Good morning, everyone. Sorry for the late delay. We are going to get started just a little bit late.
We do have another member coming in in just a little bit, and I am not prepared at the moment.
Here we are. We are the Sustainability Framework Advisory Committee.
It is Wednesday, August 31st, and it is 913, and we do have a quorum.
It has come to my attention that we have our first speaker, someone who has requested to speak,
and it is the Chair's discretion, and it is okay with me, but I want to make sure that it is okay with the members here as well.
And I do want to acknowledge that we have Mr. Stevens via webcam today before we get started.
Do we want to go ahead and have our speaker come up?
Scott Hazard, would you like to come on up? Yeah, come on up to the front. And we actually do not use the microphone there.
It is the microphones hanging from the ceiling. Thank you.
I am sorry? The white camera is working. We are being broadcasted as well. Just so you know, the white camera is working.
Oh, okay. I have got it. Thank you. Thank you for having me here today.
Seeing how I am speaking before the presentation, I will just go over a few things that you are going to hear in the presentation.
First of all, I would like to talk to you as two different people this morning.
First, as a homeowner who has invested in solar for his house, and secondly, as a professional who helps people go solar.
First, as a homeowner who has invested in his house, it is a little bit shocking to see my city, the same city that has worked so hard over the past decade,
to convince people, homeowners, to go solar and to do other sustainable energy efforts.
The same city that has given away literally millions of dollars in cash incentives to the same homeowners who they have been trying to convince to go solar.
Now making efforts that will knowingly hurt those who have converted to solar.
When we went solar at my house, our average utility bill for the 12 months previous was $130.
To that end, we financed a system for 20 years to cover our electrical usage, and the payment on that system is $133.
If we kill that metering, we will add about $50 to $60 to my personal electric bill every month on top of what I am already paying for my solar system,
which was recommended to me basically by the city of Denton.
I would also like to say that this isn't just me, this is every solar customer out there.
And that in Denton, we can't just switch to Green Mountain or somebody who is another utility company who is solar friendly.
We are locked into Denton Municipal Electric. We have no options. So this is not good.
I hope I am not the only one in this room who sees the city government assisting people in buying PV systems,
then enacting laws to make PV systems less efficient and indeed more expensive is plain wrong and is the opposite of sustainability.
Now, putting on my solar industry hat, let me clear up a few things that you are going to hear this morning from this presentation.
First of all, anybody in this room with a credit score of 640 or more, which is a very low bar,
can have a PV solar system installed on their house along the lines of what I did with a payment based on what you are already paying.
It ends up being about the same thing for most people unless your house is covered up with trees or other things or unless you are a very high electricity user.
So these solar systems are not for the wealthy elite. They do not have high upfront costs.
95% probably to 97% of my customers have purchased their solar system in this way and not a penny changes hands between the solar installer and the customer or between me and the customer.
It really is a matter of installing it and going from paying one to paying the other.
More than half of my customers are retirement age people or people who are close to retirement age who are setting themselves up for retirement by installing solar
and leveling out some of the billing peaks that you see from electrical usage throughout the year.
The Inflation Reduction Act that was signed a few weeks ago has additional solar centers for Americans, which it does. It bumps everybody up to 30%.
Regarding low income people and helping low income people, there is another 20% incentive for low income people in the Inflation Reduction Act.
There are different classes apparently of low income households or low income neighborhoods and I'll be honest with you, I have yet to do my research on that.
But there is another tier that bumps you up from a 30% to a 40% incentive and then yet another tier that bumps you up to a 50% incentive for people who have problems or income situations that might would prevent them.
But really, as I said before, if you can afford your current electric bill and if you have a credit score of 640 or more, you can have solar installed on your house that will cover your needs.
Please allow me to make some suggestions to you that might make up some of DME's shortfalls in what they're going to propose to you today.
Number one, create a post-solar account for customers. Many utilities that I work with do this throughout the state of Texas.
What this is, is when you go solar, after you're connected, now you have instead of a 15 or 20 dollar connection fee to the electric company, you have a 30 dollar connection fee to the electric company.
Some even increase the price you pay per kilowatt hour after you've gone solar.
If you use power above and beyond what you generate, that's billed at a little bit higher cost to help, again, make up some of the costs that the utility company has in administering everybody, including solar people.
Number two, the city of Denton, at the end of the month, when they compare my bill to what I have sent them and bill me for the net, that's called net metering, that's what they're trying to kill.
The city of Denton very generously pays me the wholesale rate for anything that I've produced over the month that is in excess of 100% of my usage.
They're the only utility company out there that does this that I know of. We don't need to be paying people back. Solar systems are designed to not send power back to the power company.
Even if you're going to pay me for it, you're paying me wholesale rates for it, it's still a losing proposition for me as a homeowner to send the city power back at the end of the month to have a credit because I'm paying more through the purchase of my solar system for those kilowatt hours than the city is giving me.
So to that end, we designed solar systems to achieve somewhere between an 80 and 100% offset.
Rebates. I asked for the rebates. I'll tell you. Yes ma'am.
I'm just going to say, we're almost out of time, so.
60 seconds.
Rebates from the industry side create everybody wanting to go solar all at once.
I'm sure from DME's perspective, rebates just your work stack goes from here to here in a day's time.
Rebates do have value to the customers. DME says their average rebate paid is $5,600.
I think that if we're going to keep rebates at the council, and you guys are wanting to recommend that we keep rebates, make it a flat fee.
Make it a flat $4,000 for everybody.
That'll give you almost twice the coverage that we're getting now with the rebates.
And $4,000 is enough money to motivate people to go solar.
The benefits to DME from my suggestions. Increased revenue through the post-solar program that I have recommended.
Increased revenue by not paying for excess generation.
Continued homeowner interest in solar, which helps us all. Which helps the Texas grid. It helps everybody.
And savings by getting free power from the spring months.
I've emailed you all a copy of my presentation, and I'll be happy to supply it to you guys.
There are some graphs here, and you can see, and it's only common sense.
In the spring months, we don't run our HVAC, yet we have this solar system on our roof that's designed to cover us in the summertime.
So in the spring, we're giving power back to DME.
And if they stop paying for that over generation, every household that has solar is going to give them a fair amount of power back over these three to four spring months.
That they're not going to pay for.
So that is yet another way that DME can recoup some of this money that they're talking about.
That's really all I've got to say. In conclusion, I'd like to say that there are a lot of ways to reduce upward pressure on rates.
Nobody's mentioned $4 an hour gas, or $4 a gallon gas, or any of the costs for everything are going up.
It's not just the solar companies, and it's not just the solar homeowners.
And I urge you to not let this happen to those people who you've convinced over the past decade to convert to solar.
Thank you.
Thank you, Mr. Hathaway. We appreciate your comments today.
All right, so we will move right along to our first item for individual consideration.
Receive a report, hold a discussion, and give staff direction regarding proposed update to the Green Sense Incentive Program and rates related to distributed generation from renewable sources interconnected within Denton Municipal Electric Service territory.
So Madam Chair, members of the PAB, members of the committee, my name is Tony Puendum, the General Manager for DME.
First of all, I just want to acknowledge we have a number of DME staff members here to try to make sure that we respond to any questions that you have.
We have Terry Nolte, who's our Assistant General Manager.
He's over our power supply.
Bill Sheppard, who's over our business services, will actually be doing a presentation.
We also have Elizabeth Ruiz, who's a long-term employee of DME and has been very involved with the Green Sense Program.
The first thing I want to mention is that we have ample time here.
We've certainly given you ample time today.
This is the only topic that you have.
Certainly appreciate you coming in on a special call meeting.
I was mentioning to the Chair that any change that we make, certainly I think at this point, certainly with the rebate,
would likely be next fiscal year, so it wouldn't be effective October of this particular year, just simply because of timing.
We still need to go to the PAB, get their recommendation, and then go to the Council for final direction.
If there is a change to the DGR, the distributed generation rate, likely we'd be looking at a January timeframe to make those changes,
again, pending the recommendations of this committee, the PAB, and then ultimately final direction of the Council.
So my message today is that we have time to continue to have discussions with you.
The other item that I'll mention is I know that there's a lot of different topics that may come up today,
and we're going to try to keep this to just the green sense issue.
I will tell you that we are planning to bring back to this committee an update to what is called the Den Renewable Resource Plan.
