29092.doc

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

in the matter of THE APPLICATION OF IDAHO POWER COMPANY TO AMEND SCHEDULE 72—INTERCONNECTIONS TO NON-UTILITY GENERATION. )
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) CASE NO. IPC-E-01-38

ORDER NO. 29092

On November 9, 2001, Idaho Power Company (Idaho Power; Company) filed an Application with the Idaho Public Utilities Commission (Commission) requesting approval of proposed amendments to the Company’s tariff Schedule 72—Interconnections to Non-Utility Generation.
BACKGROUND
On April 12, 1991, the Commission issued Order No. 23631 approving the current tariff Schedule 72. Since approval of Schedule 72 in 1991, Idaho Power states that it has continued to review its generation interconnection practices and has determined that it would be beneficial to modify Schedule 72 to bring the Schedule into conformance with current standards of best utility practices for non-utility generation interconnection. The purpose of these proposed changes, the Company states, is to provide a template for non-utility generation interconnection that provides a safe, economic and reliable interconnection while at the same time ensuring that Idaho Power’s other customers do not subsidize the costs associated with non-utility generation interconnections.
Description of Changes
Idaho Power’s experience gained by interconnecting non-utility generation projects of varying sizes from the extremely small (300 watts) to the moderately large (10 MW) has led it to propose that Schedule 72 be amended to accommodate a range of interconnection requirements with increasing levels of sophistication depending on the size of the generating facility. As a result, the Company proposes a simple interconnection process for net metering projects, and a more streamlined and simple interconnection process for projects 100 kWs and smaller. Projects greater than 100 kWs and less than 1 MW and projects 1 MW and greater will be required to comply with more complex interconnection standards. Reference Application Attachment 1.
The proposed Schedule 72 interconnection policy requires customer generators to pay for the costs of interconnection and any necessary equipment, modifications and upgrades required to insure safety and reliability and requires upfront inspection and annual certification. The policy also requires submission of designs, plans and specifications; proof that all required permits, licenses, inspections and approvals have been obtained; proof that adequate protective and disconnection equipment has been installed; and spells out other provisions regarding ownership, operation, maintenance, and inspection of necessary equipment.

