20061011Comments.pdf

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Little Mac Power Services
Jean D. Jewell
Idaho Public Utilities Commission
O. Box 83720
Boise, Idaho 83720-0074 October 13. 2006
Re: Case No. IPC- E-06-
Dear Ms. Jewell
The commission approved the current Schedule 84 Customer Energy Production Net
Metering policy for Idaho Power Company on February 131\ 2002. Recently Idaho Power has
asked for a revision of schedule 84 and this is the subject matter of Case No. IPC-06-17.
It is my position that the passage of this change to schedule 84 will unfairly punish those
individuals who have already developed generation projects under the terms of the current
Schedule 84. It will also seriously curtail future net metering projects. This revision creates a
penalty for those people who, in good faith and in compliance with all ofIdaho Power
policies, developed small projects and deliver reliable energy from an environmentally
friendly renewable natural resource.
For the record I do not own a net metering project. I have however assisted three individuals
in the development of two separate plants. I have reviewed numerous proposed projects for
other individuals and have advised the vast majority of them that their projects were
infeasible.
There are very few generation sites where a net metering project, meeting Idaho
Powers requirements, can be built even at the current retail rates.
There are fewer still, that can be built at the current rate offered under the schedule 86
contract from Idaho Power.
There is not one generation site of25 kW or less in the Idaho Power system area that
can be built which could reasonably expect to recoup its cost of development at 85%
of the mid Columbia index rate which is what Idaho Power is proposing.
According to Scott Gates of Idaho Power there is a population of people out there who will
build net metering projects because they are conservationists anyway. I would assert that
there are at least two projects that have been built by environmentally conscious individuals
PO Box 175 Buhlldaho 83316: [phone]
who ask only that they be able to recoup their expenses for having built dependable and
consistent power production facilities. Each of these projects, The Goodco project, and the
Powercat project are a fine example of an appropriate use of an environmentally friendly
renewable energy resource. Each of the projects uses industrial grade equipment that meets or
exceeds any standard that Idaho Power has. These projects should be promoted and used as
an example of Idaho Power s commitment to benefit the environment rather than having the
financial rug pulled out from under them after the projects have been constructed.
According to the Idaho Power filing, only 26 sites to date have been built in the last four and
one half years. Of these 26, only 4 generate in excess of their usage on an annual basis. In
each of the two cases of which I am familiar, the Goodco Project and the Powercat Project
Idaho Power was aware that the plants were designed to produce more energy than what had
been used at each site historically. In what might have been considered to be among Idaho
Power s efforts to promote conservation and environmentally friendly renewable energy
resources, Idaho Power allowed these plants to be built, exacted profits from the construction
of the interconnection facilities, and then made payments for the energy delivered as agreed
upon. I would assert that if Idaho Power is successful at receiving the changes it is asking
for, that new projects will not be developed for the following reasons:
Location of a generation site must be near an existing place of use.
There must be an available fuel to produce the energy ie. Solar, hydro, wind.
The cost of building a project is subject to the laws of economy of scale. A small
project easily costs $2 500 per kW or more to develop.
Based on the new rate Idaho Power is requesting the payback on the investment is too
low to interest any potential investor.
The cost of connecting to the Idaho Power distribution system includes the cost of an
Idaho Power approved system protection package, Idaho Power engineering costs
Idaho Power line extension or improvement, Idaho Power transformer purchase, and
Idaho Power installation costs for all of these items. These are a significant portion of
the total cost of the installation.
The owners of the projects must have the financial wherewithal to build the projects.
The owners of the project must have some assurance of a return on their investment to
offset the initial capital investment.
My primary objection to the proposed revision to the current Schedule 84 is in regards to this
last item. I was involved in the discussions with individuals at Idaho Power during their
development of the current policy which is represented by Schedule 84. It was my
understanding throughout the discussions that Idaho Power would put together a net metering
policy. It was also understood that it was a new policy and that it might need to be revised at
some point in the future. It was my understanding at the conclusion of the discussions that the
policy would be revisited if and when the net metering generation exceeded one tenth of one
percent of the company s retail peak demand (2.9 MW). Currently the net metering
generation of Schedule 1 and Schedule 7 customers is below .65 MW. My understanding of
the policy, throughout the early discussions with Idaho Power, was documented in the second
paragraph ofthe current Schedule 84.