You may be familiar with that plan, but that sets the goal for VME to be 100% renewable, which, as a matter of fact, we accomplished in '21,
and Bill will talk to you a little bit about that some more.
There's also the topic of demand response, and that is a hot topic across the state of Texas and various utilities.
We are working on a program that will address that, and ultimately once we have that program sometime after the first of the year,
we will bring that back to you as well for discussion with you.
And then finally, just understand that there's a lot of issues going on in the electric market, as you can imagine,
not just as a result of Winter Storm URI, but a number of other issues.
We're continuously looking at those.
I will tell you that in the last now six years, DME has not raised rates. As a matter of fact, we've actually decreased rates within that timeframe.
Currently, if you look at our comparable utilities, both in the public sector and also in the private sector,
we have some of the lowest, if not the lowest, residential rates out there,
and that benefits all 61,000+ customers that we have in our utility system.
So with that, I just wanted to open that up. With that, I will go ahead and ask Bill Shepard to come up here and go through the presentation.
We would ask if you could hold your question, but certainly if there's something that's pressing, please just let Bill know and he'll go ahead and try to address your question.
If not, we'll wait until the end of the presentation.
Thank you, Tony. I'm going to get my screen up and then we'll get started here. Shift B, right?
Yes.
Can I take a moment to check in with Mr. Stevens to make sure he's good, and when the presentation's up, then you'll see it.
Mr. Stevens, you shouldn't see the presentation coming.
Okay, thank you.
There it is.
All right, good morning, Madam Chair, committee members. I'm Bill Shepard. I'm the executive manager of business services for DME.
I've never been in front of this body before, so thank you for having us, and it's nice to meet you. It's a pleasure talking to you today.
So today we're going to talk about our energy efficiency incentives, our green sense program, our solar rebates, and we're going to discuss some options with you.
And I'm going to have Michael Gagne come up a little bit later and talk about some more specifics on the green sense programs that his group oversees.
But before we get started, I did want to mention that as of 2021, DME met really an unparalleled milestone. And as of 2021, everything that DME buys to feed its load and then is 100% renewable energy.
So I think that's a huge celebration that we should all be proud of.
So our energy efficiency incentives, this is a whole list of them. I'm not going to go one for one, but we budget at a level of $500,000 to support these programs.
As you can see, most of them involve the building envelope, and there's a couple other ones that involve AC systems, too, in commercial.
Some of our stats over the last 12 years, we've issued 5,700 rebates for those program categories that I just showed you to the tune of about $2.1 million that we spent on those rebates.
So it's about $375 per measure. And through those measures, our customers have been able to reduce their usage well over 41 million kilowatt hours.
So you might ask yourself, what does that mean? What does that mean to reduce that much? Well, it's equivalent to about 3,400 homes, annual usage.
It's also equivalent to taking about 22,500 metric tons of CO2 off the system.
So really proud of those stats, and we'll hopefully continue to see those. But remember, as of 2021, DME is 100% renewable. So those are carbon-free, 100% renewable offsets.
So any reductions that these programs see are reductions of CO2 through across other industries that may be impacting the city.
Oh, before I go this way, let me go back. So just remember those impacts as we get into the solar part of the presentation because I'm going to make a point there.
But again, remember the amount we spent here and how much we've got for that expenditure.
All right. So our solar rebates are also budgeted at a rate of $500,000 a year. And that rebate varies whether it's a standalone PV system or a system that's coupled with batteries.
It also varies for the depending on the size of the system. We've made some tweaks across the years based on customer feedback just to try to extend the dollars that we have available across more systems.
So over that same 12 years and into this year, we've issued 605 rebates for solar systems, about $3.4 million we've spent on those rebates for an average of about $5,700 a system.
So as of right now, we have 854 systems connected to the DME grid and those systems produce about 7,200 kW. You might want to ask what that means. That's about 11,500,000 kilowatt hours those systems produce.
And that's equivalent to about 957 homes or taking 6,200 metric tons of CO2 off the system. So again, just reflecting back to the energy efficiency programs, a little bit bigger bang for the buck on incentivizing energy efficiency measures versus the solar.
Yes, sir. Just a clarification, please. On the 854 systems, you say 820 are residential. What are the others? Commercial. Okay. Yes, businesses.
All right, so on the bang for the buck, so not only is DME paying for the rebate, that $3.4 million, but we're also paying heavily for that energy coming back from those systems. Last year was $428,000.
So that energy coming back is paid at full retail. It is by far the most expensive energy that DME purchases on a regular basis and is in fact three times more than the renewable energy that we get through our COD.
So that gives you an idea of the relationship of what we're paying with these systems versus what we get for the rest of our portfolio.
So over the next few slides, we're going to talk about how rebates are no longer driving installs. We're going to show you that the prices have been coming down steadily over the last decade for systems, and that's based on research done by the National Renewable Energy Lab, NREL.
We're going to talk to you about our current billing structure and how it's really encouraging oversizing of systems because of our generous payback amounts. And then also, I set all this context to the fact that we're already 100% renewable.
So we should celebrate the fact that everything we purchase for our load is 100% renewable energy.
So this first graph shows that the blue bars are the systems that actually got rebates, and the orange bars are the ones that got put in even when the rebate dollars were exhausted. So you can see all the way back to 2017, we started seeing systems being installed, regardless of whether or not they got paid a rebate.
In fact, in 2021, that's the second bar from the bottom, more systems were installed without a rebate than were installed with a rebate, and we're on track to do that same thing this year. That's data up through, I want to say, May, May or June.
And we're steadily getting about 20 applications a month for systems. So it's not slowing down. So why are we seeing this? Why are we seeing so many systems get installed even without a rebate? It's because the cost is coming down.
This is that data put together by NREL, and it shows that 64% reduction. So not only is the cost of the system going down, but there's also some pretty generous federal tax incentives out there too. Mr. Hazard alluded to the fact that the most recent passing of the Inflation Reduction Act, it actually extended tax credits another 10 years at a level of 30%.
So that's pretty hefty. And DME doesn't feel that our rebate dollars are spent wisely going towards such a flourishing market already.
So I mentioned before that one of the big things that we're paying for is the energy coming back. Well, that energy coming back is really a product of two things. One is the generous amount of money that we're paying for that energy as a form of credit on the customer's bill.
That's a flaw in that net billing rate structure, and it's driving these systems to get larger. These are the systems over the years, and you can see how they've been put in larger and larger. Because of our payback structure, we're seeing systems put in that are probably a little bit bigger than the customers need.
And then second and probably more problematic is the fact that as these systems get oversized, they're actually offsetting more than just their variable cost of the power to serve them. They're actually offsetting their fixed cost charges too.
So when they do that, when they're effectively canceling out their bill, they're not paying their fair share for the fixed cost recovery portion of the system that's put in place to serve them.
So when their system is down, when it's dark, when it's raining, when it's cloudy, we have to serve that customer's load. Not 10%, not 20%. We've got to be there for 100% of their load. We're obligated to do that. And we are, and we continue to be.
So who's paying that shortage? It's the rest of our DME customers. It's those 61,000 customers that Tony mentioned earlier. And they pay that in the form of upward rate pressure and the rates to support that system.
So if you recall what I already said, we're already 100% renewable. So those customers are effectively paying twice for that same renewable benefit.
This seems like the crux of the matter, and I can't wrap my head around it. You got me closer. I just wondered if you could say that again, because I'm not understanding how the existing solarized homes are being subsidized effectively by all the other rate payers.
It seems like everybody always pays for DME energy all the time. And here's a set of folks that only pay in certain times. So it seems like that's better. I understand that you're trying to tell me something else, but I can't quite get it. Can you just say that again?
Yeah, absolutely. And that's actually a great question. So some of the systems that are built such that at the end of the year, they have a net zero balance paid to DME. So some months they get a credit, some months they pay out.
At the end of the year, it's a bigger credit going to them than a payment coming to us. And those are the systems that I'm really talking about. But that adding and flowing throughout the year at any given time, we're paying for energy at a full retail rate.
That full retail rate encompasses everything. It's the fixed cost charges and the variable cost charges. So for every kilowatt hour they're offsetting, that's a fixed cost component that's not being recovered by that customer.
So it makes it difficult and it does put some upward rate pressure on the rest of our system because we're not recovering those fixed cost charges across our full customer base. Does that help?
That does help.
Yes, sir. So we're talking about systems that generate more than 100% of the household's needs. Is that what we're saying? That if somebody generates more than 100% more than what they use, that's when the city credits them or pays them.
