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COMMENTS REGARDING AND ANSWER TO
EMERGENCY PETITION FOR DECLARATORY ORDER
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Pursuant to the July 17, 2015 Notice of Petition for a Declaratory Order, Nevada Power
Company d/b/a NV Energy (Nevada Power) and Sierra Pacific Power Company d/b/a NV
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Energy (Sierra Pacific and, together with Nevada Power, NVE or the Companies)
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submit these Comments Regarding and Answer to the Emergency Petition for a Declaratory
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Order (the Petition) filed by The Alliance For Solar Choice (TASC). The Petition requests
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an order regarding the meaning of Senate Bill (SB) 374. Specifically, TASC asks the Public
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Companies to continue to offer net energy metering under the currently effective net metering
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tariff until such time as the Commission approves a new net metering tariff. This specific
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I.
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INTRODUCTION
A.
TASC stated that, under SB 374, no more than 235 MW of customergeneration would be served under existing net metering rules
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One objective of SB 374 is clear as expressed by TASC to legislators and the public,1
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SB 374 was designed to provide the Commission with wide latitude to establish a smooth
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transition between current net metering rules (NEM1) and new, sustainable net metering
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rules to become effective on or before December 31, 2015 (NEM2). According to TASC, SB
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Assembly Commerce and Labor, May 25, 2015. Written minutes of the hearing are not available from the
Legislative Counsel Bureau. However, the hearing was videotaped. Mr. Uithovens remarks begin at minute 11:42
at the following link: http://nvleg.granicus.com/MediaPlayer.php?view_id=14&clip_id=5022. See also, the joint
press release issued on May 25, 2015 by TASC and NVE, attached hereto as Answer Exhibit A.
374 defined the existing 3 percent net metering cap to be 235 megawatts,2 which is the
maximum amount of net metering permitted under the current net metering rules until
December 31, 2015.3 SB 374 identifies the single, specific scenario under which NEM1
would remain in place after NVE has accepted applications for 235 megawatts under NEM1:
only if the Commission fails to finalize NEM2 rules by December 31, 2015.4 The Petition
seeks relief that is inconsistent with the text of SB 374 and TASCs description of the
legislation. Equally important, the relief requested by TASC would not provide for a smooth
NVE will propose a transition mechanism in its July 31, 2015 filing
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In contrast, the Companies July 31, 2015 filings will propose a mechanism for
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efficiently transitioning from NEM1 to NEM2 consistent with the latitude afforded the
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Commission under SB 374 to craft and implement a NEM2 program. First, consistent with SB
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374, the NVE Companies will continue to interconnect customer-generators under NEM1 until
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again consistent with SB 374, thereafter the NVE Companies proposal will be to continue
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generation and the installation of a net meter. Third, consistent with SB 374, the filing will
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include a marginal cost of service study and a new NEM2 tariff, providing the Commission the
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data to evaluate NEM2 rules. Fourth, consistent with SB 374, the Companies will request
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permission from the Commission to begin billing customers under the proposed NEM2 tariff at
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an appropriate time before December 31, 2015, 5 subject to refund in the event that the final
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Answer Exhibit A.
Id.
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Id. See also, Subsection 5 of section 4.5 of SB 374 (requiring that, for the period beginning January 1, 2016, the
companies must offer net metering under existing rules if the Commission has not issued an order approving new
net metering rules).
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The Companies are making the system changes necessary to begin billing NEM2 customers, with the goal of
being in a position to start billing under NEM2 rules and rates as soon as September 15, 2015.
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The Companies forthcoming proposal is consistent with SB 374 and furthers Nevadas
interconnection and net metering applications and the renewable distributed generation
industry may continue to install such systems, without interruption. The proposal provides an
organized process for transitioning from NEM1 to NEM2, without interruption to the sales and
fulfillment processes. The proposal thus will achieve TASCs stated objectives in a manner
that is consistent with legislation that TASC supported.6 Ultimately, the transition to NEM2
will allow further growth in distributed generation, while ensuring that customers without these
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C.