According to the second paragraph of the SCHEDULE 84 CUSTOMER ENERGY
PRODUCTION NET METERING:
Service under this schedule is available on a first come, first served basis
until the cumulative generation nameplate capacity of net metering systems
equals MW, which represents one-tenth of one percent of the Company
retail peak demand during 2000. No single seller may connect more than 20
percent of the cumulative generation nameplate capacity connected under this
schedule.
Nowhere in this paragraph or anywhere else in Schedule 84, does it state that this schedule
will be revised prior to the point in time at which the net metering generation exceeded one
tenth of one percent of the company s retail peak demand. Nowhere is it noted that at any
time prior to that event that Idaho Power will propose to reduce its payment to the seller. This
paragraph clearly and specifically states that service under this schedule is available until a
certain event takes place. I am perplexed that Idaho Power would offer one rate to developers
of net metering projects and then propose to reduce the payment to current net metering
customers prior to the date which was originally described as an event which would trigger
the review.
I have reviewed this concern with Randy Allphin of the Idaho Power Company. He has
related that that event does trigger the review however it doesn t prevent anyone, including
Idaho Power or an individual rate payer, to ask for a change to a tariff. That being
understood, I then need to question the reasoning behind the request for a change to the tariff.
What change has taken place between the times of Idaho Power s development of its original
policy and its newly proposed policy? The original policy offers full retail rates and Idaho
Power s proposed change offers 85% of the Mid Columbia index rate. This proposed change
accounts for approximately a 40% decrease in value for this firm power, provided by these
two projects, at a time when energy rates in the United States are skyrocketing. Initially Idaho
Power determined that the power was worth full retail rates. Idaho Power offered this rate;
this was not a negotiated price. The net metering projects were built on the basis of Idaho
Power s representation of what the power was worth. Now Idaho Power is requesting a rate
change with nebulous and unsupported claims that some costs are being passed on to the
customers. What costs are the rate payers being burdened with? Idaho Power has no
transmission cost, capital costs, or risk of investment in any of these small projects. The
power generated is purchased on the distribution system and is transmitted only as far as the
next utility customer for the same price at which it is purchased. The total gain to Idaho
power on the purchase and sale of the net meter power is nearly zero. All systems for the net
metering customer/seller, existed prior to any net metering customer came on-line or were
borne by the net meter customer. The net metering customer/seller paid all Idaho Power
expenses for engineering, materials, and construction costs for interconnection and line
improvements to the site.
Idaho Power makes the argument that it was not the its intent to create a policy that was
meant to be any more than a true net metering situation. However Idaho Power is aware that
there are few if any sites where a site could be built that would exactly match the generation
to the usage. It would be a poor use of any natural resource to under develop it, using the sole
criteria that it had to match in size perfectly to the current usage at its location. Additionally
the laws of economy of scale enter in to the equation and the cost of development escalates
dramatically per kilo-Watt, as the size decreases. This is easily demonstrated by examining
the cost of the Idaho power interconnection costs.. The cost of the Idaho Power protection
package and interconnection charges for a 4 kilo-watt project are comparable to the charges
for a 25 kilo-Watt project.
The two projects I have been associated with were built at the location ofthe energy resource
and as such the production is measured at the meter in that location. Each of these projects is
owned by individuals who have multiple accounts with Idaho Power. In each case the total of
the locations of their energy use exceeds their production. Obviously some of their energy
usage is measured at the location other than the location of the energy resource. It occurs to
me that giving credit for power produced against the total of the various electric bills of the
net meter customer would provide a much fairer method of calculating a true net meter value.
As all power is metered it would be a simple bookkeeping task to give proper credit to their
accounts.
On a separate issue, Idaho Power is proposing to cut back payments to producers on this
tariff, while simultaneously claiming to promote green power. The two net metering projects
I have been involved with are producing what the environmental community would consider
to be the greenest of power. The people who are most damaged by this proposal are those
who went to the expense to design and construct power production facilities that utilize top of
the line equipment and meet or exceed Idaho Power specifications , in an effort to provide
highly dependable schedulable power.
Most utilities only have a paper portfolio to show for their green or other environmentally
friendly power generation. Some allow for their customers to voluntarily pay extra to show
support for green power. Idaho Power can currently, ifthey choose, demonstrate that they
have taken the lead in promoting actual
, "
cast in concrete , net metering projects, which are
environmentally beneficial and help to reduce dependence on foreign oil. Idaho Power can
show it is doing this to promote the idea that each individual can do their part to conserve and
even promote the appropriate use of renewable energy resources. It is conceivable that Idaho
Power could use the voluntary green power donations the company receives to offset any
impact that Idaho Power is claiming might be shifted to the rate payer. The PUC can act to
promote this source of environmentally friendly renewable energy resource by denying Idaho
Power s request.