For that excess electricity over 100%. Does that make sense?
Yes and no. So there's an extreme example of a customer that's well oversized and like I had mentioned before, by the end of the year there's more of a credit going to that customer than a payment coming to us. But at any given time, at any given month, there can be flow coming from that customer. And the way we do our net billing is we pay a full retail rate for that flow coming to us. Does that make sense?
Yes.
Okay. And then during the nighttime when they're using our system, we're effectively a battery for that customer, during the nighttime they're paying us that same retail rate, only a little bit less because we're tacking on a little bit of a solar premium on top of the retail rate that we're paying them.
Now, if you look at one month and have a total going out and a total coming in, to the extent that they send us energy that exceeds what they've used from us, then we're only paying that premium portion, that solar portion which at this point is like 3.8 cents.
What about a system that, say, covers only 30 or 40% of what the household needs, say an all electric home, but it's a small system, doesn't even come close to 100%.
In other words, this system, these people, still pay a sizable bill to DME because they can't produce all of their power and don't have, say, battery storage to have power overnight.
It doesn't seem fair that those people are seemingly, and I think they might think this, that they're being penalized for having a smaller system that is doing its share, for sure, to pay its portion of the electricity that they get off the grid.
Does that make sense?
Yeah, no, no, it makes perfect sense and actually it's a great question and it's a great point to make.
So, homes have a baseline usage.
What does?
A home has a baseline usage.
You've got the refrigerator, you've got the water heater, you've got just the things that are going on in the home all the time.
To the extent that that smaller system covers the usage of those things that are baseline there every time, we might not see anything coming back from that system.
It just might be overall reducing that bill on a monthly basis.
And that's really the most cost effective way to size a PV system is to actually slice off that base and now you're getting what's equivalent to a full retail benefit because you're not buying that kilowatt hour from DME.
Does that make sense?
So even though there's not a money transaction going back and forth, that system is offsetting that base load.
Can I jump in and just say is that the system that you're concerned about?
No, that's not really the systems we're concerned about.
We're concerned about the systems that are very much oversized.
Did you have one?
Yeah.
Do we know?
I want to make sure that we're clear about that question because, and I apologize, Terry Nolte, Assistant General Manager.
This is a really important point and Mr. Briegel, you brought it up, but I want to make sure we're clear on this.
It's not just the systems that are overproducing relative to their consumption and sending surplus back to us that create this inequity.
When I talk about inequity, I'm talking about the fact that as a utility, our fixed costs, that would be for the cost of poles, wires, transformers, substations, things like that, we are required by law to be the supplier of last resort to every customer.
So when the solar system is not running, I still have a requirement to provide that energy to them.
It costs me the same to build the system to serve a home that has a solar generator, a rooftop solar system, as it does to serve one that doesn't.
Regardless of the size of the system, we still have to invest the same amount of money in order to provide that backup for that system.
Those are some costs that in cost of service rate making, we distribute those costs and recover them to have rate sufficiency from every customer.
So when a solar panel is put on a home under our current system, we do not recover that fixed cost, their share of the cost to serve that home.
So in a system like Bill was talking about, a large system where they net zero through the year, so they never pay DME any money,
what happens is that shortfall of recovery of that fixed cost, which is in our base rate and our facility charge, has to be collected from the rest of the rate base in order to have revenue sufficiency.
So that is really the underlying issue here when we talk about equity and the equity between those 800, how many systems Bill?
854.
854 and the 61,000 customers that are effectively cross-subsidizing those systems.
That's kind of the, to your point Mr. Briggle, I hope that helps explain what we're getting at. So it's not just the large system, it is the smaller systems as well,
because to the extent, let's say they would consume 1,000 kilowatts every month normally, but because they have a solar system, they're only consuming 500 kilowatts.
We are losing the fixed cost component of that 500 kilowatts.
That fixed cost component that we're losing has to be collected from the rest of the rate base in order to have rate sufficiency and to meet our debt coverage ratios and all the other kind of financial metrics that we have to meet.
How do you break down fixed costs for individual systems?
We do what's called a cost of service study and we actually look at every asset that we have in our system and we allocate the cost to each rate plus.
So for a residential customer, we know precisely what it is. It's $64 change per month that we need to collect.
Regardless of the size of the system?
Regardless, because remember what I said, it cost me the same to build a system to serve your home that has a solar panel as it does my home that doesn't have a solar panel.
Still have to put a wire, still have to build the poles, structures, the capacitors, the transformers, the substations, all that equipment still is required for you to both deliver energy to me, to DME, as a solar provider and for me to provide energy to you at night when the solar panel is not running.
Does that make sense?
I know we wanted to hold questions, but this is really important for us to understand. So Brian, go ahead.
So we got the $425,000 in buybacks annually that DME pays out to solar producers. Out of the 854 systems, are we aware of how many of those you're concerned are designed to be overbuilt, that is they produce more than their net usage over the year?
I'm just curious about the scope of this issue.
So we're starting to dig into that data a little bit more. On average, annually it's about 25% of those systems are net producers versus takers from us.
But at certain times in the shoulder months, i.e. the springs and the falls, those numbers can be upwards of 50%.
So it is a good portion of them and I might have misspoken a little bit more. I mean, there's three components here. There's the facility charge that we're collecting that can be offset by the larger systems.
But there's also the regular charge that comes back by any system when they send energy back to us.
And then the third thing is that offset of usage that we expect to sell to that customer that they're no longer buying from us, their system is producing it. So all of those have an impact to us.
Does anyone else have a question about this specific topic before we move on?
Okay.
We good?
Yeah, thank you.
Okay. So this actually demonstrates that $428,000 that I was talking about. So that last blue bar shows what we paid last year.
That's $428,000 of that energy coming back to us. This year it's projected to be closer to $700,000 and you can see how quick that slope of that curve is going into the next few years.
So, as a matter of fact, in six years we're paying about $5.6 million if we don't change anything for that energy coming back to us.
And now, just to put that into context, every $1.5 million is about a 1% increase in rate pressure that we're seeing.
Is this chart what we're looking at, the progression? What does that take in? Is that taking new, how many new systems are coming online?
Yes, that's our projection of what we've seen in the last few years.
What are you estimating here each year?
This is the amount of energy flowing back to us from those systems.
Right, but how many systems are you estimating each year in this chart?
We didn't really look at it on a per system basis. What we looked at it on is a per kilowatt hour basis.
So the kilowatt hours that are flowing back are growing exponentially.
So if there weren't any more solar installations added from this point, would the chart still look like this?
No, it would level out.
I have one more, and I don't know if this is the appropriate place to ask it.
What about systems such as Mr. Hazard's, which he purchased himself without any city incentives or rebates?
Is a separate category made for people who have purchased without city help?
It seems like everything is being lumped together.
I still see differences between my neighbor who has a full system and a battery and the whole thing,
and someone such as myself who has a 3,000 watt system that generates, if I'm lucky, 40% of my energy,
which I bought myself because there was no Greensense program when I bought my system.
I don't understand how everybody would be affected by this change when not everybody is in the same boat initially.
You'll see when we get to our options, there's two things that we're looking at.
One is the rebate. We want to do some changes to that.
And then two is the net billing that we're paying for the energy coming back to us.
So all of those systems are hitting that latter part.
The rebate is something that we can stop moving forward.
Does that help?
All right, so just the last point on this slide.
That's just not a sustainable way to treat that billing structure,
is to continue to increase throughout the years and not make any changes.
So this is a comparison.
It's a little busy when I'm looking at it from up there,
but maybe you all can see it on the presentation that went to you all personally.
This is a compare to our peers across the state of Texas, our public power peers.
And it's using an example of a customer that is using 800 kilowatt hours from us
and sending a thousand kilowatt hours back to us.
So putting everybody on that level field, you'll see all of those utilities,
with the exception of Austin Austin is a little bit of a unique issue in and of itself,
how they bill for solar and charge back.
But the rest of those utility companies there are collecting a portion of,
or sometimes all of their fixed costs.
So they're not seeing that cross-subsidy that we're seeing within our system.
They've also, on that second column there, you've seen that the majority of them do not provide rebates.
As a matter of fact, some go one step further.
And actually, as Mr. Hazard alluded to,
they don't pay for anything that's in excess of the customer's usage.
So that's just sort of a gift to the utility, those extra kilowatt hours that are beyond the customer's usage.
