Arkansas Public Service Commission Rejects Proposed Tariff Revisions from Southwest Arkansas Electric Cooperative Corporation

Strategic Insights -

The Arkansas Advanced Energy Association (AAEA) has filed an opening statement with the Arkansas Public Service Commission (APSC) urging it to reject proposed tariff revisions from Southwest Arkansas Electric Cooperative Corporation (the "Cooperative"). The proposed revisions would impose insurance requirements on members of the Cooperative, making it uneconomic for them to own or operate Distributed Resources (DR) systems. The AAEA argues that these requirements are not in the public interest and would disproportionately impact residential and smaller projects.

Key Takeaways:

  • The Cooperative's proposed insurance requirements are not proportional to the size of the Distributed Resource or in the public interest.
  • The Cooperative's witnesses failed to rebut the testimony of the General Staff of the Commission or the AAEA, and their testimonies should be accorded no weight in this proceeding.
  • The Cooperative has not provided adequate support for its proposed insurance requirements, which are intended to discourage distributed generation by increasing the costs of projects.
  • The proposed tariff revisions would shift significant costs on Distributed Resource customers and would reduce or entirely eliminate the benefits of owning these systems.
  • The Cooperative fails to provide an analysis quantifying the impact of the proposed insurance requirements on the net benefits of Distributed Resource ownership, making it difficult to show the appropriateness of the proposed revisions.
  • The Cooperative's proposal to require a commercial general liability insurance policy with a 12-month term and a $1,000,000 limit per occurrence, with a $2,000,000 aggregate limit, is not in the public interest.
  • The Cooperative's proposal to have all four of the endorsements proposed by the Cooperative, including premises liability and product/completed operations liability, is unnecessary and would increase insurance premiums.
  • The Cooperative fails to provide substantial evidence to support the necessity of the additional endorsements, making it difficult to justify the costs associated with them.

Statistics:

  • Distribution of states that require commercial general liability insurance policies vary, but the Cooperative's proposed requirements are substantively different and potentially excessive when compared to other states' requirements.
  • Approximately 34.3% of residential inverters experience their first failures after 15 years of operation, which may cause damage beyond that of the homeowner's system.
  • The Cooperative fails to provide estimates of damages sustained by both residential and industrial equipment due to high total harmonic distortion.
  • The Cooperative fails to provide examples or evidence of fires spreading to substations in response to Staff's Data Request Number 5.

Sources:

  • Doc. No. 23, Direct Testimony of Jeffrey D. Bower
  • Doc. No. 22, Direct Testimony of Lauren Waldrip
  • Doc. No. 26, Rebuttal Testimony of Kecia Wolf
  • Rural Utility Services, Interconnection of Distributed Resources Final Rule, pg. 32408
  • 7 C.F.R. SS 1730.63(a)(3)