STATE OF VERMONT PUBLIC SERVICE BOARD Petition of GMPSolar - Williston, LLC for a Certificate ) of Public Good, pursuant to 30 V.S.A. §§ 219a, 229 ) and 248, authorizing the installation and operation of a ) 4.69 MW net-metered solar electric generation facility ) Docket No. _______ near Mountain View Road in Williston, Vermont to be ) known as the “GMPSolar Williston Project” ) PREFILED DIRECT TESTIMONY OF DOUGLAS SMITH July 15, 2015 Summary: Mr. Smith’s testimony addresses the Williston Solar Project’s compliance with certain Section 248 criteria, including criterion b(2) (need), criterion b(4)(economic benefit), criterion b(6) (consistency with least cost integration plan), and criterion b(7) (compliance with Vermont Electric Energy Plan). Docket No. ___ GMPSolar Williston Project Prefiled Direct Testimony of Douglas Smith July 15, 2015 Page 2 of 27 1 Q. Please state your name, occupation, and business address. 2 Response: My name is Douglas C. Smith. I am Director of Power Supply for Green 3 Mountain Power Corporation (“Green Mountain”, “GMP”, or “Company”). Our business 4 address is GMP, 163 Acorn Street, Colchester, VT 05446. 5 6 Q. What is your role in the Project, and what is the purpose of your testimony? 7 Response: I have reviewed the proposed Project from the perspectives of consistency with 8 GMP’s power supply strategy and Vermont policy goals, and for consistency with several 9 statutory criteria. The purpose of my testimony is to address (i) how the GMPSolar 10 Williston Project (“Project”) is needed to meet GMP’s energy demand requirements (30 11 V.S.A. §248(b)(2)(need)); (ii) how the Project provides an economic benefit to GMP, its 12 customers and the State (§ 248(b)(4)(economic benefit)); (iii) how the Project is consistent 13 with GMP’s IRP (§ 248(b)(6)(IRP)); and (iv) how the Project furthers the goals of the 2011 14 Vermont Electric Plan (§ 248(b)(7)(energy plan)). 15 16 Q. Please describe your professional background, qualifications and experience. 17 Response: I have worked for over 25 years in the electric industry, focusing on topics that 18 include electric system and portfolio planning, wholesale and retail power transactions, and 19 market price forecasting. I hold a Bachelor of Science degree in Mechanical Engineering 20 from Brown University. 21 I began my career as an analyst at the Vermont Department of Public Service and 22 was subsequently promoted to the position of Electrical Planning Engineer. From 1991 to 23 2007, I worked at La Capra Associates (“La Capra”), a Boston-based consulting firm that Docket No. ___ GMPSolar Williston Project Prefiled Direct Testimony of Douglas Smith July 15, 2015 Page 3 of 27 1 specializes in planning and regulatory issues in the electric industry. I ultimately became La 2 Capra’s Technical Director. While at La Capra, I advised several Vermont utilities regarding 3 their power transactions, risk management strategies, and Integrated Resource Plans. On 4 behalf of state agencies and large electricity customers, while at La Capra, I reviewed the 5 procurement strategies of numerous large utilities in the eastern, central and western U.S. I 6 also led the firm’s forecasting of New England wholesale electricity market prices and 7 assisted in the siting applications of several proposed electric generating plants. 8 I joined Green Mountain Power in 2007. I currently play a primary role in the 9 development of Green Mountain Power’s power supply strategy and in the evaluation of 10 potential power supply sources including new renewable sources. I also played a primary 11 role in the development of GMP’s 2011 Integrated Resource Plan (“IRP”), which was 12 approved by the Board in Docket 7748, and GMP’s 2014 IRP. 13 14 Q. Have you previously testified before the Public Service Board? 15 Response: Yes, I have testified before the Board on numerous occasions, on topics that 16 include resource planning, proposed power contracts and generation projects, electric utility 17 revenue requirements, potential non-transmission alternatives to proposed transmission 18 projects, and the development of SPEED standard offer rates. Most recently, I testified in 19 Docket 8445 in support of a proposed long-term capacity purchase. 20 21 22 Docket No. ___ GMPSolar Williston Project Prefiled Direct Testimony of Douglas Smith July 15, 2015 Page 4 of 27 1 Q. Please summarize GMP’s relationship to the proposed Project. 