Jon Nichols
@jnic93.bsky.social
Rates & Regulation Professional. JMU and UNC alum. Big fan of hockey, hiking, and skiing. Posts represent my personal views.
Most jurisdictions have yet to change traditional obligations to serve, and any changes will likely require legislative action.
January 11, 2025 at 5:15 PM
Most jurisdictions have yet to change traditional obligations to serve, and any changes will likely require legislative action.
The second barrier is the obligation to serve. Any pathway to scaling requires addressing traditional obligations to serve, as holdouts will undermine the cost effectiveness of these systems.
January 11, 2025 at 5:15 PM
The second barrier is the obligation to serve. Any pathway to scaling requires addressing traditional obligations to serve, as holdouts will undermine the cost effectiveness of these systems.
The big problem with networked geothermal systems (and many other decarb options) is the upfront costs. Framing the investment in terms of NPV and accounting for lifetime operational savings does not address the fact that someone or some group of customers will have to pay for the upfront costs.
January 11, 2025 at 5:15 PM
The big problem with networked geothermal systems (and many other decarb options) is the upfront costs. Framing the investment in terms of NPV and accounting for lifetime operational savings does not address the fact that someone or some group of customers will have to pay for the upfront costs.
I am not sure the answer to this, but I imagine PUCs and intervenors will ask similar questions.
January 11, 2025 at 5:15 PM
I am not sure the answer to this, but I imagine PUCs and intervenors will ask similar questions.
For example, I question whether the ~$27M in program costs could have been spent more effectively. Roughly ~27% of MA customers use heating oil as their primary heat source. Would the $ per emissions reduction not be lower for subsidizing conversions to ASHPs instead?
January 11, 2025 at 5:14 PM
For example, I question whether the ~$27M in program costs could have been spent more effectively. Roughly ~27% of MA customers use heating oil as their primary heat source. Would the $ per emissions reduction not be lower for subsidizing conversions to ASHPs instead?
PUCs across the country are currently facing questions around affordability due to significant capex growth and other spending, such as insurance costs. It is difficult to imagine that networked geothermal systems will currently be approved on any scale when more cost-effective options exist.
January 11, 2025 at 5:13 PM
PUCs across the country are currently facing questions around affordability due to significant capex growth and other spending, such as insurance costs. It is difficult to imagine that networked geothermal systems will currently be approved on any scale when more cost-effective options exist.
Some costs may decline due to scaling, but ~30% of the current budget is currently from in-unit renovations (unit installation, piping, weatherization, etc). These costs are not easily reduced.
January 11, 2025 at 5:13 PM
Some costs may decline due to scaling, but ~30% of the current budget is currently from in-unit renovations (unit installation, piping, weatherization, etc). These costs are not easily reduced.
Starting with affordability, based on Eversource’s latest pilot budget, costs per building unit were ~$178k (excluding IRA tax credits). In the case of the pilot, this cost is being recovered from all gas ratepayers.
January 11, 2025 at 5:12 PM
Starting with affordability, based on Eversource’s latest pilot budget, costs per building unit were ~$178k (excluding IRA tax credits). In the case of the pilot, this cost is being recovered from all gas ratepayers.
Two barriers stand out: affordability and the obligation to serve.
January 11, 2025 at 5:12 PM
Two barriers stand out: affordability and the obligation to serve.
Correct. They have a symmetrical incentive (+/- $500k) in place. I believe they are targeting ~4,500 new customers enrolled per year.
December 8, 2024 at 4:42 PM
Correct. They have a symmetrical incentive (+/- $500k) in place. I believe they are targeting ~4,500 new customers enrolled per year.
One thing to keep an eye on: Who pays? Addressing policy demands and affordability simultaneously requires $$$, and there is an ongoing question of who pays (certain customer classes, all classes, state / federal funding)? This could be an entirely different thread in the future!
December 8, 2024 at 3:00 PM
One thing to keep an eye on: Who pays? Addressing policy demands and affordability simultaneously requires $$$, and there is an ongoing question of who pays (certain customer classes, all classes, state / federal funding)? This could be an entirely different thread in the future!