On November 23, 2001, the Commission issued Notices of Application and Modified Procedure in this case. The deadline for filing written comments was December 21, 2001. Comments were filed by the Renewable Northwest Project, Idaho Rivers United, the Northwest Energy Coalition, Northwest Seed, Climate Solutions and American Wind Energy Association—collectively the “Renewable Energy Advocates”, the Idaho Rural Council, Commission Staff and a few of the Company’s customers. Idaho Power filed reply comments on January 25, 2002. The comments can be summarized as follows:
Idaho Rural Council (IRC)
It is IRC’s contention that the interconnection requirements proposed by Idaho Power are too cumbersome and expensive. Interconnection equipment, it states, has met the tests and standards of reliability and safety. While it makes sense to have those installations inspected in the beginning, it is, IRC contends, totally unnecessary to impose the economic burden of annual inspections. New certification, it suggests, should only be required if the system is changed or repaired.
Commission Staff
One of the primary objectives of an interconnection policy for non-utility generation, Staff states, is to insure that a safe, reliable electrical system is maintained. Idaho Power’s objective in revising the existing interconnection policy is to simplify the interconnection requirements for very small generation facilities and for net metering installations. Staff believes that for the most part, the proposed revisions to the interconnection policy accomplish that objective.
One area, however, in which Staff does have some concerns is the net metering system requirement for annual certifications from an independent qualified party licensed in the State of Idaho, certifying that the generation facility and equipment are in compliance with all current applicable electrical and safety codes and are able to safely and reliably continue to operate. Staff agrees in principle that periodic inspections and certifications are important, especially for larger generation facilities. However, Staff believes that annual inspections and certifications may be excessive for net metering systems smaller than 25 kW. Staff contends that such frequent inspections for small systems could potentially encourage even less rigorous compliance with electrical and safety codes. The cost of an annual certification for very small systems would be a significant expense compared to the value of the energy produced by the system over the course of a year. Inspections, Staff contends, could also become less thorough if they become too routine.
As an alternative, Staff recommends that certification for net metering systems be required of customer generators only once every three years, and whenever any material modifications or additions are made to equipment. However, Staff also recommends that Idaho Power be permitted to perform inspections of disconnection and protective equipment at whatever intervals it chooses using its own personnel or by hiring qualified persons at its own expense. Because Idaho Power must protect the integrity of its own system and insure its safety, Staff believes the Company must not delegate complete responsibility for interconnection safety to customer generators and the inspectors they choose to hire. Schedule 72, as drafted, already includes a provision requiring customers to submit designs, plans, specifications and performance data for their generation facility. It also already contains a provision for Idaho Power to retain the right to inspect the customer’s equipment at its discretion.
Renewable Energy Advocates (REA)
Renewable Energy Advocates perceives the Company’s suggested changes to Schedule 72 as imposing unnecessary and expensive bureaucratic burdens for the interconnection of net-metered generation systems. REA opposes the Company’s proposal of an open-ended requirement that the customer-generator “pay all costs of interconnecting a generation facility to the Company’s system.” Unbounded risks of interconnection expenses, it contends, would likely be a strong deterrent to installation of net-metered generation systems. As a practical matter, it states, actual utility experience with net metering facilities across the country has demonstrated that in the vast majority of cases, the customer’s equipment provides the necessary safety and power quality protection and the utility’s distribution system can accommodate the customer’s equipment without any modification. Under these circumstances, REA contends that the proposed language is overly broad and does nothing more than create uncertainty for the customer regarding the total cost of a net metering facility.
Renewable Energy Advocates suggests that the Commission incorporate a three-tiered review process, which would create a presumption that net-metered systems will be interconnected to the grid at no cost to the customer, unless the utility makes an affirmative finding (e.g., in the instance of high demand irrigation and large general service customers using three-phase power) that equipment modifications are necessary to assure a safe and reliable interconnection. If Idaho Power makes an affirmative determination that additional safety and reliability equipment for net metering systems is necessary, Renewable Energy Advocates agrees that it is reasonable to impose such costs on the customer generators.
In addition, Renewable Energy Advocates contends that the Commission should eliminate Idaho Power’s suggested requirement for up-front and annual certifications by an “independent qualified party licensed in the State of Idaho” that a net-metered system will operate safely and reliably. Such duplicative requirements, it contends, would do little to ensure grid safety and integrity, particularly considering (1) that practically every net metering system would require approval by a local or state electrical inspector; and (2) that the vast majority of interconnection systems already comply with extremely rigorous, uniform technical standards by national standard-setting authorities such as the Institute of Electrical and Electronics Engineers (IEEE 929-2000) and Underwriters Laboratories (UL 1741). As a practical matter, REA contends that the vast majority of net metering applications Idaho Power is likely to receive will be for inverter-based systems, including solar photovoltaic and small wind electric systems. REA recommends that the Commission adopt the UL and IEEE technical standards for inverter-based systems. If the standards and interconnection review processes are imposed, REA contends that upfront and annual certifications are unnecessary and if required by the Company, should be conducted at its expense. Comparable standards for non-inverter based grid connected systems using synchronous or induction generators, it states, are under development.
It is suggested further by REA that Idaho Power’s proposed requirement for duplicative certifications by an independent party would for some small-scale systems impose an economic barrier to net metering. A two-kilowatt (2 kW) solar photovoltaic system, for example, may produce only 300-kilowatt hours (kWh) of electricity per month. Assuming the retail price for power is $0.06/kWh, the value of the energy produced is $18 per month, or approximately $216 per year. The cost of hiring someone to perform an inspection and provide the required documentation to Idaho Power could easily exceed the annual energy savings from the net metering facility.
Regarding responsibility for installation of additional meters to measure power both consumed and generated by the customer, Renewable Energy Advocates suggests that the Commission draw upon Oregon’s statutory language as follows:
An electric utility that offers residential and commercial electric service:

Shall allow net metering facilities to be interconnected using a standard meter that is capable of registering the flow of electricity in two directions.

