Value and Cost of Distributed Generation

1. Value and Cost of Distributed Generation 2nd ACC Workshop June 20, 2014 The SSVEC Perspective David Bane, Key Account Manager dbane@ssvec.com

2. Major Differences • SSVEC doesn’t own generation assets • Power Purchasing Contract (Partial Requirements) • Large monthly fixed cost element • 46% of Bill prior to November 2013 • 51% after November 2013 rate change • Low Demand charge (no time of day differences) • $4.38 per kW (Average) prior to November 2013 • $4.52 per kW (Average) after November 2013 rate change • Fixed kWh charge (no time of day differences) • Baseline kWh charge $0.02975 (80% of needs) • Average kWh Cost is $0.0307 (period ending 5/31/14)

3. Fixed Costs collected in a kWh charge (variable) • A portion of our Fixed Costs and all Margins are recovered from the sale of each kWh • For SSVEC Rate R this is $0.047404 per kWh

4. Estimated Impact in 2013 • There was 6,926kW of PV installed as of 12/31/13 • Estimated production of = 12,693,019 kWh • There were 2,956,968 of kWh Sales to PV Customers to meet additional needs (as a group not a Net Zero Customer) The following chart shows the impact of lost kWh sales

5. Impact of 12,693,019 kWh Reduction in Sales

6. Determining the per kW Loss • Estimated Loss of Fixed Cost and Margins = $465,786 • Loss Divided by 1,252 PV systems = $31 per Month • Full recovery of losses based on system size would need a $5.04 per kW Surcharge • Average charge would be $28.25 per month • Not likely to be accepted by our Members or the ACC • Although the ACC approved a $0.70 per kW charge for APS • SSVEC’s cost to serve a meter is between $39.00 to $40.00 per month.

7. Where is the problem? • Is it really NET Metering? Or • An historic rate design philosophy that needs to be revised so that Net Metering is not an issue where: • Fixed Costs are covered in a Fixed Charge • De-coupled Rates where the kWh is a pass through • Non-solar Customers are NOT supporting Solar Customers

8. Thank you • Questions?