There are also some performance incentives popping up to encourage increased enrollment. National Grid in MA recently had one approved
December 8, 2024 at 2:59 PM
There are also some performance incentives popping up to encourage increased enrollment. National Grid in MA recently had one approved
One unique proposal: location-based eligibility. I have only seen this approved in MN. The program proposed to target 77 census tracts with the highest energy burden and lowest household incomes. Everyone in those census tracts will receive a credit, subject to some basic screening criteria
December 8, 2024 at 2:59 PM
One unique proposal: location-based eligibility. I have only seen this approved in MN. The program proposed to target 77 census tracts with the highest energy burden and lowest household incomes. Everyone in those census tracts will receive a credit, subject to some basic screening criteria
Enrollment is also becoming a focus area for affordable rate design. Jurisdictions are implementing auto enrollment via data sharing agreements and self-certification.
December 8, 2024 at 2:56 PM
Enrollment is also becoming a focus area for affordable rate design. Jurisdictions are implementing auto enrollment via data sharing agreements and self-certification.
For this pilot, New York is installing heat pumps for eligible customers, and then customizing monthly bill discounts to ensure the bills do not exceed 6% of a customer's income. The NY PSC has stated affordability is “equally as important” as achieving clean energy objectives.
December 8, 2024 at 2:56 PM
For this pilot, New York is installing heat pumps for eligible customers, and then customizing monthly bill discounts to ensure the bills do not exceed 6% of a customer's income. The NY PSC has stated affordability is “equally as important” as achieving clean energy objectives.
Some jurisdictions have pushed for tailored bill assistance for customers, meaning the discount varies per customer to reach a target level. One interesting example is New York’s Energy Affordability Guarantee Pilot.
December 8, 2024 at 2:55 PM
Some jurisdictions have pushed for tailored bill assistance for customers, meaning the discount varies per customer to reach a target level. One interesting example is New York’s Energy Affordability Guarantee Pilot.
In general, stakeholders are pushing for more targeted approaches. For example, National Grid just approved a five-tiered discount structure. CT PURA just approved a five-tiered structure, replacing the existing two-tiered rate.
December 8, 2024 at 2:55 PM
In general, stakeholders are pushing for more targeted approaches. For example, National Grid just approved a five-tiered discount structure. CT PURA just approved a five-tiered structure, replacing the existing two-tiered rate.
I have come across two major trends in affordable rate design: 1) Targeted rate relief and 2) Maximizing enrollment of eligible customers.
December 8, 2024 at 2:55 PM
I have come across two major trends in affordable rate design: 1) Targeted rate relief and 2) Maximizing enrollment of eligible customers.
Balancing affordability with policy objectives has always been a concern for regulators. The difference now is the unprecedented levels of investments placing upward pressure on rates.
December 8, 2024 at 2:54 PM
Balancing affordability with policy objectives has always been a concern for regulators. The difference now is the unprecedented levels of investments placing upward pressure on rates.
This Utility Dive article does a good job at capturing some of these competing objectives. www.utilitydive.com/news/state-u...
Affordability, data center growth and more: 9 state utility regulators reveal their top challenges
Utility commissioners from across the U.S. say their most pressing issue is balancing affordability with the utility spending required to meet demand growth and maintain reliability.
www.utilitydive.com
December 8, 2024 at 2:52 PM
This Utility Dive article does a good job at capturing some of these competing objectives. www.utilitydive.com/news/state-u...
Regulators are trying to balance affordability with expanding policy goals. This balance is not easy. For example, MA DPU stated “Given the urgency of addressing the climate crisis, we are reluctant to slow the pace at which the transition must occur due to concerns about affordability.” 👀
December 8, 2024 at 2:51 PM
Regulators are trying to balance affordability with expanding policy goals. This balance is not easy. For example, MA DPU stated “Given the urgency of addressing the climate crisis, we are reluctant to slow the pace at which the transition must occur due to concerns about affordability.” 👀
First up, low-income rate design. A 🧵:
December 8, 2024 at 2:50 PM
First up, low-income rate design. A 🧵: