20100617Comments.pdf

NEIL PRICE
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 6864
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Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5918
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF A VISTA )
CORPORATION'S PROPOSED REVISION )
OF TARIFF I.P.U.C. NO. 28 FOR )SCHEDULE 63. )
)
)
CASE NO. AVU-E-IO-02
COMMENTS OF THE
COMMISSION STAFF
The Staff of the Idaho Public Utilties Commission, by and through its Attorney of Record,
Neil Price, Deputy Attorney General, in response to the Notice of Application and Notice of
Modified Procedure, issued on May 20, 2010, Order No. 31090, submits the following comments.
BACKGROUND
On April 20, 2010, A vista Corporation (Avista; Company) fied electronically its First
Revision of Tariff Sheet No. 63 canceling Original Sheet No. 63 ofTariffI.P.U.C. No. 28 (Filng).
The Company proposed an effective date for the revised tariff sheet of May 20, 2010.
Avista's Filng proposes to increase the maximum generating capacity that Schedule No. 63
(Net Metering) customers may connect to the system, from the curent 25 kilowatt (kW) limit per
customer to 100 kW per customer. The Company proposes to increase the limit to 100 kW for all
customer classes. Currently, Avista allows customers to enroll as net metering customers on a "first
come, first serve" basis until the cumulative generating capacity of all net metering customers
equals 1.52 MW (0.1 % of Avista's retail peak demand in 1996). To be eligible for net metering,
STAFF COMMENTS 1 JUNE 17,2010
customers must own a facilty, located on the customer's premises, that generates electricity and
uses as its fuel either solar, wind, biomass or hydropower, or represents fuel cell technology.
STAFF ANALYSIS
A vista's primar reason for proposing to increase the individual customer limit for net
metering from 25 k W to 100 k W is to accommodate customers who wish to install larger systems
than are curently permitted under Schedule 63. A vista reports that it has received requests from
one residential customer who wishes to install a 55kW photovoltaic system and from one
commercial customer to install a 63kW photovoltaic system. A secondary reason for proposing the
change is to align A vista's net metering rules in Idaho with the net metering standard that was
established for Avista in Washington in 2008.
Although net metering seems to generate much interest among customers, the program has
historically attracted few paricipants. A vista reports that there are currently 14 participants in
Idaho, with a collective generation capacity of only 37 kW. Most net metering customers are
residential, and most systems have generation capacities of only a few kilowatts.
A vista states that the current average monthly demand of customers using net metering is in
the range of 5-10 kW. Net metering systems are often sized to have peak generation capacities that
are greater than the customer's average monthly demand so that when generation exceeds the
customer's usage, credit for the excess generation can in effect be "baned" for use when the net
metering systems are unable to produce. Nevertheless, even the current 25 kW limit would
accommodate nearly all residential customers' net metering systems. By comparison, the net
metering tariffs of both Idaho Power and Rocky Mountain Power limit individual net metering
systems to 25k W for the residential class and lOOk W for all other customer classes.
Residential customers who wish to install net metering systems larger than 25 kW would be
highly unusual. Indeed, the Avista residential customer who wishes to install a 55 kW residential
net metering system states that he has already invested $200,000 in photovoltaic equipment. This
atypical customer reports that he has a 7,000 square foot home, a large shop, four meters, four
transformers, and an average usage of about 6,000 kWh per month. The customer maintains that a
55 kW net metering system is necessar in order to fully offset his usage over the course of the
year, and that a larger system is necessar in northern Idaho than in other areas of the state due to
the low number of solar days at the northern latitudes. Nevertheless, Staff believes that the vast
majority of net metering customers will continue to install systems with capacities below 25 kW.
STAFF COMMENTS 2 JUE 17,2010
Limits on the size of systems eligible for net metering were originally adopted to restrict net
metering to those customers who wished to offset their energy usage. Customers who wish to
generate significantly more than their usage are treated as small generators under PURPA, and are
required to sell their generation under non-firm tariffs or enter into long-term fixed rate contracts.
