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1 CHUGtt=::---,oWERJG AWKA'S FUTURE March 1, 2018 ELECTROICALLY FILED WITH RCA Regulatory Commission of Alaska 701 W. 8 th Avenue, Suite 300 Anchorage, AK Subject: Tariff Advice o Commissioners: The tariff filing described below is transmitted to you for filing in compliance with the Alaska Public Utilities Regulatory Act and Sections 3 AAC AAC of the Alaska Administrative Code. This filing requests approval for ( Chugach ) to add a voluntary Green Energy Program to its tariff service offerings. Chugach s Green Energy Program will provide members the opportunity to voluntarily support renewable energy through a premium paid on their monthly electric bill. This additional amount will be used to directly support the environmental and social goals of sustainability. The following tariff sheets are submitted for approval: TARIFF SHEET UMBER CACELS SHEET UMBER SCHEDULE OR ORIGIAL REVISED ORIGIAL REVISED RULE UMBER 6.5 Fourth Revision 6.5 Third Revision Index 104 First Revision 104 Original Green Energy Original n/a n/a Program and Original n/a n/a Program Original n/a n/a Terms Approximately 67,992 retail members (81,195 meters) are impacted by this filing. The City of Seward is not impacted by this filing. This filing will not result in the termination of an existing service, conflict with any other schedule or rate, or in any other way have an adverse impact to customers or the public. Revenue under the program is projected to be less than $50,000 in year 1, increasing to approximately $130,000 by year 5. Chugach s 2018 system revenues are projected to total $206.9 million. Introduction Chugach s members have shown support for renewable energy development, and the Chugach Board of Directors (the Board ) has directed the cooperative to focus on sustainability, consistent with a Triple Bottom Line examination of the financial, environmental and social impacts of Chugach s business activities. The Green Energy Program is responsive to member desires and is consistent with Chugach s sustainability business objectives Electron Drive, P.O. Box Anchorage, Alaska (907) Fax (907) (800) info@chugachelectric.com

2 Commissioners March 1, 2018 Tariff Advice o Page 2 of 5 In February 2017, the Board adopted a resolution of sustainability as a core business philosophy by which financial, environmental and social measures are expressly considered in [Chugach s] overall performance. Further Board discussions, in addition to discussions between the Board and Chugach management, led to consideration of programs that would foster Chugach s and its members support of sustainable business practices. Chugach retained 3Degrees, a consulting firm focused on providing clean energy solutions, to assist with the design and development of this program. This process resulted in the voluntary Green Energy Program. Chugach plans to introduce this Program following introduction of a community solar program to be submitted under a separate tariff filing. In August 2017, seeking further direction on the specific initiatives that Chugach s members would find most attractive, Chugach undertook a phone and survey of its members addressing sustainability. Eighty-one percent of respondents said that it was very important (53.4%) or somewhat important (27.8%) to them that Chugach make decisions with consideration of financial, environmental and social factors. More than half of survey respondents agreed that they would be willing pay $1.00 or more per month to get more of their electricity from renewable resources. With this confirmation of member interest, and with the assistance of 3Degrees, Chugach has developed the Green Energy Program proposed in this filing. Green Energy Program Overview Chugach s Green Energy Program will provide members the opportunity to voluntarily support renewable energy through a premium paid on their monthly electric bill. This additional amount will be used to directly support the environmental and social goals of sustainability in two ways: (1) these funds will be used first to purchase Renewable Energy Certificates (RECs) at a level chosen by the participating member; and, (2) additional funds above the level necessary for REC purchases will be used to directly develop renewable energy projects in Chugach s service territory, with a focus on projects developed by non-profits and other entities primarily oriented to providing public benefits. One REC represents the environmental, social, and other non-power qualities associated with 1,000 kwh (1 MWh) of electricity produced by a renewable energy resource. 1 A REC can be transferred (bought and sold) separately from the underlying physical electricity produced by a particular renewable energy generation source. By creating these separate units of value, RECs use market forces to promote renewable energy sources. 2 Under the Green Energy Program, Chugach will purchase and retire RECs for each participating member at a level chosen by the member. To retire RECs means to identify specific RECs traded in renewable energy markets as claimed and used such that no other entity is able to sell, use or claim the same RECs. By retiring the RECs, Chugach can verify that only the applicable members who participate in the program can claim the renewable attributes of their chosen level of generation. In this way, participating members will have greened the applicable portion of their energy usage. 1 See U.S. Environmental Protection Agency, Green Power Partnership: Renewable Energy Certificates (RECs), accessed Feb. 27, RECs have been in use for many years and are bought and sold in markets around the world.