So that sort of lays them all out there.
But one point I wanted to call to the attention of this graph is all of those utilities you see listed there, Austin included,
DME is the only one that supplies 100% renewable for their customers.
And we have one of the most generous paybacks to customers.
So this is a map of the solar installation, those 854 installations across town.
I draw that circle just to emphasize that big gap in the older parts of town,
or the parts of town that may have poorer housing stock.
It's not just a matter of income when it comes to install a solar system.
You have to have a roof that's able to hold it.
You have to have a building envelope that's not leaky and has broken windows or a broken air conditioning system.
You want to put on a system that's already assigned to a pretty efficient household.
But any which way, that's just to emphasize the fact that where you see those gaps,
those are the customers that we're talking about that are subsidizing the ones that have systems.
So all that information brings us to some options.
Option one is pretty much status quo.
We just keep going the way it is.
We'll continue to put out rebates to customers who probably don't need them.
And we'll continue to pay a retail rate for the energy coming back to us and continue to see that upward rate pressure.
Option two, we sunset the solar rebate
and instead redirect those funds to other green sense efficiency programs that have that bigger bang for the buck that we talked about.
This does not have an impact.
It doesn't lower the rate impact or the upward pressure on the rates,
but it rechannels some of those dollars to what we feel are more cost effective programs.
And then the final option three is everything that option two says, all the benefits of option two,
only it restructures our net billing, so it'll lower that amount that we're paying for all that energy coming back from those systems,
putting it more in line with those other utilities and paying out an ECA rate.
That first year savings for that is anticipated to be about $700,000 a year.
And as those systems continue to be installed, which would be no reason why they wouldn't,
that savings opportunity will increase.
Well, really what I was going to do, before I got into the staff recommendation,
I was going to have Mr. Gagne come up and talk about what he would do with some of those funds if they were rechanneled to the other green sense programs.
Could I ask my question?
Sure, yes.
Does this include commercial and industrial installations as well?
PV, yes. It includes all the PV.
Okay. Have any rebates been given to large commercial or industrial?
Yes.
I'm just wondering what their response to this would be.
Anyway, I think we're good to talk to them.
Well, again, so the larger that base load, the less energy we're seeing coming back to us.
The bigger impact to us is that offsetting of sales in those cases.
Thank you.
Michael Gagne, Director of Environmental Services and Sustainability for City of Denny.
So just as you saw back on slide three, there's various energy efficiency programs or incentives that we're focused on.
I just want to take a moment to make sure the public is aware that at the ENERGY STAR website, the EPA website, most of those programs are covered.
There's metrics there you can play with. You can look at your house, do different things with it.
It's a good resource, so the incentive programs we generally have are also recommended and anchored off the ENERGY STAR.
So looking at the actual energy efficiency programs that were outlined on slide three earlier,
the most use is coming through the HVAC system upgrade that goes for both single-family and multi-family.
Also, our smart thermostats are a big user.
Then the next three somewhat get grouped together.
To me, the windows, insulation, solar screens are all similarly used.
And then ductwork, ceiling improvements on the actual ductwork is the next.
Radiant barriers are somewhat tricky. Those are usually better done either at the time of re-roof or at new build, so they're not quite used as much.
And we haven't seen anybody take up the solar hot water heater or our weatherization materials.
So on the far right, it's just a graphic representation of if you look at some of those categories on the money we invested into those to what we're getting back at.
So it's just a different little graphic representation.
So now to take the big mouthful. If you listen to the presentation from Bill and all the different things,
this slide attempts to summarize everything that's been touched on within the Greensense program.
So it gets that million dollars total. As you walk through it, the left-hand side talks to the programs.
The second column is total participation from 2017 through 2021.
The next column, or the center column, is our current program budget.
In other words, the amount of dollars currently budgeted for each of those efforts.
Then you get to the current cost structure. Far right is our proposed cost structure.
Effectively, on most of these, we want to go up. So we want to actually increase the amount of rebate that would go out for those affected areas.
Some things on here, as you'll see, are recommended to be removed.
To be determined, we haven't had the audit programs for energy and water audits were paused during COVID.
And we're currently looking to seek to get a contractor on board again.
And that's why that's kind of to be determined at this point.
But that was just what we would change within the current program.
We're also looking to some potential additions.
So with the additions, we recently did a fan giveaway program that was well received, well respected.
We want to continue that going forward.
Weatherization. You saw that it wasn't used under the current rebate program.
We want to change that. Instead of doing a rebate, we want to actually look at possibly buying the kits to help people get the materials they need to do that weatherization.
Also do targeted education and outreach to help them make that happen.
So change how we're doing that. Instead of saying, hey, go do it, come back for a rebate, we want to change that program.
Also, HVAC programs are a great thing.
If you can't afford to either keep it up or keep up with it on an annual basis, that system is not as efficient, doesn't last as long, all kinds of things.
So we want to add in a tune-up rebate to help people actually do the maintenance on their systems annually.
We also want to expand and try to look more further at the multifamily to make a bigger impact on multifamily properties to make the impact on those residents.
The bottom two get into basically appliances, but there's Energy Star appliances.
And if you're lucky enough to have a pool, pool pumps can be a large demand on your system year-wide.
Is this currently available funding or is this only potentially available funding given the options presented?
This is funding in the Greensense program that would have to be reallocated or reshuffled.
So if we stop doing some of the PV incentives, things like that, those dollars would then go to these new potential program additions.
Does that answer your question?
And Michael, how much CO2 reduction do these programs take out?
Like if we take away the solar that removes the CO2, how does this environmental sustainability committee,
so if we're adding these programs in, how does that compare to the CO2 that we're not removing?
First and foremost, we're 100% renewable currently through DMV, but the second part to that question is
without knowing how many people are using it, I can't do that calculation.
I can estimate on how much usage is there. I can't do that. These are just expansions.
I don't have that calculation because again, we don't know how many people would actually be using them to be able to do that calculation.
That's a little premature at this point, unfortunately. Does that make sense?
Yeah. I would just have estimations on what programs can do, so I just thought maybe we would have that.
Okay, thank you.
So to take all of my slides and kind of put them on one, this will help.
The far left-hand side is possible additions. Those are things we'd like to add in if we could reuse the money differently.
The middle section is removals. The bulk of that removal, if you look at that, the bulk of that removal would be the PV install incentives.
There's really the big change there, the biggest dollar, and the far right-hand side summarizes some of the changes.
Some of those, we want to actually increase the amount of rebate.
One thing we do want to lock in flat rate is on the smart member stats. We did a 50% or up to $50.
We'd probably just recommend doing that as a flat $50. That's not specifically on this slide. It was on two slides earlier.
So this is just the overall summary of how we would use that.
And once we go down the road of seeing how we can push the funds and see what the estimate is for the users on all the various rebates,
then we can come back with a recommendation on the CO2 impacts on that, to your question prior.
So with that, I'm going to turn it back over to Bill to go through staff recommendations.
So I know this is your last slide, and I was looking at this the other night.
Demand response is listed under removals, but when we were talking the other day, I didn't think we had any demand response.
And I thought somebody just said, we're thinking about doing demand response. So I don't understand how we could remove it.
Yeah, I think from the context of removal, it's really bringing it back to DME and having DME looking at demand response.
That's one of the things that we're going to be doing next year, is looking at demand response programs.
So it's going to be pulled out of the green sense category.
Thank you.
Okay, so in summary, we're looking at those three options. Again, option one, status quo, no impact to the programs that we have right now.
And we'll continue to see that over great pressure. Option two, sunset the rebate and send that over so Michael can invest more dollars in some of those cool programs that he was just talking about.
And on option three, it's option two with the addition of restructuring that that green rate.
So that's the only one of these options that really starts lowering that pressure that we're seeing on rates.
And just to put that into perspective, 24 FY 24, 25 and 26 were anticipating about a 12% increase to rates across those three years.
So this will have an immediate impact on trying to lighten that load that we're looking at and trying to deal with.
So, could I ask a question?
Yeah, go ahead.
I actually have to take off in a minute. I apologize everyone for being late.
So I wanted to ask, can you go back to the last slide?
Sure.
Like, my question is like, what's the biggest bang for the buck of all the programs that Michael mentioned?
And it's hard to know that like we can calculate that in dollar amounts, or it was brought up with what were the CO2 comparisons between those.