Regardless of whether the Commission approves Avista's request to increase the net metering size
limit, all customers, irrespective of the size of their system, wil stil be able to choose to be
compensated as a small generator under PURP A if the customer believes that PURP A avoided cost
rates wil be more attractive than net metering.
Historically, one of the primar reasons for restricting net metering to customers who offset
their usage has been to minimize subsidization of net metering customers by the general body of
ratepayers. Under net metering, customers are credited for the full retail value of every kilowatt-
hour produced. Retail rates, however, include cost components for transmission, distribution,
metering, biling, and administrative and general costs, in addition to the cost of the generation
itself. For many years, retail rates far exceeded the cost of generation alone, thus creating a subsidy.
That situation is no longer true today. Avista's residential retail rate is approximately 7.4 tlkWh.
By comparison, the 20-year levelized PURPA rate, a fair proxy for the cost of new generation, is
7.9 tlkWh. New peaking resources and some renewable generation is even more expensive.
Because net metering customers are no longer subsidized by other ratepayers, Staff believes there is
much less reason to limit the size of net metering systems.
Under the provisions of Schedule 63, net metering customers can accumulate and cary
excess generation credits from one month to the next, and utilize those credits as needed throughout
the course of the year. However, all unused credits are forfeited at the end of each calendar year
and A vista provides no compensation to customers for unused credits. These provisions help to
preserve the intent of the net metering program by encouraging customers to install systems
designed only to offset their usage. Thus, even if the Commission agrees to increase the net
metering limit to 100 k W, customers wil have no incentive to oversize their systems.
Avista states that it does not believe that increasing the generation limit to 100kW wil
significantly increase the number of net metering participants for a variety of reasons, most notably
the high cost of developing small power generation facilties. As stated earlier, the Company's
Schedule 63 limits the cumulative enrollment in the net metering program to 1,520 k W. With a
current enrollment of only 37 kW, it should be many years before the enrollment limit presents any
barier to additional paricipation.
STAFF COMMENTS 3 JUE 17,2010
A vista asserts that the proposed revision would not impact the distribution system or other
customers' service. The Company requires that each potential net metering customer file an
application prior to participating in the program. Upon submittal of the application for net
metering, A vista evaluates the existing capacity of the applicant's service to address any potential
capacity issues that may be encountered by the customer. If the applicant's service capacity is
deemed insufficient to accommodate the applicant's proposed generation capacity, Avista provides
the applicant with a detailed cost estimate for upgrading the service. The cost to upgrade the
service facilities, including the transformer, if required, is the sole responsibilty of the applicant.
This process is curently in place and wil continue as a standard procedure if the net metering
standard is increased from 25kW to 100kW.
RECOMMENDATIONS
Staff recommends that the Commission approve A vista's request to increase the net metering
size limitation to 100kW for all customer classes. Adoption of the proposed net metering standard
for A vista wil accommodate customers who wish to install larger systems, stil preserve the intent
of net metering to offset usage, and recognize the lower number of solar days in northern Idaho.
The proposed change should not cause net metering customers to be subsidized by other ratepayers,
nor wil it change net metering customers' responsibilty for paying for service upgrades when
required.
Respectfully submitted this \'lfi day of June 2010.
~aJ~~
Neil Price
Deputy Attorney General
Technical Staff: Rick Sterling
Doug Cox
i :umisc:commentslavue i O.2nprpsdc.doc
STAFF COMMENTS 4 JUNE 17,2010
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 17TH DAY OF JUNE 2010,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. AVU-E-IO-02, BY MAILING A COPY THEREOF, POSTAGE PREPAID,
TO THE FOLLOWING:
PAUL KIMBALL
A VIST A CORPORATION
PO BOX 3727
SPOKANE WA 99220-3727
E-MAIL: paul.kimball(iavistacorp.com
Jo~TÁSECRET~~-=
CERTIFICATE OF SERVICE