CPAZ Podcast Episode 2 – New Utility Business Models

Episode 2


Roger Williams- Clean Power Arizona episode number 2 [jazz music] Hey Dillon. How are you?

Dillon Holmes- Great. Fantastic.

RW- This is Roger Williams. I’m joined by my good friend Dillon Holmes.

DH- Hello everybody. Welcome to episode two.

RW- I hope you enjoyed episode number one. We had a lot of fun making that. Listening to it reminds me of making it. But, being there, I really didn’t remember as well. Anyway, I hope everybody is having a great winter. Here in Arizona, it has gotten quite frigid. It’s cold. I had a winter ski hat and gloves on this morning for my dog walk. It’s interesting how, here in Arizona, the cold stays here even thought it’s not humid.

DH- It’s pretty humid today. Last I checked, it was like fifty percent. Which is not generally a stat that I look up, but it popped into my face. The summer is not really that humid.

RW- Moving on. Everybody wants to hear about Clean Power Arizona issues. Today, we’ve actually got a really good one. The Arizona Corporation Commission [ACC], the commissioner…

DH- One of the five commissioners, Bob Burns.

RW- Bob Burns has issued a docket. He issued this out of the blue?

DH- Yes. He opened a new docket.

RW- This is docket 13-0375.

DH- That’s what you want to look up.

RW- A little insider knowledge here.

DH- If you’re in Arizona, you type in edocket into Goggle, it will go right to the ACC’s e-docket. Then type in at the search bar, the 13-0375 and it will bring you right to that docket.

RW- Or, you could just search it from this blog post from this podcast will come up and you will have a link straight to it. On this docket, he has essentially calling for knowledge on a bunch of topics having to deal with renewable and sustainable energy in Arizona and how it’s going to affect things. Specifically, we’re going to get into the six items that he has outlined. What he’s doing this for, they’re going to have some workshops, maybe starting in February 2014. The want people to issue comments based on their knowledge by January 17 of 2014. Just over a month away. If you feel you have something intelligent and knowledgeable to say, submit this to the ACC. What is the best way to go about submitting a comment?

DH- On the Net-Metering one, you could email in a comment and they are posting it on the docket. Officially, that is not the way it is done or an acceptable way. Usually, you have to submit thirteen copies to the ACC or mail it in. Then you have to send that to everybody that is on the Service List. You can right a letter, which I have, to say I want on the Service List. So now, when anybody sends something, they have to also send one to me. Which I wish would come in by email, but it tends to come in by postal service. Which is a terrible waste.

RW- In our blog post that we come up with for this, we will come up with some more information on how to do these things.

DH- Send them to me, I’ll get them submitted.

RW- You can trust us.

DH- This is what I do.

RW- In these workshops, what they want to do is explore what each of these six items, which we are going to go into detail on. They do have some bullet points and I am just going to quickly go over them. Then we can get into these actual topics. What they want to explore is:
What customer classes are going to be potentially affected and when. By classes they don’t mean grade school, they mean income level.

DH- They mean type of customer: residential, small commercial, large commercial.

RW- Oh, not like rich versus poor people

DH- No, that has been the whole topic of conversation with net-metering stuff, but technically they just mean, is a certain technology going to affect one customer class like residential.

RW- Okay.
Impact on the grid. So that is affecting APS’s grid and SRP is also involved in that.
The cost and benefits of the technology.
Any business or regulatory impacts. And finally, I find this one interesting,
Impact on other regulated industries. And they specifically point out natural gas, water, telecom and cable. Which we both thought a couple of those were pretty interesting. Maybe we’ll get into some detail on that seeing how much time we have. I think, lets dive into the six topics which I will list out real quick and we can get into the details:
#1 Distributed supply and storage
#2 Energy efficiency
#3 Utility scale storage technology
#4 Meter technology and services
#5 Transmission and distribution automation
#6 Micro grids

DH- Before we go into the six topics, today I had this meeting with commissioner Burns Policy Adviser, Angela, if you’re listening, hello. She said that essentially the purpose of this docket was to educate, bring the commissioners up to speed on something they are not necessarily experts on already. They wouldn’t be expected to be. The purpose of the net-metering docket was to rule on something. This one isn’t necessarily to rule on, it could lead to opening up other dockets that would cover policy issues. This one is to get feedback and comments on these six areas and their effects that you listed out, to start with. Then to have a couple of workshops. The first is going to cover one through three. The second will cover four through six. Then have experts come in to talk about the same things they’ve been writing about. But, with a Q and A, something that is more back and forth.