So I think with the CO2 comparisons, what that gives us is an idea about what would be the biggest bang for the buck of all of the various options and the different things.
Sure. Well, and he's going to do some deeper analysis on those programs.
But how we were measuring that CO2 reduction was purely from a kilowatt hour standpoint.
So a kilowatt hour reduction applied to the standard heat rate across the state of Texas is that CO2 reduction.
However, moving forward, everything that we're buying is renewable anyway.
So any CO2 reduction, I would argue, would probably be calculated that same way.
But it can be applied to the city as a whole.
So whatever that carbon footprint that the city has, these programs can start digging in and offsetting those carbon productions.
Does that make sense?
It does. But I think having some, you know, like just that simple question, well, what's the biggest bang for the buck? Like, what can we get the most back for these different programs?
Because even in my mind, I'm like, PV is still, you know, like better than some of these other programs, getting more of that.
It's a great question. It's, as a sustainability committee, it's the question you should ask, right?
And so here's the qualitative answer.
Since we're already 100 percent renewable on every kilowatt hour that's consumed in the city, the carbon footprint of your demand on the system is zero.
If you can reduce the kilowatt hours that are consumed qualitatively, that is the biggest bang for the buck.
And so when we talk about energy efficiency programs, HVAC programs, high efficiency appliances, weatherization, all these things, weatherization especially,
because think about it, how many homes in Denton are fueled by natural gas, fossil fuel, right?
If you can tighten that up and reduce the energy consumption, the BTUs that are used to heat or cool that space,
you're having the biggest bang for the buck in terms of a CO2 footprint.
So I think although we don't have the exact numbers and rank order then, right?
I think qualitatively, eliminating the demand is the most environmentally beneficial program that we could invest in.
You know, when you think about what is per ton, ton per kilowatt hour, yeah, we can probably calculate that for you.
But again, I think eliminating those, that demand in the first place is beneficial, more beneficial.
And you know, so that's where I would recommend you kind of think about this. Recommendation is we're taking money from a program
that's already achieved its goal, 100% renewable energy with zero carbon emissions.
And we're directing, we're recommending you redirect that money to programs that are going to improve efficiency, energy efficiency.
I hope that answers your question.
I have a couple of questions. For me, the solar completely takes the demand off of the system, right?
So if somebody's generating their own power, we're not using our system.
But I do want to ask about the 100% renewable. Are we still counting RECs or is it all physical energy now?
It is a combination. There's a small portion that is RECs from a legacy contract that we have.
I think you were involved in this discussion.
Because for me, the solar is 100% renewable. That is actual physical energy that we can, we can generate.
And some of that, and I don't know if we have the numbers, how much of that offsets the emissions from our local gas plant too.
So, you know, there's some, there's some emissions and offsets there that I would like to know more about.
Yeah, a couple of points. One, there is a thought process that if I install solar on my home, I'm having, I'm offsetting the emissions.
So why not increase the energy consumption in my home, right?
So there's some studies out there that show that for some homeowners, that's an issue. They turn their conditioning down from 68 to 65 in the summer
because they justify it by saying, "Hey, I'm producing my own clean energy." And that's an individual choice.
With respect to the, this rooftop solar's indents, 7.2 megawatts that we have today, we don't actually count any of those avoided emissions in our 100% renewable gold.
Because ERCOT has no way to allocate RECS, renewable energy credits, to those because they don't know what the actual generation is on a rooftop solar across the entire ERCOT footprint.
There's no way to meter right now. They don't mandate that. It would drive the cost up considerably. So we don't include that today.
The only RECS that we include are the ones that are verified by ERCOT that those megawatts, those kilowatt hours, came from a generator that is renewable, that had no emissions associated with it.
So we could get in a whole discussion about RECS. And we probably, as Tony said, we will when we come back with the Dent Renewable Resource Plan and how we think we could score that better.
Right. And thank you, thank you for that clarification. Do you, since you have to go, do you have direction you want to give?
Yeah, that was about it. I just have one more slide, too, for a while. Michael, again, I just had one thing to Max question.
So the biggest bang for the buck on money when you get to energy consumption, energy efficiency, there's going to be two things when you look at most buildings.
It's going to be your HVAC equipment, how that's run, the efficiency, the duct work, how it's all sealed, then it's the building envelope, which gets into your weatherization, your insulation, your windows, all of that.
When you combine those two things and do it correctly, that type you reduce the demand. And that's actually where we see this.
So what we're recommending coming out is to take part of the money that was being to incentivize solar and put that into making it be more available across the city to all users to do better things with every building.
So I understand that, and I appreciate the qualitative aspect of it. To me, it's more just, I think people want to see something that they can grasp, like a comparative.
So that's why I was saying, like, you can do dollars, you can do kilowatt hours, which is a really hard thing to understand. It's really hard to record now if you had around 40-50 kilowatt hours.
I mean, I'm sorry, I've tried to teach that for years. It's really hard to understand.
CO2 emissions, I think it's closer to like a dollar in terms of what that is. So that's, my point is more of a recommendation that if you can set those things up.
Though I appreciate the qualitative aspect, I totally appreciate that, and I think people hear that. I'm just saying, I think that sells it better.
I think that's my point.
I appreciate that comment on teaching kilowatt hours, and then when you talk about demand, then you ratchet it up that education curve. So you and I are on the same line there.
Last slide.
I think.
There we go. So the staff recommendation is option three, and that's the one that sunsets the solar rebate, sends those dollars over to green cents. It also restructures that net billing program.
So instead of paying a retail rate, we're paying more of an appropriate rate. In our case, it's the energy cost adjustment or that 3.4 cents.
And then our first year savings is anticipated to be about $700,000 with that if we're able to make those changes.
So with that, that concludes the presentation, and we'll take any more questions.
I do have one more question about 100% renewable, and I understand that's probably going to come back to us.
We take down so that we can see.
There he is.
Yeah, it's my understanding and it could be have changed, but each year it depends. And I remember seeing a chart where sometimes 100%. Sometimes we're not. Sometimes we are.
And I mean, it just it fluctuates. So there's not like 100% guarantee that we're at 100% each year as things come and go. And that might might be true.
I'm seeking clarification on that because if our main reason for us being 100% is trying to eliminate these programs, but we may not be in four years, like then that's a concern for me.
Yeah, you know, our mandate from the council is to be 100% every year. And so we procure contracts, power purchase agreements with renewable energy resources based upon a forecasted load that we're going to serve in the future.
So our goal is to always be 100%. Will we achieve it every year? Our goal is to do that.
We just went through a summer where we had very high electrical demand, about 20% higher than we thought we would have in the summer.
What does that mean? That means going forward, rather than being 101% renewable like we were in 2021, maybe we need to target 110% renewable to ensure that we've got enough carbon free emission generated kilowatt hours to serve.
What is a variable load? Any forecast that you've heard me say before, any forecast that I give you is going to be wrong, right? But we use a lot of science, a lot of math, a lot of statistics to try to make sure that we're getting as close to a realistic estimate as possible.
So, yeah, we do not plan in any year to not be 100% renewable. We will be 100% renewable, unless there's something that happens that doesn't enable us to do that.
For example, if we had a wind resource that we're under contract with, that the wind turbines got blown down during a hurricane or tornado, obviously they wouldn't be producing anything.
We'd have to go out and replace those kilowatt hours, either through a new contract, through a bilateral transaction with another entity, or by recs. And again, our goal is 100% renewable. I hope that answers your question.
Just one follow-up, and I'm going to let the committee talk, because just while you're on this. And so, can those extra generations from the localized solar fill in that 10% that you're saying, like, you know, to the grid that we're missing? Like, can that supplement?
I mean, if through the Dent Renewable Resource Plan revision that we bring to this committee and to the PUB and the council, they give us guidance that says, yes, you can count those emissions, those avoided emissions, then yeah, we can count those.
But we would, in the accounting for the year, we would have to forecast what we thought the rooftop solar were going to contribute to the total reduction. So, that variability is always going to be there.
You know, we don't typically go out and say, well, we're going to buy an option on an asset that could produce additional renewable energy credits and clean energy. We're going to pay somebody for the option, just in case we're going to need it.
That's something we have not done, and I wouldn't recommend it, because it would be very, very expensive. I'm just saying, in my head, that could offset, that could be physical renewable energy going into the grid that we haven't planned for that can help us maintain our 100% renewable.
