The Commission will convene a Retail Electric Competition Workshop on Monday, December 3rd. At its November 7th Open Meeting, the Commission expressed a desire to engage relevant parties in a discussion of whether it is in the public interest to implement retail electric competition in Arizona. Accordingly, Staff is seeking input on the "potential opportunities, benefits, and challenges that may accompany a transition to retail electric competition." Staff has issued questions for input as follows to be discussed during the workshop and in written comments. The questions are as follows:

"1) Should retail electric competition be implemented across the board equally for all customer classes and enterprises or for only specific customer classes and enterprises (e.g., for electric vehicle industry only)?
2) How could retail electric competition affect each of the customer classes?
3) How might the benefits of competition apply to all customer classes equally and/or equitably?
4) Can a transition into retail competition be in the public’s interest if residential customers may be adversely affected by the transition?
5) How can the Commission minimize or eliminate market structure abuses and/or market manipulation in the transition to, and implementation of, retail electric competition?
6) What, if any, features, entities, or mechanisms must be in place for there to be an effective and efficient market structure for retail electric competition?
7) What impact, if any, would retail electric competition have on the reliability of electric service in Arizona?
8) Among the states that have transitioned to retail electric competition, which model(s) best promotes the public interest for Arizonans? Which model(s) should be avoided?
9) How have retail rates been affected in states that have implemented retail electric competition?
10) Considering the Court of Appeals’ decision in Phelps Dodge Cop. v. Ariz. Elec. Power Coop., 207 Ariz. 95, 83 P.3d 573 (App. 2004), are the Commission’s existing retail electric competition rules (R14-2-1601 through R14-2-1618) able to be modified to comply with the court’s decision or should the Commission completely discard those rules and start with a clean slate to transition to retail electric competition? Are there other legal impediments to the transition to and/or implementation retail electric competition?
11) Is retail electric competition compatible with the Commission’s Renewable Energy Standard that requires Arizona’s utilities serve at least 15% of their retail loads with renewable energy by 2025? (See A.A.C. R14-2-1801 et seq.)
12) Is retail electric competition compatible with the Commission’s Energy Efficiency Standard that requires Arizona’s electric utilities to achieve a 22% reduction in retail energy sales by 2020? (See A.A.C. R14-2-2401 et seq.)
13) Should the Commission address net metering rates in a competitive market differently than it has in the Value of Solar decision (Decision No. 75859)?
14) How will retail electric competition affect investor-owned utilities, public power utilities, cooperatives, and federally-controlled transmission systems?
15) What consumer education should be provided, and which consumer protection issues will need to be addressed?
16) What issues may arise regarding billing and collection in the transition to retail electric competition?
17) How should the Commission accommodate and encourage evolving technology in a competitive market?
18) Other than the Commission’s existing retail electric competition rules, what other existing Commission rules and policies will need to be changed to accommodate retail electric competition?"

Yesterday, Commissioner Olson added a letter request to the docket to "highlight one of the areas of inquiry that is particularly important" and asking "stakeholders to detail how retail competition has affected rates in states that have allowed a market in the supply of electricity." He wrote "that the effect of retail competition on rates can be determined by looking at the change in average rates within a state over a period of years before and after enactment of retail competition and then comparing this change in rates to the change experienced by all other states in the region over the same period."

The full texts of the Notice of Workshop and Commissioner Olson's Letter are available on the NEM Website.

Staff will be convening a stakeholder meeting on December 7th to discuss implementation of the Clean Energy Act, including how to implement the increased Class I obligations as well as how to allocate the increased solar RPS obligations over the next three Energy Years as related to the BGS auction. Discussion will also include an upcoming rulemaking proceeding regarding the RPS obligation under the Act, which altered the Class I RPS, Class II RPS, and solar RPS obligations. Written comments are due December 10, 2018. The full text of the Notice of Stakeholder Meeting is available on the NEM Website. For consideration with respect to allocation of RPS for BGS for the period beginning June 1, 2019, stakeholders are asked to consider: 1) how to allocate the solar RPS obligations of the exempt entities amongst the nonexempt entities; 2) what the RPS requirements should be for Energy Year (EY) 2019, EY 2020, EY 2021, and EY 2022; and 3) whether to consider solar obligations to be included within the overall Class I obligations as a carve-out, such that SRECs submitted to satisfy the solar RPS will also be counted toward the satisfaction of the total Class I RPS rather than being considered additive to the Class I RPS. For consideration with respect to the upcoming rulemaking to amend the RPS, stakeholders are asked to consider: 1) whether to include solar obligations within the overall Class I obligations as a carve-out, such that SRECs submitted to satisfy the solar RPS will also be counted toward the satisfaction of the total Class I RPS rather than being considered additive to the Class I RPS; and 2) whether the treatment of the increased Class I RPS obligations and the treatment of solar RPS are appropriately calculated by Staff. The full text of the Notice of Stakeholder Meeting is available on the NEM Website.

The EDI Working Group filed a November 2018 Report on EDI Standards Development. The Report "includes includes modifications addressing limited cyber security concerns pertaining to the Electronic Delivery Mechanism (“EDM”) used to transport EDI transactions via the public internet, Department of Public Service (“DPS”) Staff requested changes to the Phase I testing application, standardization of gray box notes to provide clarity and consistency in the 814C and 814HU Implementation Guides and incorporation of updates addressing April 2018 Report errata."

Specifically, changes are being made to the Technical Operating Profile Standards to upgrade the current standard EDM from GISB EDM 1.4 to NAESB EDM 1.6 to reflect the practice of other retail choice states. The purpose of the upgrade is to "ensure that 'Confidential Utility Information is encrypted in transit utilizing industry best practice encryption methods' as stated in the Self-Attestation provided by Energy Service Entities to utilities." The Technical Operating Profile Standards are also being revised to:

"• Require a 1024-bit PGP encryption key.
• Recommend the practice of utilizing different PGP keys for production and test environments.
• Recommend that periodic testing associated with utility-initiated changes to PGP keys be process in batches.
• Update references to the underlying EDM standards documents supported by the North American Energy Standards Board (“NAESB”).
• Update the recommendations for alternative secure medium recommendations to be used during prolonged EDI outages to reflect technological changes.
• Reflect other changes to reflect experience since New York’s initial implementation of EDI and to address miscellaneous errata."

Pending the formation of the Cyber Security Working Group, the EDI Working Group deferred additional upgrades including:

"• Further updates New York’s standard EDM, i.e. mandated implementation of a higher version that GISB EDM 1.6.
• Whether or not to require and/or support longer PGP encryption keys, e.g. 2048-bit or 4096-bit.
• Further recommendations for alternative secure medium recommendations to be used during prolonged EDI outages to reflect technological changes."

The Working Group recommends a twelve month implementation timeline for changes in the Technical Operating Profile, to accommodate testing with ESCOs and utility upgrades. The changes are being submitted under the Expedited EDI Standards Approval Process for consensus changes. The full text of the Report is available on the NEM Website and EDI Working Group Website.