RW- Okay. About these workshops, how does this work? We’re going to show up and we’re going to have some arts and crafts and build some stuff?

DH- It’s possible. We don’t really know.

RW- Have you ever gone to a workshop held by the ACC before?

DH- I don’t know that I’ve been to one that is going to be like this. Because, this is strictly educational without necessarily a goal of something they’ll be acting on something.

RW-This is kind of a shift for the ACC, right? We haven’t really seen them behave like this before.

DH- They have done a couple of others this year, like net-metering was originally an inquiry into what could happen.

RW- Then APS came in with the power.

DH- And that turned into a docket that required a ruling. Deregulation was like that. Deregulation was an inquiry trying to get educated on the pros and cons and toy with it and see if it was something worth implementing. This is another one like that. It could lead to something. I’d love for it to.

RW- Let’s go through them and maybe look at the potential outcomes of the workshops and how it might fit with Clean Power Arizona. The first one, Distributed Supply and Storage, I’ve put in some notes here real quick, this is dealing with residential and commercial solar power and potential storage like batteries at the home or the business.

DH- It’s pretty much going deeper into what we’ve already got and adding the storage to it. All distributed supply is rooftop solar as an example or if somebody had a wind turbine in their backyard.

RW- I’m curious. What else do they need to understand about this technology.

DH- Well, all of these bullet points, what more of an impact will it have on other customer classes, impact in the grid, the cost benefits. There hasn’t been an excellent comprehensive breakdown of this that has been talked about in open, in front of everybody in the ACC. Even looking at it from last year to this year, it’s quite different.

RW- It seems a little shocking to me that a regulatory board like the ACC, here at the final weeks of 2013, has never had an open discussion about solar panels on a house and on a business.

DH- They have. What I’m saying is that discussion changes every year. It’s not a discussion you should have once and then it goes away. With the technology being adopted more and more quickly and eventually we’ll have storage, for example, it needs to be looked at again and again and again. It’s due to be talked about.

RW- What do you see as potential issues that could come up under this topic, in relation to the things that we’re looking at.

DH- Imagine if everyone went solar tomorrow and everyone did it with storage.

RW- That would be nice for companies like Cambio Energy.

DH- It would be nice for everyone, except for whoever has to own the grid and be expected to make money off it based on the current business model. Remember, this whole thing is coming back to, what is the future business model of the utility. Adding solar and storage, that is a very controversial issue for them, for our utilities.

RW- What type of experts should be paying attention to this and should be weighing in?

DH- Any level of expert that could discuss how it could physically work. Like, what is the benefit of having a battery there. I don’t know if they’re going to want to get really nitty gritty in these two workshops, or if this will lead to another workshop. Kind of like with net-metering, we talked about the surface issues and that led into the really specific cost shift, which in my opinion has not been looked at properly. There will also be another set of workshops for that, by the way.

RW- Is that something that should come up in these or should that all be held off?

DH- I think a portion of that should definitely come up in these. Maybe not in that we spend three days in net-metering. But, in item number one here should have a discussion on net-metering and all of its affects.

RW- I think another thing to continue to point out is this technology is employing a significant number of people in Arizona right now.

DH- Yes, but they don’t hear about that in this docket, I don’t think. They are more concerned with the effect on the grid and the reliability on the grid. And, who’s covering the cost of the grid than they are giving people jobs. The ACC job isn’t to protect employed people. It’s to protect rate payers.

RW- This sound then, like it’s exactly the conversation about net-metering and its effect on the grid almost to a tee. If you had the ability to create a dream team of experts, you could bring in anybody from the country or the world, do you have a list a names that you could pluck out of a hat right now.

DH- I won’t do a list of names yet, though I’m working on it. But, it would include people that have been involved with these policies in states that have already implemented this.

RW- Which states have done this?