Again, today, in the way that we, the metric that we use to determine the 100%, we do not give any credit to that. But certainly, we can think about it, and you know, if we see a proliferation of additional rooftop solar, yeah, I think it would be a good idea.
Okay, thank you. Ed? Adam? Anyone? Go ahead. I haven't forgotten about you, Mr. Stevens. I know you have questions.
Is this so clearly just so I'm clear? Is this a time where we can kind of weigh in about what we think about?
Yeah, is this a time, right? You're looking for direction or suggestions from us, from our community?
Sure. Any comments, thoughts, suggestions?
Adam, go ahead. So I have some, I want to just say some thoughts about the way I think about this and the way, Matt was talking about teaching, the way I teach this stuff, which is really complex, just to make sure you think I'm approaching this from a way that makes sense, right?
And then at the end of that, about a couple of recommendations/questions, I guess. So I always think what we're trying to do is accomplish three goals, reliability, rates, and renewables, I call them the three R's, right?
In this conversation, we're mostly talking about rates, and what's interesting is the goal of rates isn't just to have them low, but what I've learned through this conversation is to have them equitably distributed, right?
So we're trying to have rate equity accomplished, while also not sacrificing the other goals, right, of renewables and a reliable grid, right?
And as I see it here, there's, you know, look at your proposals. Within that, there's two issues. There's the rebates, which is the sort of initial install, and then there's the metering. So what do we do once it's operational?
Okay, so that's the way I'm thinking about this. Now on the rebates, I think it does make sense to sunset them, for the reasons you've talked about, because the feds are picking up more of the slack, it sounds like, and the market costs keep dropping.
And it seems like people are installing them, regardless of a rebate program. And if you think about this question, well, where do we get our most bang for the buck?
You can say, well, rooftop solar is a demand reduction strategy, but the only kind of thing you're reducing is the electrons that are already fossil free, right?
Whereas if we put rebate money into home weatherization programs, we're reducing BTU demand, which is often fossil generated. We were talking about, like, if you're heating your home, like I do with natural gas, I get better insulation.
Now we're really actually contributing more to 100% renewable goal that's our climate action plan, which is actually 100% not just in electricity, but across the building sector and everything. So that's the way I'm thinking about that.
On metering, I'm less clear, and I'm sensitive to, you know, this is really where the questions of equity for installed, who's already installed it, and all of that comes up with our first presentation.
But I'm just wondering, I have a couple questions. Isn't there a way, so one idea, this is probably really stupidly simplistic, if you could just say your bill, if you have a rooftop system,
will be $64 minimum, because that's your fixed cost per month, and then plus any other costs that you incurred above the net sort of feeding back into the system, right?
So that's, I don't know if that could work. Or could you say, you could have a net zero bill, right, if, and maybe you'd cap it there, if you sent enough electrons at the market rate back into the system to cover your fixed cost, right?
That is, if you sent enough to cover your demand, plus at market rate, not the rate you're paying, then it would cover your $64 fixed cost. Does that make sense?
I'm just trying to brainstorm, how can we structure equitable metering, you know, and billing structure?
Sure. First of all, the comments you made, Linden, up to that point, you're spot on. I mean, I think you hit all our points very well, or the points that we were trying to convey anyway.
Certainly, if we could recover that fixed cost component, I mean, you know, our work here is done, you know, we can all pack up and go, so that's the question here, and that's the one that we're trying to solve.
That's certainly an option, what you mentioned, having a minimum of $64, and then everything that happens above and beyond that is just sort of the ebb and flow of the electrons, which are not the big portion.
And then that final, I'm a little less clear on what you're thinking about for that final part, because that would take quite a few KWHs coming back to us, or flowing to the customer at that smaller rate.
I didn't say it very well, because I don't understand it.
I think I messed it up saying it. Couldn't you have a rate structure where if somebody's got a really big rooftop system, that they're essentially giving you well beyond what they're consuming, so they're net generating.
It's interesting, because they're like prosumers, right, they're production end consumers. So they're doing more production than consumption by a large amount, but those electrons are just free for y'all, and that amounts to enough to cover that fixed cost.
So those big systems could have a zero bill, and you can still cover your, because you're essentially getting free electrons to cover that.
Yeah. Well, the devil's in the detail. Rate making is definitely a bit of a science and a bit of an art. It's certainly something that we can look at.
That's how many kilowatt hours you'd have to sell back each month to make the $64.
Oh, okay. Thank you.
At the current market price.
So about 1,280 kilowatt hours a month would have to flow back to us. That's a pretty substantial amount. Maybe the commercial systems can come close to that, but then we're sort of talking about a different customer category altogether.
Okay, but you could say you don't cover all of that, but you start chipping away at that $64. So your bill could be lower than $64 if you're feeding free electrons.
Sure.
It's like you're paying, what's that called, when you pay, you don't pay in cash, in kind. It's like an in kind payment with electrons.
Yeah, that's certainly a different way to look at it. We can take a look at that.
Do you mind if I go to Mr. Stevens real quick?
For sure.
Mr. Stevens, do you have any questions or comments or anything on the options or non-options?
Yes, I do.
Can we turn that up, please? Hold on one second. We want to make sure we can hear you.
Okay. Testing. Testing. One, two, three, two, one.
That's better. Yeah, that's better. That's good. Thank you.
All right, very good. I have a ton of questions, I'm sure.
And I'm sorry, but gentlemen, I guess I'll probably form it up.
And a great question from an equity perspective. Some of the things that I'm missing in the presentation, if you would, what is the impact on the consumer, categorized consumer?
I would like to see information that those that are making those major contributions back into the system and costing the system, what is the percentage of customers that are actually in that category?
And I think about, when I talk about the toll roads, I know that I'm going to have to pay for my uses of that toll road. Can we laser focus this cost recovery that you need in order to offset your costs?
I need a little bit more understanding on how is it that if I'm giving energy and I don't have a solar system, I am a customer in a brand new home, I am considering going solar, I am looking at the new federal legislation, I'm looking at how we can get away from more fossil fuels and enter energy generation through wind and solar.
But it would sound like that I would be penalizing the system if I were to go solar penalizing myself to a certain degree.
And my concern is, can we identify the MEUs, the starship users, in a sense that, how DME is described, can we identify that percentage of the population? And can there be a building structure that would impact those rather than, as I've heard you say earlier, why would we want to impact the mass audience?
Where are the numbers, such as what Mr. Hazard presented, where are the consumer based numbers that I really need to see the impact on the consumer community, sexualized, cataparized, what is this going to put back to us?
We are here, yes, for sustainability of this community. That tells me that I am a target audience. That is both of the citizens of this community. So in addition to protecting their health through our involvement, our direction, I'm very concerned about the sustainability of the community from a cost perspective as well.
Why would the solar community be strapped with additional costs, additional expenses, to take it out and shift it to just a different pocket?
I understand weatherization and new windows and so forth, but for the new housing community, I don't need to look at that for the next 10 years. How can I participate in reducing our carbon emissions? That would be just some of the concerns that I have with regards to this presentation.
Thank you. I'll try to unpackage that a little bit before you, Member Stevens. First of all, you're not going to be penalized to put in a system. We're still going to interconnect systems.
Those are the utilities that I showed up on that comparison. They're seeing systems going into their service territories as well, even with that rate structure.
It just changes the economics that you're going to use personally, along with the tax credits, to justify your expense on that system.
So part of that is going to be economics. Part of that is just going to be your overall feeling and desire to be renewable as an individual and as a household.
So I don't look at it as a penalization, more so really correcting how we're billing moving forward. So in as far as your impact on the consumer, are you talking about the impact to the solar consumer or are you talking about the impact to the rest of the 61,000 customers?
I would actually like to suggest that you do a presentation or present information that would show us the impact to the expense, like your expense to the entire community, and then even sectionalize it down to just the solar community.
So are we talking about just solar impact to DMV's cost system or are we talking about there going to be impact across the 61,000 consumers?
Well, that's a great question, and right now there's already impact to the rest of the customers that aren't solar, and that's the part that we're trying to correct.
One, by removing that rebate. Two, by restructuring that net metering.
And the third thing is the part that is going to be hard for us to capture or correct, and that's the offset of electrons that we would originally sell to a customer.
If they're generating their own, we're no longer seeing those sales, so it's a lost opportunity for us.
And when you add those three categories together, we're already at a level of $1.5 million a year, and that's going to go up exponentially like that curve that I showed you.