May at its own expense install one or more additional meters to monitor the flow of electricity in each direction.

Such an allocation of responsibility for meter installation, Renewable Energy Advocates contends, would resolve metering and billing concerns. At its core, Renewable Energy Advocates contends that the number of meters involved is a minor issue relative to the primary issues of customer choice and the ability to pay the “net” of generation against consumption. REA recommends that the Commission provide an option for the installation of additional meters if necessary to resolve technical or billing considerations for irrigation and large customers.
Idaho Power Reply Comments
System safety and reliability requires periodic inspection of interconnection facilities.
Idaho Power believes that it would be correct to assume that all of the commenters recognize the need for periodic inspections of interconnection facilities for larger projects. Interconnections of larger generation facilities, the Company contends, certainly pose the greatest risk to Company personnel, as well as to customer equipment and overall system reliability. The Company agrees that small net-metered projects may not need annual inspections.
Net metering projects, even very small ones, the Company contends, present a real dichotomy to an electric utility. On the one hand, most very small net-metered projects will utilize inverter technology and other interconnection equipment that has become very standardized and reliable. When this standardized equipment is properly installed and maintained, Idaho Power agrees that it will provide a high degree of system protection. On the other hand, small net-metered projects, the Company contends, are also more likely to be of the do-it-yourself variety. Inspection by the local building authority, it states, provides little security because both the inspector and owner-operator will have very little understanding of how the interconnection equipment operates in conjunction with Idaho Power’s system and will certainly not provide any assistance in ensuring that the owner-operator will be able to properly maintain the equipment in the future. In addition, future remodeling projects and other home repair situations, the Company contends, can result in the interconnection safety equipment being relocated or otherwise altered from the original configuration that was inspected and approved by Idaho Power. As a result, Idaho Power feels strongly that some interval of periodic inspection is necessary even for the smallest net-metered projects. Idaho Power would accept the three-year interval as proposed by Staff for small net metering projects if clarifying language can be added to the tariff that specifies that certification of Schedule 84 net metering systems will be required once every three years and/or whenever material modifications or additions are made to the generating equipment and/or interconnection facilities. The clarifying language would also provide that sellers are required to notify Idaho Power of any material modifications or additions prior to making such modifications or additions, and if at any time Idaho Power determines that such material modifications have been made without notice, Idaho Power will have the ability to disconnect the facility until such time as certification of the modified facility is submitted to and accepted by Idaho Power. Idaho Power believes this modification strikes a reasonable balance between the Company’s need for safety and the customer’s desire to minimize interconnection costs.
Customers Choosing to Develop Net Metered Projects should pay the costs of interconnections.
Idaho Power believes that in all likelihood very small net-metered projects utilizing standardized disconnection equipment will not require the expenditure of extraordinary interconnection costs on the part of Idaho Power. Renewable Resource Advocates urges the Commission to adopt language that is equivalent to a presumption that small net metered projects will not have to pay interconnection costs unless the utility specifically identifies required cost items and notifies the customer of the required additional costs. This proposed presumption, the Company contends, makes sense only when the net metering option is limited to small projects, i.e., projects 25 kW or less. Projects larger than 25 kW are much more likely, the Company contends, to require additional interconnection expenditures.
That being said, Idaho Power still believes that it is important for the tariff to explicitly state that all interconnection costs will be borne by the customer-generator. In the case of small net-metered projects, in most instances, the customer may satisfy that requirement by providing an inverter and other interconnection equipment meeting nationally recognized standards, which have been reviewed and approved by Idaho Power in advance. However, language in a tariff, the Company contends, should not create ambiguity. There should be no misunderstanding that if an interconnection requires more than the customer-furnished standard equipment, it will be the customer-generator’s responsibility to bear those additional interconnection expenses.