I chose to assist only two individuals to develop their projects because the projects met
certain criteria. In determining the economic feasibility of the projects I was involved in, I
had to look at the price per kWh that Idaho Power was willing to pay for the power produced.
At the then current rate under Schedule 86 the projects were not regarded as great
investments. They were however regarded as manageable investments by these two
individuals given the current retail rates. These two projects were developed at no risk to
Idaho Power. The capital for development was provided by the individuals themselves at no
cost, or risk of investment, to Idaho Power.
The Goodco project and the Powercat project produce a good product for a fair price. Idaho
Power has profited from these projects in a number of ways and will continue to. The current
Idaho Power net metering policy may have some flaws. There may be some substandard
projects or intermittent power producers, such as wind power producers, that have taken
advantage of the policy. I do not believe that the current course that Idaho Power is on is fair
to the developers who built reliable power projects capable of producing schedulable power.
The developers acted in good faith. They developed their projects based on Idaho Power
initial representation that the value of the power they produced was equal to the current retail
cost of power at their sites.
Idaho Power has benefited from these projects in the following areas:
Idaho Power was paid construction and engineering fees by the developers for
interconnection.
Idaho Power is receiving valuable, reliable power on the portions of the distribution
grid which is most susceptible to power shortages.
Idaho Power has no additional costs for this power such as transmission, wheeling,
administrative, or construction of new generation facilities, associated with an
alternative source of power.
Idaho Power can currently demonstrate credibility to claims that they promote
development of environmentally friendly renewable resources and possibly use these
projects for their green power check off program.
Idaho Power can possibly include this power source in their conservation program and
demonstrate that they are participating in an appropriate utilization of a renewable
energy resource.
Idaho Power resells this power for the same price it purchases it for and therefore
realizes a nearly negligible cost.
Idaho Power should be embracing the development of the type of power projects similar to
the Goodco and Powercat projects, rather than attempting to penalize them and consequently
curtail the development of the infinitesimally small number of viable power producing sites
remaining. Idaho Power has the opportunity to demonstrate their support of the appropriate
development of a natural renewable energy resource. Idaho Power can continue to reap the
Public Relations benefits it has earned by demonstrating its support. Or Idaho Power can
continue down this new path and seek a reduction in the amount it is willing to pay for this
valuable product and eliminate all future net metering projects other than small Photovoltaic
or wind power.
The current net metering policy demonstrated Idaho Power s promotion of development of
environmentally friendly, natural and renewable energy resources. The PUC should support
their promotion of the development of these resources by denying their request to revise
Schedule 84.
I would appreciate the opportunity to intervene in this proceeding if this case goes to hearing
before the commission. .
Sincerely,
Tom McCauley
Jeff Comer
Co-Owner - Goodco Power
A Partnership of Jeff Comer and Jack Goodman
4186 North 1100 East
Buhl, Idaho 83316
October 12 2006
Jean D. Jewell
Idaho Public Utilities Commission
472 West Washington Street
Boise, Idaho 83702-0074
Dear Ms. Jewell:
I am a co-owner in a net metering hydro facility in Buhl. The decision to build the plant
on existing numbers from schedule 84 was critical to the feasibility of the project. The
economy of scale for a 25 kw plant, as you know, is inversely proportionate to the cost.
Ours is triple per kw than that of larger plants.
Our plant has been built at no cost but a profit to Idaho Power. Application fees
engineering fees, line and transformer costs were all at a profit to Idaho Power.
The idea that some plants are producing consistently more power than they consume
sounds like firm power and therefore should be compensated accordingly.
In a larger picture, some net metering customers have more than one meter, as is our
case. Therefore, our production is substantially less than our total consumption, as
indicated below.
Jack Goodman
Commercial Building
Irrigation
Residence
Retail Business
830 kw/month
300 kw/month
837 kw/month
570 kw/month
Jeff Comer
Residence
Shop
Shop w/net meter
880 kw/month
280 kw/month
(9000) kw/month
993 kw/month
Obviously our consumption exceeds our production.
I think the revision of schedule 84 is not in the best interest of customer generators or
Idaho Power customers but only to Ida Corp stockholders.
Respectfully,
Jeff Comer