DH- California, who’s worlds above all of us. Colorado has been doing some crazy stuff. There are a ton of states that have done this and we can look at them as experts instead of reinventing the wheel. They would be some people. But, are they going to be interested in coming out of their state to come work with little Arizona. That is why, whether they do or not, we need to be going around and making ourselves experts. By talking with them, doing podcasts with them, if you’re listening, be expecting those phone calls and emails.

RW- Absolutely, we’ll be reaching out to all of you. We’ll try not to spam your inbox, so just be ready. On this topic, I just wanted to bring up a side story that came up a few weeks ago, there was a research paper done by an Australian research project. They did a study of rooftop solar and its efficiency and they had broken it down into different segments. One of the segments was from June to August. They found that at peak hours, the most efficient direction of the panels was… I won’t get specific yet. This research report came out and in a number of technology blogs like..

DH- Let’s give them the punchline. It was about the panels facing west.

RW- West facing panels are more efficient than south facing solar panels. But an elementary education tells me, no, that can’t be right. Because, if I’m in the northern hemisphere south is the best and if I’m in the southern hemisphere, north would be the best. Always. That is where the sun is the majority of the time.

DH- The headline that was chosen was not correct.

RW- The information was cherry picked. Obviously, it was a link bait situation. That’s how all these websites operate. These writers get paid, this is a whole other issue. I’ll touch on it briefly. People don’t understand. A lot of online journalism, a journalist is paid by how much traffic they’re generating to their stories. Their employers can see all this information and journalist, rather than supplying good and useful information is more incentivized to make an outrageous claim or headline just to get you to click on it. I’m sure you’ve run into this. So, I saw this and I forwarded it over to you, Dillon.

DH- But the idea then would be to clarify it and say, “hey-gotcha ya. here’s the actual details”. It didn’t really.

RW- Nobody really reads the article, dude.

DH- I read a little bit. You asked me to blog about it. I read it and was, X

RW- There is no story here.

DH- The claim was, the west facing panels were better which is simply not true. South facing panels produce the most energy. West facing power produced tends to be during peak times. It completely depends on how you use power and what your tariff is, if you’re on a peak plan. On one of APS’ time of use plans, you’ve got on peak and off peak, turning your solar panels slightly to the west will help. All the way to the west, it wouldn’t based on their current plans. I have a spreadsheet that will take everything produced by the panels and then quantify it based on the hours that it’s produced and the days of the year. You can calculate exactly what the perfect angle is on that rate plan. But still, it’s like fifteen degrees west of south.

RW- You should be on the flat rate plan if you have solar, right?

DH- It depends on how much your solar is offsetting though. Your solar is offsetting everything, so you should be on the flat rate plan. But other people that are only at a third or a half, maybe two-thirds, it depends on how they really use power. So the leftover power that solar is not producing it matters whether that would have been during on peak or off peak.

RW – Bottom line, you need to make sure that your not just getting solar installed, your solar installer should not only be installing your solar but they should be helping you understand which plan you should be adopting. So that whole west facing debacle, debunked.

DH- Get a proper look at the numbers and how you use power.

RW- Number two on the docket is Energy Efficiency. The first thing we brought up was monitoring services.

DH- I love energy efficiency. It’s boring.

RW- So how does this fit in to the concepts of the workshops?

DH- They want to learn how customers using like energy efficiency, monitoring technology and what not, and the use of plug-in electric vehicles. That response would have an effect on the whole business model. Energy monitoring software is tough because most people want to set it and forget it. I see it a lot with solar monitoring. People are super into for like a month or two then they want to rely on me to tell them if something is wrong.

RW- I get an email at the end of the month that tells me that is was really cloudy last month.. So, I mean energy efficiency is it something that really needs to be covered at this level?

DH- If it’s going to be covered, it should be on this level. This is a level where we’ve taken six topics and we’re going to put it into two workshops. We could just surface chat about them and if we get really deep if they’re worth taking it to the next level. So if anytime is the time to talk about it, it would be at this set of workshops, I think.

RW- Monitoring services, we have things like the Nest Thermometer that supposedly learns when you want it to be hotter or cold. EcoBee falls into that a little bit.

DH- Because energy efficiency technically hurts the utility, because people buy less power in some cases there is decoupling where even if the utility is more efficient, and sells less power, they could recoup that revenue through another means. It could be more of a look as to how the effect is going to have on the utility. I will follow up with them and see where they are going with this. I think they’re making in general in order to get whatever comments they can get to fish in.