3 Commissioners March 1, 2018 Tariff Advice o Page 3 of 5 Chugach will offer the Green Energy Program to both its residential and commercial customers at three levels, with monthly payment levels as follows: Level Residential Small General Service Large General Service Low $3.00 $5.00 $ Medium $6.00 $10.00 $ High $9.00 $20.00 $ Each level corresponds to a greening volume premised on 25% (low), 50% (medium) or 100% (high) of average energy usage for that customer class. For example, the three residential energy levels are premised on average residential customer usage of 600 kwh per month. At the high level, Chugach will purchase and retire RECs sufficient to green 600 kwh per month of the participating customer s energy usage. The medium level will green 300 kwh per month of residential energy usage (50% of average usage) and the low level will green 125 kwh per month (25% of average usage). The projected revenues and expenses for the first five years of the Green Energy Program are attached as Exhibit A. These projections are based on estimated customer participation rates as shown on Exhibit B. Actual participation may vary significantly. Table 1 contains a summary of the initial five-year financial projections for the Green Energy Program. Table 1: Initial Program Financial Projection Description Year 1 Year 2 Year 3 Year 4 Year 5 Estimated Participation Total Revenue Total Expenses Available For Grants Combined Total ,122 1,487 1,494 1,048 $45,049 $90,535 $109,664 $128,983 $129,614 $503,844 $27,368 $31,675 $35,114 $38,586 $38,660 $171,403 $17,681 $58,859 $74,550 $90,396 $90,953 $332,441 The Available Funds shown in Table 1 are projections of the funds that Chugach expects to have available by the end of each applicable year to fund the second element of the Green Energy Program, the grants that will be used to directly develop renewable energy projects in Chugach s service territory. Chugach will separately track expenses and revenues under the Green Energy Program. The grant portion of the Green Energy Program is detailed below. The Green Energy Program is completely voluntary and has been designed to be administratively simple and inexpensive for members. There are no minimum participation terms, start-up fees or

4 Commissioners March 1, 2018 Tariff Advice o Page 4 of 5 cancellation fees. Members will be able to participate in or depart from the program as they see fit and those members who do not wish to participate in the Green Energy Program are economically indifferent to the program. 3 Green Energy Program Grants Available funds in excess of those needed to green the applicable portion of participating members energy usage and satisfy other program costs will be used to provide grants for constructing renewable energy projects in Chugach s service territory. In this way, participating members will have a low cost means for supporting renewable energy in our Alaska community. Chugach currently intends that only entities and organizations primarily oriented to providing public benefits, such as non-profits, will be eligible to apply for these Green Energy Program grants. The proposed Green Energy Program tariff authorizes Chugach to seek proposals for grants, evaluate applicants and their proposed projects and select grantees, all within the listed constraints. Among other considerations as listed on the tariff, Chugach will evaluate proposals for their projected impact (which will be assessed, in part, on the basis of projected kwh per dollar of grant funds) and will favorably consider proposals that have matching funds, are seeking other grants or financing, or are otherwise seen to be leveraging the Green Energy Program resources. Chugach currently has no planned minimum or maximum grant level. The sum of available funds will change with participation and chosen levels of enrollment; therefore the anticipated available funds varies widely, from a projection of a total of $66,000 to a total of $515,000 by the end of year five, as shown in the table below. Chugach intends to fully utilize the grant funds at whatever level they are available. Chugach further intends that the RECs generated by the grant-supported projects will be used to green program participants energy usage by replacing a portion of the RECs purchased as described in the program overview section above. Table 2: Estimated Range of Available Funds Low Medium High $66,000 $330,000 $515,000 r I...:. I Given the uncertainty as to the sum of funds that will be available, Chugach proposes to postpone making Green Energy Program grants until (1) there are available funds of $50,000 or more or (2) the end of year three of the program. This will allow sufficient time for the program to develop and become self-sustaining, or for Chugach to determine program modifications to increase participation (or otherwise increase available funds), as applicable, so as to provide a meaningful pool of funds available for grants. 3 If the Green Energy Program results in significant new generation resources being added to the Chugach system, it is possible that the base rates of non-participating members may be slightly impacted by the displacement of existing generation with these new renewable generation resources. Chugach does not expect this to be material.

5 Commissioners March 1, 2018 Tariff Advice o Page 5 of 5 Description of Tariff Changes Tariff Sheet o. 6.5: Updates the Table of Contents to include Green Energy Program. Tariff Sheet o. 104: Updated to include the proposed Green Pricing Program. Tariff Sheets : ew tariff sheets establishing Chugach s Green Energy Program. Please contact Sean Skaling, Manager of Business and Sustainable Program Development, at (907) if you have questions or additional information is needed. Sincerely, CHUGACH ELECTRIC ASSOCIATIO, IC. Arthur W. Miller Vice President, Regulatory and External Affairs P.O. Box Anchorage, Alaska Telephone: Facsimile: Arthur_miller@chugachelectric.com Attachments cc: John Foutz, City of Seward (electronically)

6 RCA o.: 8 4 th Revision Sheet o. 6.5 Canceling 3 rd Revision Sheet o. 6.5 RULES AD REGULATIOS IDEX RETAIL AD WHOLESALE RATES (COTIUED) Sheet o. Sale for Resale Economy Energy Transactions Regulatory Cost Charge Calculation of Chugach G&T Losses Green Energy Program RULE 10 - O-UTILITY GEERATIO ITERCOECTIO AD OPERATIG GUIDELIES, AD PURCHASES AD SALES OF ELECTROIC POWER TO AD FROM QUALIFYIG FACILITIES 10.1 Definitions Interconnection and Operating Guidelines Power Purchases From Qualifying Facilities Power Sales to Qualifying Facilities. 116 Tariff Advice o.: Effective: April 16, 2018 Issued by: P.O. Box , Anchorage, Alaska By: Title: Chief Executive Officer Lee D. Thibert

7 RCA o.: 8 1 st Revision Sheet o. 104 Canceling Original Sheet o. 104 GREE EERGY PROGRAM The Green Energy Program (the Program) is a voluntary program available to residential, small general and large general service members to support renewable energy development. Members may select from three levels of support and the applicable monthly charge identified below will be added to the member s electric bill. The Program has no minimum participation terms, start-up fees or cancellation fees, and members may participate in the Program at their discretion. All amounts collected under the Program will first be used to purchase Renewable Energy Certificates (RECs) at a level chosen by the participating member, and funds above the level necessary for REC purchases and to satisfy program expenses will be used to develop renewable energy projects in Chugach s service territory, with a focus on projects advancing non-profits and other entities providing public benefits. Levels and Monthly Payments Electric bills for members participating in the Program will be computed in accordance with the applicable retail service rates contained in the operating tariff, and the payment amount below corresponding to the member s chosen level of support for the Program will be added to the member s bill. Each level corresponds to a greening volume premised on 25% (low), 50% (medium) or 100% (high) of average energy usage for that customer class. Monthly Payment Level Residential Small General Service Large General Service Low $3.00 $5.00 $ Medium $6.00 $10.00 $ High $9.00 $20.00 $ A cancellation of participation becomes effective on the member s next meter read date. The bill for the period prior to such date will include the final monthly payment amount. Bills will not be prorated for partial months of participation. Tariff Advice o.: Effective: April 16, 2018 Issued by: P.O. Box , Anchorage, Alaska By: Title: Chief Executive Officer Lee D. Thibert