Consistent with the preference established by Section 4.5 of SB 374, NVE
will propose a just, reasonable and fair billing regime for NEM2 customers that
eliminates the unreasonable shifting of costs to customers who do not choose to
install rooftop solar systems.
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Subsection 3 of Section 4.5 of SB 374 establishes a preference for the NEM2 billing
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regime. The preference established by the law is for a three-part rate that consists of a basic
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service charge, a demand charge, and an energy charge. These charges will be based on the
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specific costs that NVE incurs to provide electric service to customers who install intermittent,
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renewable generation. Pursuant to SB 374, the basic service charge will reflect marginal fixed
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costs incurred to provide safe and reliable service to customer generators. These costs include
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back-office systems (e.g., accounting, billing, and customer service systems), employees,
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meters and the terminals, transformers, and wires that are closest to the customers premise.
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These costs do not vary based on the amount of electricity a customer consumes. Pursuant to
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SB 374, the demand charge will reflect the maximum load requirement that a customer-
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generator places on the system, including the need to accommodate energy delivered by the
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customer-generator.7 The demand charge will reflect the Companies investment in the
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Assembly Commerce and Labor, May 20, 2015. Written minutes of the hearing are not available from the
Legislative Counsel Bureau. Mr. Lyndon Rives remarks regarding the industrys concern regarding the transition
between
NEM1
and
NEM2
begin
at
hour
3:17:00
at
the
following
link:
http://nvleg.granicus.com/MediaPlayer.php?view_id=14&clip_id=4959
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That is, the demand charge will reflect the cost of provide the specific service that a customer-generator receives,
which includes both stand-by service and energy receipt service.
generation, transmission, and distribution facilities that are needed to ensure the delivery of
reliable service to customer-generators. Again, pursuant to the SB 374, the energy charge will
reflect the volume of energy consumed by a customer. Energy costs, such as fuel and
The three-part rate is neither new nor novel. The Companies and utilities across the
country have offered three- and multi-part rate structures to commercial customers. Indeed, the
Companies have used a three-part rate structure to bill commercial accounts for more than six
decades. A three-part rate design better reflects the cost of providing electric service, is well-
established and provides a fair and reasonable way to recognize the cost of serving customer-
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generators.
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In this vein, NVEs July 31, 2015 filing will further the policy of SB 374. The filing
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will propose just, reasonable and fair rates that reflect the cost of providing service to
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customers who choose to install variable distributed generation. Not only will the proposal
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eliminate the unreasonable shifting of costs from customer-generators to other customers, but
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the filing will propose rules that fairly compensate customer-generators for any capacity and
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energy benefits associated with their systems. In summary, the filing will seek to establish a
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sustainable environment for renewable distributed generation one that treats all customers
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fairly and one that recognizes that the inherent subsidy utilized to promote distributed
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II.
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While subsection 2 of section 2.3 allows the Commission to establish enrollment limitations
under the NEM2 tariff, NVE does not anticipate asking for a capacity limitation on NEM2 in
its July 31, 2015 filing.8 Accordingly, the Companies will propose to continue to accept
net meters after the 235 megawatt-limitation on NEM1 described in the statute is reached.
NVE also will ask the Commission to allow it to begin billing NEM2 rates at an appropriate
III.
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The Petition asks the Commission to issue an order requiring the Companies to offer
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net metering under existing rules until the Commission approves the NEM2 tariff. As
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explained above, the Companies will provide a solution in their July 31, 2015 filing. The only
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matter at issue is how the Companies will bill new customer-generators after the 235
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Subsection 1(a) of Section 2.95 of SB 374 provides that until the 235 megawatt cap is
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reached, customer-generators will be charged under the NEM1 rules.9 Then, subsection 1(b) of
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Section 2.95 requires the Companies to offer net metering in accordance with a new net
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metering program and tariffs (NEM2) filed with and approved by the Commission.10 To move
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from NEM1 to NEM2, section 4.5 of SB 374 requires the Companies to file cost of service
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studies and NEM 2 tariffs with the Commission. To facilitate the transition from NEM1 to
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Subsection 2 of section 2.3 provides, in relevant part, the Commission . . . [m]ay close to new customergenerators a tariff filed pursuant to subsection 1 and approved by the Commission if the Commission determines
that closing the tariff to new customer-generators is in the public interest.