Idaho Power contends that there are no great differences between what it has filed and the comments of Commission Staff and Renewable Energy Advocates, so long as the size of net metered projects remains small. If the size of net-metered projects is expanded beyond 25 kW, the Company feels strongly that annual inspections are imperative to ensure the safety of its employees and the reliability of the system.
COMMISSION FINDINGS
The Commission has reviewed and considered the filings of record in Case No. IPC-E-0138 including the filed comments of the Idaho Rural Council, Commission Staff, Renewable Energy Advocates and the Company’s Reply. The Commission continues to find it reasonable to process this matter pursuant to Modified Procedure, i.e., by written submission rather than by hearing. Reference Commission Rules of Procedure, IDAPA 31.01.01.201-204.
Idaho Power proposes changes to its Schedule 72 tariff to establish streamlined procedures for interconnecting non-utility generation to the Company’s system without compromising safety and reliability. The commenting parties suggest changes in the Company’s requirements for 1) annual inspection and certification of interconnection facilities and 2) the Company’s proposed tariff language that the customer-generator “pay all costs of interconnecting a generation facility to the Company’s system.”
The Commission finds the Company’s proposed amendments to its Schedule 72 Interconnection Tariff with the changes proposed in its reply comments to be reasonable. We accordingly approve a three-year annual inspection requirement for small net metering projects (25 kW or less) utilizing an inverter and other interconnection equipment meeting nationally recognized standards which have been reviewed and approved by Idaho Power in advance. We agree that clarifying language should be added to the tariff to specify that certification of Schedule 84 Net Metering Systems will be required whenever material modifications or additions are made to the generating equipment and/or interconnection facilities. It is reasonable also to note in the tariff that sellers are required to notify Idaho Power of any material modifications or additions prior to making such modifications or additions and to provide notice in the tariff that if at any time Idaho Power determines that such material modifications have been made without notice, the Company will have the ability to disconnect the facility until such time as certification of the modified facility is submitted to and accepted by Idaho Power. The Commission finds the Company’s arguments for annual inspection and certification for net meter projects larger than 25 KW to be persuasive. Safety concerns need to be addressed thoroughly and without compromise.
Regarding interconnection cost responsibility, we find that it is important for the tariff to explicitly state that all interconnection costs will be borne by the customer-generator. If interconnection requires more than the customer-furnished standard equipment, it is the customer-generator’s responsibility to bear those additional interconnection expenses. We appreciate the QF’s desire for certainty. We put the Company on notice that should it abuse its discretion in interconnect matters and thwart the development of non-utility generation, the Commission will entertain a complaint and revisit this issue.
CONCLUSIONS OF LAW
The Commission has jurisdiction over Idaho Power Company, an electric utility, and the subject matter of its Application in Case No. IPC-E-01-38 pursuant to jurisdiction granted the Commission in Idaho Code, Title 61 and the Commission’s Rules of Procedure, IDAPA 31.01.01.000 et seq.

O R D E R
In consideration of the foregoing and as more particularly described and qualified above in our findings, IT IS HEREBY ORDERED and the Commission does hereby approve the proposed amendments to the Company’s tariff Schedule 72 Interconnections to Non-Utility Generation. The Company is required to submit an amended tariff conforming with the Commission’s findings and including the approved clarifying language. We approve the proposed changes for an effective date of September 1, 2002.
THIS IS A FINAL ORDER. Any person interested in this Order (or in issues finally decided by this Order) may petition for reconsideration within twenty-one (21) days of the service date of this Order with regard to any matter decided in this Order. Within seven (7) days after any person has petitioned for reconsideration, any other person may cross-petition for reconsideration. See Idaho Code § 61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
day of August 2002.

PAUL KJELLANDER, PRESIDENT

MARSHA H. SMITH, COMMISSIONER

DENNIS S. HANSEN, COMMISSIONER

ATTEST:

Jean D. Jewell
Commission Secretary

vld/O:IPCE0138_sw

ORDER NO. 29092 1

Office of the Secretary
Service Date
August 27, 2002