20020510Staff Comments.pdf

SCOTT WOODBURY
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
472 WEST WASHINGTON STREET
PO BOX 83720
BOISE,JDAHO 83720-0074
[phone]
BAR NO.1895
Street Address for Express Mail:
472 W.WASHINGTON
BOISE,IDAHO 83702-5983
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF )
IDAHO POWER COMPANY FOR )CASE NO.IPC-E-02-4
AMENDMENTS TO SCHEDULE 84--NET )
METERING.)
)COMMENTS OF THE
)COMMISSION STAFF
COMES NOW the Staff of the Idaho Public Utilities Commission,by and through its
Attorneyof record,Scott Woodbury,Deputy AttorneyGeneral,and in response to the Notice of
Application,Notice of Modified Procedure,and Notice of Comment/Protest Deadline issued on
April 18,2002,submits the followingcomments.
On February 13,2002 in Order No.28951 in Case No.IPC-E-01-39,the Commission
approved a Schedule 84 net metering tariff for the Company's Schedule 1-Residential and
Schedule 7-Small Commercial Customers.The Commission in its Order directed the Company
to 1)file a net metering proposal for the Company's remaining customers;2)include provisions
to allow larger generating facilities,between 100 kW and 125 kW,to offset their load and energy
requirements under a net metering arrangement;3)propose solutions to any safety,service
quality and grid reliability concerns created by the required expansion of the net metering option;
STAFF COMMENTS 1 MAY 10,2002
and 4)make specific proposals for monitoring program cost,cost recovery and related issues of
subsidization.
On March 29,2002,Idaho Power by way of compliance with Commission Order
No.28951 filed an Application in Case No.IPC-E-02-4 that presents a net metering proposal for
the Company's other customer classes.Under the Company-proposed amendments,the
Schedule 84 net metering tariff will:
(a)Allow customers receiving retail service under schedules other than Schedule 1
or Schedule 7 to connect a generating resource they own or operate to the Company's system to
offset all or part of their electric consumption by means of a financial credit on their retail billing;
(b)Allow the Company to continue to charge the net-metering customer with a
demand component in its retail rates for the electrical demand its load places on Idaho Power's
system;
(c)Impose only those monthlycharges provided for in the Company's standard
service schedule applicable to the net-metering customer;
(d)Credit all energy provided in excess of the customer's consumption at a price that
does not result in a subsidy from other customers;
(e)Permit generatingprojects with a capacity up to 100 kW to interconnect to the
Company's system in a safe and reliable manner;
(f)Provide for broad-based access to customers to participate in net metering.
By proposing the above amendments to Schedule 84,Idaho Power states that it is making
the net-metering option available to customers taking service under all service schedules who
own and/or operate a generation facility that is fueled by solar,wind,biomass or hydropower,or
represents fuel cell technology,is rated at 100 kW of nameplate capacity or less,and is
interconnected to the Company's system at the same interconnection point where the customer's
retail load is connected.
Under the proposed revisions to Schedule 84,customers taking service under schedules
other than Schedule 1 and 7 will continue to utilize a standard utilitymeter that measures the
customer's demand and energy and a second meter will be installed to measure the energy
provided by the customer's generating facility.The Company will read both meters on a monthly
basis and credit the energy generated by the customer's generationfacility against the customer's
STAFF COMMENTS 2 MAY 10,2002
energy consumption for retail billingpurposes.In other words,the Company states,a customer
will pay its normal demand and customer charges each month but all of the customer's retail
energy consumption could be offset by the customer's generation.
If the customer's energy generation exceeds its consumption,Idaho Power will pay the
customer for such excess generation an amount per kWh equal to 85 percent of the market price
for non-firm energy in the Pacific Northwest.By purchasing excess energy at market prices,
Idaho Power states that it reduces the subsidy that otherwise might be paid under Schedule 84 if
excess energy was purchased at full retail rate prices.