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Subsection (a) provides, In accordance with the provisions of this Section, NRS 704.774 and 704.775, to the
customer-generators operating within its service area until the date on which the cumulative capacity of all net
metering systems for which all utilities in this State have accepted or approved completed applications for net
metering is equal to 235 megawatts.
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Subsection (b) provides, After the date on which the cumulative capacity requirement described in paragraph
(a) is met, in accordance with the tariff filed by the utility and approved by the Commission pursuant to section
2.3 of this act.
NEM2 in a transparent manner, the Companies will ask the Commission to permit billing of
Because the date upon which the 235 megawatt limitation will be met was (and is)
uncertain, the May 20, 2015 version of SB 374 provided a bridge between the NEM1 and
NEM2 programs in the form of a temporary tariff to be applied in the event the cumulative
capacity of all net metering systems reached 235 megawatts prior to the final approval of
NEM2 tariffs. This approach was opposed by representatives of the largest competitors of the
solar industry.11 The final version of SB 374, which was expressly supported by TASC,
exchanged the temporary tariff transition mechanism described in earlier iterations of the bill
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determine that transition process is necessary.12 In the final version of SB 374, the Commission
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is charged not only with approving the NEM2 tariff, but with establishing the mechanism for
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transitioning between NEM1 and NEM2 in the event that the cumulative capacity of all net
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metering systems reaches 235 megawatts before the final approval of the NEM2 tariff. In the
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final version of SB 374 the Commission will make these assessments based on information
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filed first by the NVE Companies on July 31, 2015, along with the information it receives from
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TASCs proposal is inconsistent with the process and time table set forth in SB 374 for
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determining whether and how, in the event that the cumulative capacity of all net metering
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systems reaches 235 megawatts before the final approval of NEM2, to transition from NEM1
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to NEM2. TASC asks the Commission to require NEM1 to continue even after the 235
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Assembly Commerce and Labor, May 20, 2015. Written minutes of the hearing are not available from the
Legislative Counsel Bureau. Mr. Lyndon Rives remarks describing the industrys opposition to the temporary
tariff
transition
mechanism
begin
at
hour
3:17:00
at
the
following
link:
http://nvleg.granicus.com/MediaPlayer.php?view_id=14&clip_id=4959
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Subsection 1 of Section 4.5 provides that in lieu of the temporary tariff approach opposed and rejected by the
solar industry, the Commissions consideration of the process for transitioning from NEM1 to NEM2 will begin
with the filing on July 31, 2015 of the NEM2 tariff and a cost of service study. Subsection 2 of Section 4.5
describes the minimum terms of the NEM2 tariff. Subsection 3 of Section 4.5 describes the role of cost of service
analysis to be used in determining rates for service in the NEM2 tariff. Subsection 4 of Section 4.5 describes the
review that the Commission will undertake in approving, modifying or not approving the NEM2 tariff, and
provides that the Commissions review will be completed no later than December 31, 2015.
The relief requested by TASC is unnecessary, prohibited by SB 374, and inconsistent with
IV.
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TASC asserts that SB 374 provides that NEM1 will remain in effect and apply to all
new net metering applications, including net metering applications received after the 235
megawatt cap is reached. TASC argues that, in the absence of any new tariff, the applicable
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tariff is the existing NEM tariff that has been filed by the Companies and approved by the
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Commission.14 This argument is inconsistent with the plain language of SB 374, which
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defines the single situation under which NEM1 rules will become effective after the 235
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TASCs argument also is inconsistent with the plain language of the NEM1 tariffs.