8 RCA o.: 8 Original Sheet o Canceling Sheet o GREE EERGY PROGRAM (Continued) REC Purchases and Retirements One REC represents 1,000 kwh (1 MWh) of electricity produced by a renewable energy resource. Chugach will purchase and retire RECs for each participating member at the level chosen by the member. To retire RECs means to identify specific RECs traded in renewable energy markets as claimed and used such that no other entity is able to sell, use or claim the same RECs. Green Energy Program Grants Program funds in excess of those required to purchase RECs and satisfy Program expenses will be used to fund Green Energy Program Grants (Grants). Grants will be used to develop renewable energy projects in Chugach s service territory with a focus on providing Grants to entities providing public benefits, including non-profit organizations. Grant Eligibility Criteria To be eligible to receive a Grant, an applicant must: (1) Be an Association member; (2) Use Grant funds to install an eligible project (as described below) within Chugach s service territory; and (3) Provide all information required by the applicable solicitation to which the applicant is responding and otherwise reasonably requested by Chugach in relation to the application. To be eligible for a Grant, unless otherwise agreed to by Chugach, an applicant s project must: (1) Be owned or leased by the applicant member; (2) Use any of the following technologies: (A) solar photovoltaic or solar thermal; (B) wind; (C) biomass, including landfill gas or biogas produced from organic matter, wastewater, anaerobic digesters, or municipal solid waste; (D) hydroelectric, geothermal, hydrokinetic or ocean thermal; (E) battery energy storage; and (F) other sources as may be approved by the Regulatory Commission of Alaska that generally have similar environmental impacts; and (3) Be interconnected with the Chugach system, either on the member s or on Chugach s side of the applicable electric meter, and in any event remain in compliance with all interconnection requirements otherwise application in accordance with the operating tariff. Chugach will determine whether any applicant and/or project satisfies these criteria. Tariff Advice o.: Effective: April 16, 2018 Issued by: P.O. Box , Anchorage, Alaska By: Title: Chief Executive Officer Lee D. Thibert

9 RCA o.: 8 Original Sheet o Canceling Sheet o GREE EERGY PROGRAM (Continued) Grant Process Chugach will solicit applications from interested parties who desire to receive a Grant. Applications must: (1) describe the applicant, including the specifics of its public benefit; (2) as completely as possible, describe the project for which the applicant is requesting Grant funds; (3) clearly state how the applicant and the project satisfy all of the eligibility criteria; and, (4) provide any other information requested in the applicable solicitation. Applications will be evaluated pursuant to the timeline established in the applicable solicitation. Chugach will evaluate all applicants and projects that satisfy the above eligibility criteria (Eligible Projects) and may select one or more Eligible Projects to support with Grant funds. Chugach will evaluate proposals for their projected impact, assessed in part on the basis of projected kwh per dollar of Grant funds, and will favorably consider proposals that have matching funds, are seeking other grants or financing, or are otherwise seen to be leveraging Program resources for maximum public benefit. Additional Terms & Conditions 1. Once a member elects to participate in this Program, their election shall remain in effect until the earliest of: a. Cancellation by the member through the Chugach online member portal, or by phone with, or in writing to, Chugach customer service; b. the member ceases to pay the applicable monthly payment amount, or c. the Program is terminated. 2. Participating members must remain current in their payment of bills, consistent with the conditions contained in the operating tariff. Members participating in the Program and become delinquent on their payments are subject to cancellation. 3. Without limiting any other applicable provision of Chugach s tariff, unless otherwise agreed between Chugach and an applicant, all costs related to equipment and services required for developing, installing, testing, interconnecting and integrating a selected Eligible Project will be paid from Grant funds or by the applicant. Chugach will work with applicants to screen for and address possible interconnection, integration and other issues at the beginning of the application process. Tariff Advice o.: Effective: April 16, 2018 Issued by: P.O. Box , Anchorage, Alaska By: Title: Chief Executive Officer Lee D. Thibert