RW- Some other things that would fit into this would be if you have an electric car, you could be using that as a battery.

DH- Right. You could charge your car at night and use that battery as a power source for your home when power is most expensive. If everybody did that tomorrow, what effect would that have on the grid?

RW- On a smaller scale, new windows, more insulation…

DH- Right, which also definitely effects the grid. When a grid is installed, they have a projections of how much power is needed and how that investment is going to pay off

RW- Interesting. And the next is Utility Scale Storage Technology and this seems like it’s one of the most exciting topics, I think, on here. This is where we’re talking about batteries and fuel cells.

DH- They have left it vague for a reason. Utility scale doesn’t necessarily mean utility owned. Virtual net-metering or community solar is where there could be a large solar system installed off site, maybe a mile or ten or twenty miles away. And you can own a share of that system just like you own solar on your own house. It would then be net-metered. The very same as if that system was on your house, but it’s somewhere else. A lot of homes can’t have solar because of shading or roof orientation or funky rooftops.

RW- Or maybe you live in a condo.

DH- Yes, a condo or renter. You don’t own your home but you could still own your own power. This is like owning one utility even though you’re renting the structure that it’s being applied to. So, if you move somewhere else, the solar that you own off of that large system, could go with you.

RW- Right now, is this allowed in Arizona?

DH- No.

RW- So specifically, I can’t set up a bunch of solar panels down the street…

DH- And apply it to your bill, you specifically can not do that.

RW- Interesting. So that applies to number one. Jumping back to number three, is virtual net-metering actually in use right now?

DH- Yes. There are a couple of state, California and Colorado have implemented solar gardens. There are places where this is happening. I think they’re in pilot programs. There is a cap on how much they can do this. If you unleashed a program like this, it would catch on more exponentially and how solar has already been here. You have to be careful of that.

RW- Jumping back to number three, utility storage scale technology. They are using the word utility here…

DH- And storage. What impact are those huge solar systems with battery going to have on the existing utility model. If the utilities own them I don’t think it would have any impact, really. It would help them.

RW- It would make their system more efficient.

DH- Where it becomes a controversial issue is if the people own that power.

RW- Right now, if I wanted to purchase a fuel cell that wasn’t on my property, that was tied into the grid…

DH- You would have to do something like invest and get a return on it. You wouldn’t be able to apply the production of that fuel cell to another one of your meters, like on your home or your office.

RW- But if I had my fuel cell on my property, I could tie that into my grid?

DH- Yes, that would work the same as solar.

RW- This is dealing with remote storage really.

DH- Right. Or, if you’re one business, let’s take a restaurant chain for example, usually you can’t put solar on restaurants because there are so many exhaust fans and stuff on the roof. You usually don’t put it on parking lots, because that blocks the site for the retail. Which is why we see so many open huge parking lots, that could be covered by solar. What they could do is take a plot of land outside of town and built a huge solar system on it. And then, he had the ability to take that production and apply it to all of his restaurants. Right now, you can’t do that. This would allow him to apply it to all of his different restaurants. And, if he had storage, it serves a different purpose. That would be getting into number six, which is micro grids, in my opinion.

RW- Number four is Meter Technology and Services. Under this we have things like smart meters. What’s your take on this one?

DH- I don’t see how smart meters is something that is going to disrupt the utility business at all. But, I’m not super in tune on smart meters. I’ll enjoy hearing from others about smart meters. In my opinion, isn’t that something the utilities should be doing to make things better for their customers? Then if smart meters are eventually used to control peoples homes, isn’t that just something provided by a utility to allow them to build less power plants and to shift demand.

RW- Smart meters is the promise that we don’t have to have the APS guy come into my backyard.

DH- He already doesn’t.

RW- One thing I wanted to bring up, I hear I should be unplugging my television when I’m not using it.

DH- That is energy efficiency. I think that is the least of our worries. That’s like saying leaving the sink on for an extra second is going to be the thing that ends Arizona’s water supply. When really it’s coal plants that need water for cooling. Phantom power accounts for very little. Doing that would have more of a detriment mental impact, having to go around unplugging everything and flipping everything off every time you’re done using it. It accounts for such a small amount of power that I personally have trouble advocating for reacting to phantom power.