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Those tariffs expressly provide that [t]his Rider will close when the cumulative generating
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capacity of Net Metering Systems operating in Nevada equals three percent of the total annual
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peak capacity of all Utilities in Nevada. As stated by TASC, SB 374 defines the existing 3
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percent net metering cap to be 235 megawatts.15 By their own terms, the NEM1 tariffs close
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when the Companies accept and approve applications from customer-generators for 235
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megawatts.
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the final version of SB 374. On May 25, 2015, TASC representative Robert Uithoven appeared
before the Assembly Committee on Commerce and Labor to support the ultimate version of SB
374, a consensus version to which TASC expressly agreed. On behalf of TASC, Mr. Uithoven
introduced the compromise legislation and stated unequivocally that the current net metering
program and tariff would apply only up to the 235 megawatt cap.
In a sense this amendment will one, define the existing 3 percent net
metering cap to be 235 MW. This 235 MW will be the maximum amount
of net metering permitted under the current net metering rules until
December 31st of this year, 2015. The amendment will also require that
the Public Utilities Commission of Nevada design a future net metering
tariff with wide latitude for the Commission to structure that new tariff.
And finally the amendment will require the Commission to finalize the
new tariff by the end of this year December 31, 2015. Should the
Commission not meet this deadline the existing net metering tariff will
remain in place until the Commission finalizes the new tariff.16
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Nevada Power Company
and Sierra Pacific Power Company
d/b/a NV Energy
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A few moments later Assemblyman Nelson asked Mr. Uithoven you said you know
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what you are agreeing to . . . if you bump up to that [235-MW limitation], youre going to live
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with that right?17 Mr. Uithoven stated that there was disagreement between the parties
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presenting the compromise version of SB 374 as to whether 235 megawatts represented three
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percent of load, and when the cap would be reached. Mr. Uithoven then stated, We are
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confident in our agreement, and we are here testifying in favor of the agreement we made with
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NV Energy. Finally, Mr. Uithoven agreed that, if a tariff were in place, then the limitation
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would be academic.18 The compromise that resulted in the final version of SB 374 did not
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eliminate the need to establish a plan for transitioning between NEM1 and NEM2: it left the
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V.
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NVE did not mislead the Legislature, the industry, or the public with respect to when
the 235 megawatt-cap would be reached. During the 2015 legislative session, the renewable
distributed generation industry and NVE disagreed about when the three percent cap on
installed net metering capacity, which had been in place since 2013, would be reached. Even
though the industry acknowledged that it was experiencing massive growth,20 and believed
the cap might be reached before December 31, 2015, the industry also stated that reaching the
limitation was unlikely.21 Notwithstanding this understanding, the industry agreed that no more
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than 235 megawatts of customer-generators would be served under NEM1, indicated that it
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NVE presented its estimate to the legislature based on both the then existing rules,
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which focused on installed capacity, as well as the growth rates applicable in 2014 and early
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2015. The concept of a cap based on reserved or pipeline capacity was not established until
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SB 374. The previous version of NRS 704.773 established a three percent net metering cap for
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operating projects, not reserved projects. Thus, NVE had systems in place to report operating
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capacity. NVE first attempted to calculate pipeline capacity for reserved projects during the
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week of April 27, 2015. As the discussion evolved through the session, NVE continued to
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refine the calculation procedure for pipeline projects in order to provide the best estimate
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possible. Throughout the entire process, NVE provided these numbers based on the best
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The 17.5 megawatt counting error that was discovered and reported to the industry by
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NVE on or about June 22, 2015 consisted entirely of pipeline projects. Over the last several
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months, the pipeline has been fluid and rapidly growing. NVE had robust reporting systems in
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The Petition references the information provided by NVE as part of Docket 14-06009.