Idaho Power is proposing to make net metering service available under the amended
Schedule 84 on a first-come,first-served basis until the cumulative generationnameplate
capacity of net metering systems for all customer classes connected to the Company's system
equals 2.9 MW.The Company is also proposing that no single customer be permitted to connect
generationin excess of 580 kW (20%of the 2.9 MW cumulative nameplate capacity limit),and
no more than 100 kW nameplate capacity can be installed at each meter point.This,the
Company states,will ensure that the net metering option will be available to a wider spectrum of
potential customers.If demand for net metering service exceeds the 2.9 MW limit,Idaho Power
states that it will advise the Commission and the Commission can take such steps as it deems
reasonable and in the public interest.
Analysis
Staff has reviewed the Application of Idaho Power to amend Schedule 84 and believes
that the amendments proposed by the Company are in accordance with the Commission's
directives in Order No.28951.For the most part,Staff views Idaho Power's Application to
amend Schedule 84 as a compliance filing,and therefore does not believe it is necessary to
debate issues already addressed in the Company's initial net metering filing,Case No.IPC-E-01-
39.Staff agrees with the amended Schedule 84 as proposed by Idaho Power and offers the
followingcomments in support of the specific proposed amendments.
In testimony supporting its Application,Idaho Power addresses the fact that customers
taking service under schedules other than Schedule 1 or Schedule 7 would have different
metering requirements to provide for net metering.For those customers whose service includes a
demand component,Idaho Power proposes to continue to bill those customers for demand,just
STAFF COMMENTS 3 MAY 10,2002
as before.The Company proposes to use a dual metering system so that it can separately
measure a customer's demand,energy usage and energy generation.Only the energy usage and
the energy generation would be netted against each other.There would be no netting of demand.
Staff believes that the proposed methodology is appropriate,and consistent with the
reasons as outlined in Idaho Power's testimony.Whether a customer net meters or not,the
likelihood is that the customer will still,from time to time,place as much demand on the utility's
system as before.Demand charges are intended to allow the utilityto recover its cost of
maintaining the capability and necessary infrastructure to serve a particular customer,and are
directlyrelated to things such as the size of transformer or conductor that a customer needs.
Because the required size and capacity of the utility's facilities does not change when a customer
net meters,Staff believes it is appropriate to not allow a customer's generationcapacity to be
netted against his recorded demand.
In order to continue billingnet metered customers for demand,Staff agrees with Idaho
Power that it will be necessary to use two meters.Staff agrees with Idaho Power's proposal to
require net metering customers to pay the cost of installinga new meter base and a second meter.
As the beneficiaries,net metering customers should be responsible for costs incurred by the
utility to accommodate their participation.
Unlike Schedule 1 and Schedule 7 customers who are credited for excess generation at
the full retail rate,Idaho Power proposes that other customer classes only be credited for excess
generation at 85 percent of market price.Staff believes that this is appropriate.Excess energy
generated by a net metering customer allows Idaho Power to avoid generating an equal amount of
energy itself or relieves the utility from buying it from another source.In effect,IdahoPower
avoids only the generation component of the retail rate,but not the other components associated
with each kWh that would otherwise be sold.Market price represents the value of energy that
Idaho Power could acquire from another source or sell as surplus;therefore,it is a fair proxy for
avoided cost.Paying full retail rates for excess generation further subsidizes net metering
customers,and the larger the net metering customer,the greater the subsidy becomes.
Staff also believes it is appropriateto pay only 85 percent of market price rather than full
market price,because Idaho Power would presumably incur transmission costs if it did not need
the customer generationand was forced to sell it on the market.Althoughthere will also be
times when Idaho Power does,in fact,need the energy and will actuallyavoid paying
STAFF COMMENTS 4 MAY 10,2002
transmission costs by having customers net meter,the fact that the generation is non-firm greatly
decreases its value.Paying less than full market price insures that Idaho Power's other customers
will never be harmed by Company purchase of excess generation.
One problem with relying on Mid-C market prices as the basis for determining the value
of net metering generation,however,is that the Mid-C index is no longer widelypublished.
After April 1,2002,the Wall Street Journal stopped publishing the Dow Jones Mid-C index
prices.The index prices are still compiled by Dow Jones,but Dow Jones and nearly all other
secondary publishers of the index now charge high subscription fees for access to the index.
Staff believes it is important to continue to have an easily accessible,widely accepted
index computed by an independentthird party source to serve as the basis for market prices.