2 Response: The proposed Project is a net-metering facility proposed under 30 V.S.A. § 3 219a(m)(3), which allows electric utilities to allow the construction of one 5 MW net- 4 metered facility in their service territory. This particular Project is designed to off-set energy 5 consumption at the GlobalFoundries facility in Essex Junction, Vermont. GMP will own 6 and operate the net-metered facility through a special purpose project entity, which is the 7 Applicant. This approach is being taken in order to allow GMP customers to benefit from 8 the maximum practical value of the federal investment tax credit which is presently available 9 for new solar photovoltaic projects. The Project will, in effect, be a conventional above-the- 10 line, utility project, subject to traditional cost-of-service rate-making procedures – with the 11 Project’s costs (and the benefits of its output) reflected in GMP’s annual retail revenue 12 requirements. The specific structure of the Project and the details of the net-metering 13 arrangement with GlobalFoundries are described in more detail in the testimony of Kirk 14 Shields. 15 16 Q. Please summarize your findings and conclusions regarding the Project. 17 Response: My primary finding is that Project meets these Criteria, and I recommend that 18 the Board issue the requested Certificate of Public Good. In short: 19 • The Project will help GMP meet its long-term needs for energy and capacity. These 20 needs are projected to be substantial, even after considering the ongoing implementation 21 of aggressive energy efficiency measures; Docket No. ___ GMPSolar Williston Project Prefiled Direct Testimony of Douglas Smith July 15, 2015 Page 5 of 27 1 • The Project will help GMP to meet its obligations under Vermont’s new Renewable 2 Energy Standard framework (also known as “RES” or the “H.40” bill) in a least-cost 3 manner. 4 • The cost of power from the Project over its life is projected to be competitive with the 5 very lowest-priced solar options presently available to GMP, and lower than any solar 6 sources that have been procured to date. 7 • The Project is consistent with the Department’s most recently adopted electric plan, 8 which emphasizes the use of new renewable resources in meeting Vermont’s energy 9 needs; and 10 • The Project is consistent with GMP’s most recent IRP. As an in-state, GMP-owned 11 solar project, it comports with several of themes from the 2011 and 2014 IRPs, and it 12 will help to move GMP toward its preferred supply portfolio. 13 14 SECTION 248 CRITERIA 15 Need for the Project - 30 V.S.A. § 248(b)(2) 16 Q. Section 248(b)(2) requires the Board to find that this Project is required to meet the 17 need for future demand for service which could not otherwise be provided in a more cost 18 effective manner through energy conservation programs and measures and energy efficiency 19 and load management measures. Please explain how this Project satisfies this criterion. 20 Docket No. ___ GMPSolar Williston Project Prefiled Direct Testimony of Douglas Smith July 15, 2015 Page 6 of 27 1 Response: The Project will help address several requirements – including energy, capacity, 2 and renewable energy – that are associated with meeting the demand for service of GMP’s 3 customers. I will first discuss energy and capacity. 4 Over the long term, GMP will need substantial amounts of additional resources to 5 meet the energy and capacity requirements associated with its customers’ electricity 6 consumption. As a load serving entity in the ISO-NE electricity market, GMP is responsible 7 for providing or purchasing sufficient energy to meet its customers’ needs (on an hourly and 8 real-time basis), along with its share of regional capacity requirements (through the ISO-NE 9 Forward Capacity Market (“FCM”)). Energy and capacity are the two largest components of 10 power supply costs for GMP and uncertainty in future energy and capacity market prices are 11 among the top sources of uncertainty in those power costs. 12 The substantial magnitude of this power supply gap is shown in Exhibits GWP- 13 DCS-1 and DCS-2, which compare the estimated output of GMP’s committed power 14 supply sources (including owned plants and purchased power contracts) to GMP’s projected 15 needs over time. Exhibit GWP-DCS-1 shows the supply gap in terms of energy (MWh per 16 year) and Exhibit GWP-DCS-2 shows the gap in terms of generation capacity (MW of 17 FCM capacity value). For energy, the projected gap increases quickly to about 1.5 million 18 MWh (roughly one-third of GMP’s projected requirements) by 2021 and to over 2 million 19 MWh (roughly 40% of GMP’s projected requirements) in the longer term. Turning to 20 capacity shown on Exhibit GWP-DCS-2, the projected gap between committed sources1 1This depiction of committed sources includes GMP’s planned purchase of an additional 150 MW of capacity from NextEra Seabrook; this purchase was recently granted a Certificate of Public Good. Docket No. ___ GMPSolar Williston Project Prefiled Direct Testimony of Douglas Smith July 15, 2015 Page 7 of 27 1 and requirements is over 200 MW in the near term, growing to about 350 MW (roughly 40% 2 of GMP’s projected requirements) over most of the next decade.