Solar & Battery Regulation & Incentive Programs
Origin
Rhode Island enacted legislation in 2006 requiring the state Public Utilities Commission (PUC) to establish standards for system reliability, energy efficiency and conservation procurement, including standards for energy supply diversification, distributed generation, demand response, and "prudent and reliable" energy efficiency and energy conservation measures.
Additional legislation enacted in June 2012 (H.B. 8233) requires utilities to support the installation of efficient combined heat and power (CHP) systems at commercial, industrial, institutional and municipal facilities. Each utility must specify in its annual efficiency program plan how it will do so. Proposed plans must be approved by the state's Energy Efficiency and Resource Management Council.
Electric Sales and Demand Reduction (and Natural Gas Sales Reduction)
The specific standards and guidelines pursuant to legislation must be reviewed at least once every three years. In late 2014, the PUC adopted the following required triennial targets for its rate-regulated electric and gas utilities for the period 2015-2017.
| Year | Electric Energy Savings (Relative to 2012 Baseline) | Gas Savings (Relative to 2012 Baseline) |
|---|---|---|
| 2015 | 2.50% (193,603 MWh) | 1.00% (376,915 MMBTU) |
| 2016 | 2.55% (197,475 MWh) | 1.05% (395,760 MMBTU) |
| 2017 | 2.60% (201,347 MWh) | 1.1% (414,606 MMBTU) |
| Year | Summer Peak Demand Reduction ( | Winter Peak Demand Reduction |
|---|---|---|
| 2015 | 27,268 kW (27.3 MW) | 27,268 kW (27.3 MW) |
| 2016 | 27,813 kW (27.8 MW) | 27,268 kW (27.3 MW) |
| 2017 | 27,268 kW (27.3 MW) | 27,268 kW (27.3 MW) |
Program Administrator Type
While the recommended standards and programs intended to meet the standard are initially vetted through the Rhode Island Energy Efficiency and Resource Management Council (EERMC), the seats of which are comprised of a representative range of energy efficiency stakeholders, the programs are administered by Rhode Island's affected utilities.
Cost Effectiveness and Program Evaluation
Rhode Island uses the Total Resource Cost test (TRC), one of the five "California tests" in the California Standard Practice Manual, as the primary test for evaluating the programs intended to meet the standard.
Utility Cost Recovery Provisions
Decoupling and Program Cost Recovery
Rhode Island Statute 39-2.1.2 requires each electric distribution company to include a surcharge per kilowatt-hour delivered to fund demand-side management programs, which are implemented by the electric distribution company. The electricity surcharge took effect January 1, 2008, and will remain in place through December 31, 2017. Similarly, each gas distribution company must include a surcharge per decatherm (Dth) delivered to fund demand-side management programs. The gas surcharge took effect January 1, 2007, and will remain in place through December 31, 2017. The PUC determines the surcharge levels, which are not specified by the statute, for electricity and gas delivery.
The Narragansett Electric Company (d/b/a National Grid), Rhode Island's largest electric and gas utility, has its electric and gas revenues decoupled from its sales.
Performance Incentive for Narragansett Electric Company (d/b/a National Grid)
In addition, National Grid receives performance incentives for achievement (and exceedance) of its electric and gas efficiency targets. The utility can earn incentives starting at 75% savings target achievement, and can be earned on a sliding scale basis up to 125% for both gas and electric programs. For annual program achievement levels ranging from 75% to 100% of target, the (relatively complex) formulas used to determine National Grid's incentive can be stated as:
Incentive = Total Program Spending * (15% x (The level of achieved savings) - 10%)
For annual program achievement levels from >100% and 125%, the formula can be stated as:
Incentive = Total Program Spending * (5% x (The level of achieved savings))
| Utility Type | Max After-Tax Electric Incentive |
Max After-Tax Gas Incentive |
|---|---|---|
| 75% (Min) | 1.25% | 1.25% |
| 80% | 2% | 2% |
| 85% | 2.75% | 2.75% |
| 90% | 3.50% | 3.50% |
| 95% | 4.25% | 4.25% |
| 100% | 5% | 5% |
| 105% | 5.25% | 5.25% |
| 110% | 5.50% | 5.50% |
| 115% | 5.75% | 5.75% |
| 120% | 6% | 6% |
| 125% (Max) | 6.25% | 6.25% |
| Utility Type | Max Electric Energy Incentive Component (70% of Total) |
Max Electric Demand Incentive Component (30% of Total) |
|---|---|---|
| 75% (Min) | 0.875% | 0.375% |
| 80% | 1.40% | 0.6% |
| 85% | 1.925% | 0.825% |
| 90% | 2.450% | 1.05% |
| 95% | 2.975% | 1.275% |
| 100% | 3.5% | 1.5% |
| 105% | 3.675% | 1.575% |
| 110% | 3.85% | 1.65% |
| 115% | 4.025% | 1.725% |
| 120% | 4.2% | 1.8% |
| 125% (Max) | 4.375% | 1.875% |