Furthermore,the Mid-C index is particularlyindicative of the market in which Idaho Power most
often participates.Therefore,Staff agrees that the Mid-C index should be used as the reference
for market prices.While it would be best to rely on a source that is readily available to the
general public at no charge and that precisely represents the market prices used by Idaho Power
in computing prices for excess energy,that does not appear to be possible at the present time.
Alternative sources are still available for free via the Internet that give nearly the same
information as is available from Dow Jones.While not giving firm,non-firm,on-peak and off-
peak prices like Dow Jones,they still give a reasonable indication of Mid-C prices.One source
used by Staff is www.enerfax com Another free source for weekly summaries is
www newsdata enm/cem/pricesindex html
In addition,the Wall Street Journal still publishes the COB (California-Oregon border)
index.Prices at Mid-C and COB will always be different,but the differences are usuallysmall.
Thus,while not precise,the COB index is still readily available and gives at least a general
indication of regional market prices.These alternative sources for market price information
should be able to provide customers a satisfactory reference for verifying the accuracy of
payments or credits to be made by Idaho Power.
In its Application,Idaho Power proposes a limit of 100 kW nameplate capacity per
metering point.The Commission,in Order No.28951,stated that it believed a reasonable
capacity limit for net metering for customer classes other than residential and small commercial
was in the range of 100 to 125 kW.Since the Company's proposed limit falls within this range,
it clearly complies with the Commission's Order.
STAFF COMMENTS 5 MAY 10,2002
Idaho Power also proposes that no single customer be permitted to connect generation in
excess of 580 kW (20%of the 2.9 MW cumulative capacity limit).Staff believes that this limit
is generous and would adequatelyaccommodate most net metering projects.This limit does not
restrict larger projects from being developed,since they could be accommodated under Schedule
86 or through a PURPA contract.Staff,in fact,believes it is more appropriate for large
generationprojects to fall under Schedule 86 or a PURPA contract.
In implementing Schedule 84 for customers other than Schedule 1 and Schedule 7,Idaho
Power proposes to give customers financial credit for excess kilowatt-hours,rather than
"banking"excess kilowatt-hours.The Company's testimony explains that by giving financial
credit,the worth of the energy at the time it is actually generated can be credited.Staff believes
that although computing credit on a monthlybasis cannot recognize the value of energy on an
hourlyor daily basis,it is at least a step closer to fairly representing the real value of the energy.
Staff believes that anything the Company can do to more accurately assign value to excess energy
without being burdensome or increasing costs should be encouraged by the Commission.
Staff recognizes that an argument could be made for "banking"excess kilowatt-hours,
contending that the seasonal usage pattern and consumption pattern of some customer classes
differ substantially,particularlyfor irrigators who might wish to utilize wind as a source for
generation.However,Staff believes it is precisely this difference that warrants a financial credit
rather than banking kilowatt-hours.Because there can be a marked difference in the value of
energy depending on the timing of when it is used or generated,financial credits will avoid
creating an additional subsidy for net metering.
Finally,Idaho Power proposes to track payments made for power delivered in excess of
consumption and treat those costs as purchased power expenses to be recovered through the
PCA.Staff agrees that this proposed treatment is appropriate and recommends that payments
made for excess power purchases be booked in a new,separately identified subaccount to
Account 555.
Recommendation
Staff recommends approval of amendments to Schedule 84 as proposed by Idaho Power
without modification.
STAFF COMMENTS 6 MAY 10,2002
Respectfully submitted this A day of May 2002.
5 t Woodbury
Deputy AttorneyGeneral /
Teclmical Staff:Rick Sterling
i/umisc/comments/ipce02.4swrps
STAFF COMMENTS 7 MAY 10,2002
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 10TH DAY OF MAY 2002,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF,IN CASE
NO.IPC-E-02-4,BY MAILING A COPY THEREOF,POSTAGE PREPAID,TO THE
FOLLOWING:
BARTON L KLINE MAGGIE BRILZ
SENIOR ATTORNEY DIRECTOR OF PRICING
IDAHO POWER COMPANY IDAHO POWER COMPANY
PO BOX 70 PO BOX 70
BOISE ID 83707-0070 BOISE ID 83707-0070
SECRETARY
CERTIFICATE OF SERVICE