RW- Number five,Transmission and Distribution Automation. I have a big question mark on this one. Is this really a disrupter or is this something that APS should just be doing?

DH- I think this is just a normal technology advancement of the grid. It has nothing to do with generation coming from somewhere else. Therefore, the utility revenues decrees and now we have like a business model problem. I’ll look into it further, I haven’t given it much attention yet.

RW- Maybe there are some experts out there that can tell us otherwise.

DH- This seems like an everyday thing that every grid can do to make their grid better.

RW- It’s not like something I can go out and purchase and have any effect on.

DH- Correct, you can not.

RW- The last one is Micro Grids, which you eluded to a little bit. This is where we start creating, just like it says, smaller grids for different entities. Like, I live in a neighborhood and we could build a grid just for our neighborhood.

DH- It really takes the centralized approach and puts it into lots of different power generation spots. So instead of having one point of failure, the power plant, you would want a lot of points of failure. People think that introducing bells and whistles leads to more potential failures. But, with power that’s a good thing. It’s like micro-inverters. You have micro-inverters on your house on your solar panels. Instead of one centralized inverter that could fail, and your whole system is out. You could have micro-inverters. If one micro-inverter were to fail, then everything else is still producing. You have a micro micro grid. Now take that to one level larger. Let’s say this whole neighborhood had all of their systems pooled together with storage and they were actually able to disconnect from the grid. You could have micro grid’s system, where if one system goes out, the other systems would be still working.

RW- It sounds like the internet.

DH- It does sound like the internet. Looking back, I wish we would have gone in that direction.

RW- Is that happening anywhere?

DH- Micro grids are happening also in California. Some universities are creating the whole micro grid for the university. I don’t know if they include storage or not. I need to look into that. But, it is happening. Look at ASU. They have tons of solar and they could add storage to that and create a micro grid. It’s really just taking the generation and storage and taking it to many many points. Then you could reduce stress from the power plant and essentially reduce alliance on the power plant.

RW- Obviously, that one has the most disruption capabilities.

DH- It depends on who owns the generation. If APS went in and installed a ton of 1 megawatt solar systems all over town, they could integrate that into their grid and that really wouldn’t hurt them. That would actually benefit the grid and allow them to build less power plants.

RW- Who’s going to allow APS to build a ton of solar plants around?

DH- If they own the land, which they don’t… So the question is, if consumers own it would it be disruptive? I’m going to say yes.

RW- Interesting. So, there are your six points on the docket. We need knowledge and we need experts and intelligent people to write up some comments. We’re calling to university researchers, industry professionals…

DH- Anybody who is in on this. Some people just read so much that they become experts. Anybody who is good on communicating these things to a group of people, how they work, what potential impacts they have. I don’t think we need to get into these two workshops the crazy electrical engineering. What impacts it will have. I think we need to look at big picture impacts on the grid, and how it’s going to effect people and utilities.

RW- That’s pretty short and sweet. Clean Power Arizona, Dillon Holmes and Roger Williams. If you want to send something, Dillon can help you with that.
Do we want to take a couple of seconds and talk about what Clean Power Arizona is?

DH- Clean Power Arizona right now, we are in a research phase. I’ve alluded to all these other states that are doing these things, so now we need to go and talk to these people and ask the questions. I don’t want to reinvent the wheel. If they have already done it then we can do it here. I recently had an awesome conversation with someone in New Hampshire. People know what they are doing in the other states, we tend to not here. So we can talk to them in order to gain knowledge. I’m using these people essentially to create a roadmap.

RW- Is this a inclusive operation or are you looking for more people.

DH- I am open to ideas. We are here for you to be involved. I want people that are rallying and want to be the crazy people on TV as energy advocates. I’m looking for people that want to get involved, want to write, want to contribute knowledge or receive knowledge in order to spread knowledge.

RW- Are you looking for any specific backgrounds right now?

DH- No

RW- Just somebody who has energy and likes to be intelligent, and write, and share.
Dillon Holmes

DH- Roger Williams.
[jazz music]


search 13-0375: Filing date 12/5/2013 Filed by Bob Burns