There, NVE provided a projection based on installed capacity, not pipeline capacity, and the
plain language of that response denotes this fact. The same reporting systems were not in place
for pipeline capacity because this capacity had not previously been a part of any reporting
requirement for compliance. This new pipeline reporting process was being developed
concurrently with the discussions occurring around SB 374. It is consequential to note that
prior to the deliberations around SB 374, the projected number of projects and associated
energy was of virtually no consequence. The notion that NVE hid numbers that heretofore had
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The Petition also references the legislative testimony and an exhibit provided on May
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20, 2015. This exhibit provides an update to the forecast of operating capacity provided in
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Docket 14-06009. Again, the update revised the forecast of operating capacity using the then-
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current installation rate. This rate was lower than the installation rate forecasted in Docket 14-
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06009 operating capacity forecast. NVE considered this reasonable; in large part because
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industry leaders had indicated that it could not sell systems any faster.22 The actual operating
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capacity additions from January through April are denoted on that forecast.
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indicating that a reservation capacity could be hit in March 2016. The 6.8 megawatts per
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month growth rate assumption is stated. The assumption was based on historical information
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wrong. But NVE presented the assumptions used to create the forecast attached to the Petition
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a clear and transparent manner for Legislators and stakeholders. The Petition highlights the
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nature of the difference between the forecast growth and actual growth rates seen over the
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previous several weeks. The error that was later found plays a minor role in when the cap will
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be hit in comparison to this growth rate.23 The forecast assumption of May 20, 2015 was 6.8
megawatt per month, spelled out by NVE and part of the public record for TASC members to
consider. The point is that the 17.5 megawatt counting error is not material to the forecast
discussion. Given the current rate of applications being received by the Companies, with or
without the 17.5 megawatt of additional capacity, the industry will hit the 235 megawatt limit
well before that date the NEM2 tariff is required by statute to be put in place by the
Commission.
Finally, NVE has no control over the sales rates of the industry.24 The industry controls
the pace at which sales grow and, as it acknowledged during the 2015 Legislation session, has
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the option of plateauing and avoiding the cliff.25 Instead, the industry has rushed forward
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making sales at approximately 20 megawatt per month. Any assertion that NVE acted in a
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deceptive or misleading manner is short on the facts. The industry has actual knowledge of the
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current and future growth rate. That knowledge should have been a critical factor in deciding
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whether or not to support SB 374 and agree that no more than 235 megawatt of customer-
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generators would be served under NEM1 in light of the clearly stated assumption that NVE
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VI.
CONCLUSION
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The relief requested by TASC bypasses the procedure established in SB 374 pursuant
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to which the Commission will determine whether and how to transition from NEM1 rules to
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NEM2 rules. The relief requested by TASC is contrary to the plain meaning of the statute,
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Nevada Power and Sierra Pacifics NEM1 tariffs, and TASCs testimony before the 2015
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Nevada Legislature and public statements. The emergency petition filed by TASC on July 8,
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2015 is procedurally deficient. The emergency petition filed by TASC should be rejected.
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The difference between the industrys actual growth rate from May 1, 2015 on, and its historical growth rate of
6.8 MW of additions per month eclipses the 17.5 MW error in a few weeks
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The industry, which controls the level of sales and sales growth, called its recent growth massive.
http://nvleg.granicus.com/MediaPlayer.php?view_id=14&clip_id=4959 at approximately 3:18:30.
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Id. at approximately 3:33:00
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Respectfully submitted,
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Nevada Power Company
and Sierra Pacific Power Company
d/b/a NV Energy
/s/Elizabeth Elliot
Elizabeth Elliot
Associate General Counsel
Nevada Power Company
6100 Neil Road
Reno, NV 89511
775-834-5694
belliot@nvenergy.com
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ANSWER EXHIBIT A
CERTIFICATE OF SERVICE
CERTIFICATE OF SERVICE
I hereby certify that I have served the foregoing NEVADA POWER COMPANY D/B/A NV
COMMENTS in Docket No. 15-07021 upon the persons listed below by the following:
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Tammy Cordova
Public Utilities Comm. of Nevada
9075 West Diablo Drive Suite 250
Las Vegas, NV 89148
tcordova@puc.nv.gov
Eric Witkoski
Michael Saunders
Attorney Generals Office
Bureau of Consumer Protection
10791 W. Twain Ave., Ste. 100
Las Vegas, NV 89135-3022
bcpserv@ag.nv.gov
msaunders@ag.nv.gov
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