collins Hydro, LLC; Bay State Hydropower Association, L.P. Athol Corporation; Olson Electric; West Dudley Hydro; Chad W. Cox, P.E.; State Representative and Chairman

-8- D.P.U. 17-10: National Grid and Unitil Reply Comments purpose in requiring a program for small hydroelectric power net metering facilities is to foster the development of a market for renewable energy development, then the Department’s eligibility requirements for program participants should include all necessary criteria for the

System of Assurance to require in meeting that objective.

9. Whether the definition of a small hydroelectric net metering facility should include hydrokinetic facilities.

Commenters were somewhat split on whether to include hydrokinetic facilities in the

“small hydroelectric power net metering facility.”17 In the absence of broad agreement, the

Department may wish to exclude hydrokinetic facilities from eligibility for the new program.

Thomas A. Golden, Jr.; Eversource; National Grid; New England Hydropower Company, LLC; State Representative Daniel F. Cahill; State Senator Anne M. Gobi; Thorndike Energy, LLC; and State Representative Stephen Kulik.

17 Specifically, Eversource, National Grid, and New England Hydropower Company, LLC stated doubts about including hydrokinetic facilities within this definition, whereas the following commenters supported its inclusion: Ampersand Collins Hydro, LLC; Bay State Hydropower Association, L.P. Athol Corporation; Olson Electric; West Dudley Hydro; The Cadmus Group, Inc.; Chad W. Cox, P.E.; DOER; and Thorndike Energy, LLC.

-9- IV. Conclusion

For the foregoing reasons, National Grid and Unitil respectfully request that the

Department issue an order in this proceeding consistent with the positions stated above.

Respectfully submitted,

By its attorneys,

FITCHBURG GAS AND ELECTRIC MASSACHUSETTS ELECTRIC LIGHT COMPANY d/b/a UNITIL COMPANY and NANTUCKET ELECTRIC COMPANY, each d/b/a NATIONAL GRID

______Laura C. Bickel, Esq. Gary Epler, Esq. National Grid Unitil Service Corp. 40 Sylvan Road 6 Liberty Lane West Waltham, MA 02451 Hampton, NH 03842 Tel. (781) 907-2126 Tel. (603) 773-6440

Date: July 14, 2017