10 RCA o.: 8 Original Sheet o Canceling Sheet o GREE EERGY PROGRAM (Continued) 4. RECs generated by Grant-supported projects will be used to green program participants energy usage by replacing a portion of the RECs that would otherwise be purchased as described above. 5. Chugach reserves the right to adjust Program participation payments upward or downward if necessary if circumstances change or unforeseen costs or benefits arise. Any change would not affect monthly payments already paid, and affected members would retain the right to cancel at any time. 6. Chugach has made no warranty or representation, express or implied, of any kind to members who desire to or actually participate in the Program. Without limiting the generality of the foregoing, Chugach has made no warranty or representation, express or implied, that participating members may or will derive an economic or any other kind of benefit from their participation in the Program. 7. Funds collected from members participating in the Program will be deposited into an interestbearing investment account. Tariff Advice o.: Effective: April 16, 2018 Issued by: P.O. Box , Anchorage, Alaska By: Title: Chief Executive Officer Lee D. Thibert

11 Anchorage, Alaska Green Energy Program Exhibit A: Projected Base Case Revenue and Expenses (Year 1 through Year 5) Description Year 1 Year 2 Year 3 Year 4 Year 5 Total Revenue Expected Participant Income Residential $18,505 $37,195 $56,071 $75,135 $75,511 $262,418 Small General Service $1,944 $3,907 $3,927 $3,947 $3,966 $17,691 Large General Service $24,600 $49,432 $49,666 $49,900 $50,136 $223,735 Subtotal $45,049 $90,535 $109,664 $128,983 $129,614 $503,844 Total Revenue $45,049 $90,535 $109,664 $128,983 $129,614 $503,844 Expenses Fixed My Account Modifications $3,000 $3,000 $3,000 $3,000 $3,000 $15,000 Marketing $16,000 $16,000 $16,000 $16,000 $16,000 $80,000 AR Registry $2,000 $2,000 $2,000 $2,000 $2,000 $10,000 Subtotal $21,000 $21,000 $21,000 $21,000 $21,000 $105,000 Variable Participant recognition $1,890 $3,799 $5,608 $7,435 $7,472 $26,204 Acquisition of ational Wind Low Cost RECs $1,895 $3,807 $5,060 $6,327 $6,356 $23,444 at'l Wind Low Cost RECs Retirement Fees (AR) $79 $159 $211 $264 $265 $977 at'l Wind Low Cost RECs Transfer Fees (AR) $16 $32 $42 $53 $53 $195 Subtotal $3,880 $7,796 $10,921 $14,078 $14,146 $50,821 Contingency (10%) $2,488 $2,880 $3,192 $3,508 $3,515 $15,582 Total Expense $27,368 $31,675 $35,114 $38,586 $38,660 $171,403 Revenue Available for Grants $17,681 $58,859 $74,550 $90,396 $90,953 $332,441 GEP Calculations 3/1/2018 Exhibit A Page 1 of 1

12 Anchorage, Alaska Green Energy Program Exhibit B: Projected Participation Rates (Year 1 through Year 5) Description Year 1 Year 2 Year 3 Year 4 Year 5 Average umber of Meters Residential Meters 70,900 71,255 71,611 71,969 72,329 - Small General Services Meters 8,100 8,141 8,181 8,222 8,263 - Large General Service Meters 1,300 1,303 1,307 1,310 1,313 - Subtotal 80,300 80,698 81,098 81,501 81,905 Percent Participation Residential Particiption Rate 0.50% 1.00% 1.50% 2.00% 2.00% 1.40% Small General Service Participation Rate 0.25% 0.50% 0.50% 0.50% 0.50% 0.45% Large General Service Participation Rate 0.25% 0.50% 0.50% 0.50% 0.50% 0.45% umber of Participants Residential Participants ,074 1,439 1,447 1,005 Small General Service Participants Large General Service Participants Subtotal ,122 1,487 1,494 1,048 GEP Calculations 3/1/2018 Exhibit B Page 1 of 1