But we're already at a $1.5 million a year that's providing that 1% pressure on the rest of our customers.
Now, if you're looking at it from a solar standpoint, yes, their economics will change a little bit on their systems that they've already installed.
However, they're still going to offset those kilowatt hours that they would have otherwise purchased from us at full retail.
So that economic piece is still going to be in their equation.
It's just it may extend their original thought of when they were going to pay that system off.
Does that make sense?
So are we talking about just the fact that there's a lot of retail potential because of the growth of solar?
Or are we actually talking about real savings to the community, to the consumer themselves?
No, it's real savings to the community.
It is real savings to the community because right now, the folks that don't have solar are, in fact, subsidizing the ones that do.
So we're trying to correct that cross-subsidy.
And this is one step closer to doing that.
So I'll finish with that.
That's where I would like to see what savings would be added to the consumer base.
I don't see the consumer represented in this conversation at all.
This conversation, with the exception of what Mr. Adams just presented, what I do not know is whether I'd be moving, you know, would he be moving? Would he add? But this is the only part of the conversation that has any impact on the consumer.
So thank you very much.
Thank you.
Brian?
Yeah, so I'm going to concur with kind of Adam's thought because based off of our framework and one of our guiding principles,
it is to maintain a diversified power portfolio under the way we review energy generation.
I just conceptually kind of hate the idea of penalizing these early adopters that for a decade we've encouraged them to build these systems and a lot of those systems finances out, you know, 20 years.
And so they're now fixed in this cost that they may have adopted a decade ago.
And we're kind of going to flip the switch on them.
I would hope we could find a way to structure this to where it doesn't hurt the folks that did the thing that we asked them to do, but also make sure that it's equitable going forward.
And that the way that we develop this future rate structure enables folks who are generating local power to pay back into the system up to the point where we're not subsidizing their bill.
So if they get to a net zero, including with your facilities fees, and no further, the rest of those electrons just go to D&E for free.
I would think that would be a more ideal scenario than somehow building that out to where they're paying more than the standard user might.
Yeah, I concur with my fellow member on what he just said.
Just some really broad things here.
I really appreciate the complexity of this.
And I really appreciate your expertise in trying to solve this in a positive, beneficial way.
I don't want to in any way discourage PV installation. And that to me is the biggest concern, especially installations in lower income neighborhoods.
And I know that the idea that it's these lower income neighborhoods to some degree that are subsidizing other people's solar installations.
I don't really, I don't see that. What I do see is the need to make solar available to those people, to those neighborhoods, by continuing some form of a rebate program.
And I thought even a rebate program that could be incrementally reduced as the market price gets cheaper and cheaper, as prices fall, there could be a sliding scale in that respect.
Again, there's the issue of people who have already spent their money and are continuing to pay for their systems, having the rug sort of pulled out from underneath their feet.
I think that really needs to be looked at closely in a more equitable approach found.
The first DME-permitted solar installation was put in 17 years ago. And it's amazing to see what's happened in 17 years. It's incredible.
And because of what's happening climate-wise, it's going to have to happen even faster.
And I think that we must also look at the big picture here. Denton's part of a big organism, or just one part of it.
And we need to think about what we can do in the big picture too. And we're doing that to a certain degree.
We are getting 100% renewable from RECs. And the interesting thing is that the people who are putting power back into the grid are basically giving you or providing RECs in another form.
And in a way being paid for, if that makes sense.
And the point of this is that when that renewable energy that homes generate that they don't use, that they put back into the grid, they are continuing the greening of the grid.
Right now, as of the first quarter of 2022, 34% of the grid's energy is generated by wind and solar.
Solar alone is only 4.9% at this point.
So the more we can do to increase those numbers, I think it's something that should be promoted by having some form of rebate still in effect for people who want to put in solar installations.
But I think that we're not going to be on where we need to be until the grid is 100% renewable energy.
And it's going to be. You know better than I what's coming down the highway. Batteries becoming more economical and all.
And frankly, it's just amazing. It amazes me how quickly the tide has turned and continues to turn.
And the more we can do to enhance that shift, I think is very important.
And I don't see removing this current rebate program in its current removing it without serious discussion of how it can still be implemented in some way
so that there's equity involved in allowing people to have the opportunity to put solar on their homes.
And equity involved in not pulling the rug out, as I said, for the people who are still paying for their, who got to install their solar systems
knowing that they were going to have, that the payback of that system was going to be helped by a net metering.
I just don't see how that can be done in a way that's going to make people feel great, feel wow, that's wonderful.
I'm glad you're doing that. So those are just some observations. Thanks.
I have, I have a few comments and some questions and you have to forgive me. I've got everything scattered. So one, I want to ask if this will affect our SolSmart designation?
If we stop giving out rebates? Okay. Well, I'm actually not in favor of getting rid of the rebates and I'd like to look beyond the three options.
I feel like there's something there that we could do with maybe reducing the rebate or spreading it out further.
I feel like there's some things, some finagling we could do with the rate structure that, you know, would be a little bit more fair.
But we talk about equity and we heard our speaker say is that there are a lot of individuals who can actually get credit to financing to afford systems.
The way we structure our rebates is you have to, and correct me if I'm wrong, make the investment upfront.
And for a lot of these that we have proposed, there's not financing available, maybe for Windows, maybe not, but they use a different structure.
And so somebody who may be wanting to get a rebate on Windows is going to have to pay a 20% interest rate so that they can get that receipt to get a municipal rebate from us.
So I don't know that that's equitable. With a solar system, they can do that and it's a little bit different.
As far as like HVAC or any kind of other system, you have to have that $1,000, $12,000, I think, even upfront and then show a receipt.
And I don't know how that is adding equity into our rebate system, as you suggest.
And that's just something, if I could be wrong on how that's handled, but I think that's what we used to do.
I feel like we're leaving out the whole economic development aspect of having rebates for solar on our commercial buildings.
I do know that when I was on that committee, we have that as an item to attract businesses to our community, that they look for those things.
And so to get rid of that, I think would be a little bit harmful on that aspect when we're looking to get businesses to our city.
I wonder if we can, let me see, and do we have to pay wholesale, at least minimal wholesale, to someone who is providing energy to the grid?
Like say, I think Mr. Hazard said, don't pay us at all, you know, just take that energy and then use it.
Are we required by state or law or some things maybe to pay at least wholesale for those?
I'll default that to the attorney, but there are utilities, as Mr. Hazard said, that are doing just that.
It's part of the agreement upfront, the interconnection agreement.
Anything that flows beyond the customer's usage is sort of a gift.
So I mean, I would like to look at what that would look like if we just did wholesale rather than retail, how that affects the chart that we saw.
And on the chart, I would like to know how many kilowatts we're estimating each year as that chart goes up.
It's actually embedded, so if you hover over it, it'll show you the amount of kilowatt hours that that's indicating.
So and then I know we're getting a lot of data centers, which is going to increase our demand load.
And as those come on, we're going to have to produce a lot more energy.
And so having more actual solar generation locally may be useful.
And the other thing is that with climate change, as Mr. Sof recommended, and weather extremes,
that's another reason why people want to get these systems put in now that batteries are available.
And so I don't want to take away that ability for them to do.
And I know we have federal credits coming down, but I also think that if we could do not get rid of that rebate program,
but maybe lessen it or spread it out or put restrictions on the size of systems,
say per square feet to make it more fair and equitable so we don't have, you know, a smaller house, just like an oversized system.
There are certain things that we can require of the consumer before they get the rebate.
Just throwing it out completely, I'm not in favor of.
So yeah, just the COSO, restricting the size, maybe reducing the incentive.
Yeah, those are some of my suggestions.
I have one more thing.
Okay.
At some point, I'd appreciate a discussion about the possibilities of community solar installations.
Thanks.
Great questions and discussions, excellent.
But I want to address just a couple of specific questions that I heard there.
The wholesale reimbursement of energy that we buy from the customer.
There's no requirement under the law that I'm aware of that would require us to pay that customer the wholesale price.
As everything is in this business, it's highly technical and complicated, right?
If your solar panels are producing surplus energy at 9 o'clock in the morning because your air conditioning load is lower
and your system's generating at peak output and I'm buying that energy from you at the wholesale rate.
The wholesale rate at 9 o'clock in the morning is not the same as the wholesale rate at 5 p.m.
It's considerably less, much less.
And we don't have the technology to be able to price that wholesale energy at that spot wholesale price.
DME is not equipped to do that.
It would be a very large investment for us to be able to do that.
It would be like real-time pricing of energy.
We don't offer that currently to any customers.
We'd love to get there, but it's going to require a significant capital investment in metering systems and data management.
Ten years from now, we'll probably be there, but we're not there today.
I just want to go back to the kind of broader question, the policy question, which is, you know, today, from an equity perspective,
we have 61,000 customers who are paying 842 customers for those fixed costs that we cannot recover.
The policy question for you is really, do you want to continue that inequity?
I call it an inequity.
It's a policy question.
It's pure policy that we're going to give you the numbers, and we're looking at the economics for the benefit of all ratepayers,
not just the ratepayers that have made the decision to install.
And I get the issues of, hey, I made a bargain with you based upon a program that was in place five years ago, and now you're changing it.
It happens all the time, right?
When you buy a stock in the stock market, you're not guaranteed a price.
When you attach your home to the DME system, whether you have a solar panel or not, we're not guaranteeing you a price for the next 20 years.
It's going to vary.
I can't go buy electricity in the wholesale market at a fixed price for the next 20 years without paying a huge premium.
So really, there's no right answer on this.
This is why we brought it to you, is because it's a policy issue that you as a committee have got to provide a recommendation to us.
We're just providing you with the facts about what we think is the most equitable way to deal with it on a per-customer basis, all customers.
And I'm not trying to lecture or preach or anything, but I just want to make sure that we're not telling you that your only option is
you've got to do what we're recommending.
No, it's a policy decision that this committee and the PUB and council is going to have to make.
Right. I appreciate that.
This committee is for sustainability framework, and we have a framework that we abide by in goals and things that we set.
So we're looking at it in a different way than your other two committees will.
And so I appreciate you bringing it to this committee to hear our side.
And I've written down every comment that you all made.
So we want to make sure that we go back and address those.
So have you thought about increasing the connection fee?
What I'm hearing is that it's the net metering, it's the money that you have to pay, or increase the fixed cost on the bills of those with solar.
I feel like there's a way to fix it without just getting rid of everything.
So I don't know if you've run numbers on that, what that would look like,
or what the connection fee increase would be to help compensate for that.
So a connection fee, just to be clear, I want to make sure, Bill, that we're speaking the same language.
A connection fee, when you say that, is that a one-time charge or is that a recurring monthly charge?
Well, it would be a one-time charge to connect the solar to the DME system.
So I don't know what that is currently because I'm not a solar customer.
Or maybe it is, and then the fixed rate would be a monthly charge.
So, you know, to cover the...
I mean, again, from a pure equity perspective, the best system we could put in place would be to charge every solar customer $62 a month fixed cost.
And then whatever you can offset by your own self-generation, you're avoiding our full rate, right?
And then the surplus that you generate that we would pay, we'd pay the wholesale price for.
That would be the most equitable way that we could do things.
However, that's a big $62. Our current rate is, what, $8 and $8.67.
So that's a big jump.
Now, granted, we could structure it so it only applies to the solar PV customers.
But, you know, I'm not aware that anybody's charging that type of a structure at this point.
Yeah, there's a couple of utilities that charge that added rate for the facility cost.
And I think to the answer to your question, there's several different ways to slice the Apple rate.
The rate structure that we were talking about is one way of addressing it.
Talking about loading some of those costs into the facility charge is another way to recover those costs.
So, I mean, that's the top note I have here is flesh out these rates a little bit more to see if there's something that's a little bit more palatable to all the groups.
Because you're just one of three that we're going to have to, you know, go forward with and talk about the information.
So, yeah. So, Madam Chair and community members, I think, kind of hearing different kind of thoughts here.
And as I mentioned earlier on, I mean, at this point, from my standpoint, there's not a big rush, right, to get a decision today.
I'm hearing one community member is asking for some additional information.
Ms. Briggs, you've asked for, hey, what other options are out there?
I think what would make sense from my standpoint is let us go back, let us look at your questions.
We'll provide a response. We'll come back to the committee to try to give some context to some of those questions and, you know, what other possible rate structure we could have.
And then we can bring that back to the committee. I think you guys meet at the end of the next month.
And then we can have this conversation again.
I think ultimately what we would like is a consensus recommendation from the committee that we can then eventually take forward to the council in whatever form you would like that to be.
But it doesn't sound like we're quite there yet. So we're happy to do that. So that would be okay with you and the rest of the committee.
Yeah, I think there's a lot of questions that we need to answer a little bit more. I don't feel like we're at consensus, mostly, except for that we just want to hear more information, basically, and that we want to provide, you know, equity and fairness.
I think there may have been a couple that were okay with getting the rebates and then some that weren't. So there's not consensus there yet.
Adam?
I agree. One thing that might be helpful is really helpful. In one of your slides you took, let's take a paradigmatic house and how much their bill would be in different cities.
If you all could work that, something like that up within Denton, what would a rate look like for somebody with a solar system with this rate structure versus that rate structure?
That would help me a lot to think through. I think we're all on board with equity. There's different understandings of equity, though. If we could look at comparisons, because I don't quite understand what this ECA is and how that would actually map out onto somebody's monthly bill.
That might help. I don't know.
I'd be curious to know if there are any other municipally owned companies that have faced this same problem. And if so, how they have solved it or not solved it.
I know there's a big confrontation in California over it, but I think it's called Net 3. I think that's still up in the air. But I've found state situations where they've tried to change this policy.
But I couldn't find any municipalities that have been grappling with the same problem. And I don't know if that would be a problem because of our 100% power that we've got now.
But in any case, have there been any other instances similar to or equal to what we're dealing with now?
I want to thank you for your time today and bringing this to our committee. We really appreciate it that you thought about us.
Madam Chair, can I just summarize what we heard to make sure we're all going off in the same direction? So the recap, I'm seeing a little bit more work with the rates impacts to customers more specifically than we showed Member Stevens. I apologize that we didn't get too granular with that $700,000. But that is a direct rate savings impact to customers. But we'll flesh that out a little bit more.
Let's see. I don't want to discourage solar in the community. And this certainly is not going to discourage. What it's going to do is just more level of scale as to what we're paying already. So anybody can look at that as discouragement.
But we look at it as just sort of even enough to tie a little bit. We'll talk a little bit more about that. Maybe a low income focus on some solutions. Business impact, what it's going to do to businesses. I can tell you that at least one of the businesses that we did, we entered into a PPA with their generation from their system. And that was lucrative for them.
It is much, much, much less than we're paying for the renewables now. But they were pleased with that PPA. And that comes into play when we have a large system that has a potential large impact to our system.
I think Terry already addressed the legality of energy coming back to us. Looking at it from a size-based rebate. We already have a little bit of that in there, but I like your thought, Madam Chair, on capping that size for a more appropriate size for a house.
Rate compared internally. Member Grable will certainly look at that and show you some options on a matrix. And then the last thing I have is what other munis have done. And Member Sothe, you're absolutely right. We're on a different platform than those other munis.
There's not a handful of munis in this country that can make the claim that we're making right now. And we should celebrate that. We should be proud of the fact that we're 100% renewable. When I was doing some research last night and before I wanted to make that statement broadly that says,
"Hey, everybody on this list, none of them is 100% renewable." I was like, "Well, I know Austin really fools with it a little bit." Austin wasn't even 50% renewable. So, I mean, that is huge. That's a huge accomplishment that we really need to celebrate, really take to heart.
And to me, that puts us on a different platform when we're looking to incentivize customers to do these things. We've already done it for them. So, but yeah, we'll talk a little bit more about that. And that was really what I wanted you all to go home with is the fact that, you know, we're doing a great job being 100% renewable now. We should be proud of that.
And also to add to your list, to look at maybe reducing the rebate so that it can spread out further. And right, I do want to make the comment that, you know, our speaker said that we do not have a choice that this is, you know, our utility. But in Russia, it is our utility, right? It's DME. It's locally on.
So, it's up to us and we can, you know, make it what we want and we're 100%. So, we get to have these conversations and a lot of others don't. So, you know, that's what's really great. We don't want to lose sight of that.
Right.
Yeah. So, thank you.
Thanks for hearing us.
Yep. All right. We have concluded that item and we do have concluding items. Does anybody have anything they want to add today? No.
All right. So, we will in the meeting at 1102. Thank you. Thank you, Mr. Stevens. It's good to see you.