20121130Application.pdf

IHO
- - - An IDACORP Company
20NOV38 PM L 36
LISA D. NORDSTROM
Lead Counsel 11)AHO
lnordstrom(idahoDower.com UTILITIES COMMISStQ.N.
November 30, 2012
VIA HAND DELIVERY
Jean D. Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
Boise, Idaho 83702
Re: Case No. IPC-E-12-27
Net Metering Service - Idaho Power Company's Application and Direct
Testimony
Dear Ms. Jewell:
Enclosed for filing in the above matter please find an original and seven (7) copies
of Idaho Power Company's Application.
In addition, enclosed are nine (9) copies of the Direct Testimony of Matthew T.
Larkin filed in support of the Application. One copy of Mr. Larkin's testimony has been
designated as the "Reporter's Copy." In addition, a disk containing a Word version of Mr.
Larkin's testimony is enclosed for the Reporter.
Lastly, four (4) copies of Idaho Power Company's press release and customer
notice are also enclosed.
Very truly yours,
Lisa D. Nordst6m
LDN:evp
Enclosures
1221 W. Idaho St. (83702)
P.O. Box 70
Boise, ID 83707
LISA D. NORDSTROM (ISB No. 5733)
JULIA A. HILTON (ISB No. 7740)
Idaho Power Company
1221 West Idaho Street (83702)
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: [phone]
Inordstromcidaho power. com
ihiItonidahoDower.com
L
2812 N1J.V 30 PM 4: 36
ftAH•O PU3L. UTILITiES COMM.S8o
Attorneys for Idaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )
OF IDAHO POWER COMPANY FOR ) CASE NO. IPC-E-12-27
AUTHORITY TO MODIFY ITS NET )
METERING SERVICE AND TO INCREASE ) APPLICATION
THE GENERATION CAPACITY LIMIT. )
)
Idaho Power Company ("Idaho Power" or "Company"), in accordance with Idaho
Code §§ 61-502, 61-622, 61-623, and RP 52, 121, and 125, hereby respectfully makes
application to the Idaho Public Utilities Commission ("Commission") for an order
authorizing Idaho Power to modify its net metering service. If approved, these changes
would result in a rate increase for some net metering customers, and a decrease for
others; however, the proposed changes only modify the charges through which Idaho
Power collects its currently authorized revenue requirement, without changing the level
of revenue requirement itself. The Company is requesting an order be issued by July 1,
2013, authorizing tariff revisions and rates to become effective October 1, 2013, and
APPLICATION -1
authorizing modifications to the billing of Excess Net Energy to become effective at the
beginning of each customer's billing period for the month of January 2014. In the event
the current 2.9 megawatt ("MW") cumulative nameplate generation capacity limit is
reached before the Commission issues its order, Idaho Power requests the Commission
temporarily waive the limit during the pendency of this case.
In support of this Application, Idaho Power represents as follows:
I. BACKGROUND
1.On October 20, 1983, per Commission Order No. 18358, the Company
first offered net metering service to customers through Schedule 86, "Cogeneration and
Small Power Production Non-Firm Energy" ("Schedule 86"). Net metering is a service
which provides for transfer of electricity to the Company through customer-owned
generation facilities with the intent of offsetting all or a portion of a customer's energy
usage. At the time net metering service was established, participating customers were
charged the full retail rate for net energy consumed and credited the full retail rate for
net generation delivered to the Company. Order No. 18358, p. 1.
2.On January 22, 1997, net metering service offered under Schedule 86
was modified to include a formula rate designed to recover certain non-generation costs
from net metering customers. Order No. 26750. When the formula rate was created,
the Company's net metering service consisted of a single customer with an installed
photovoltaic system.
3.On February 13, 2002, net metering service was moved from Schedule 86
to a newly created Schedule 84, "Customer Energy Production Net Metering"
("Schedule 84"). Order No. 28951. The creation of a schedule specific to net metering
APPLICATION -2
service was driven by the complexity of applying the formula-based rate and difficulty in
understanding the net metering provision of Schedule 86. Id., p. 2. Through the
implementation of Schedule 84, the formula rate was eliminated and participating
customers were charged the full retail rate for net energy consumed and credited the full
retail rate for net generation delivered to the Company, allowing the Company to use its
existing billing system and a single meter for each customer. Id. At the time Schedule
84 was created in 2002, three customers on Idaho Power's system were taking net
metering service.
4.As described in detail in the Direct Testimony of Matthew T. Larkin, in
Case No. IPC-E-01 -39 both the Company and Commission Staff ("Staff') recognized
the. potential for subsidization of net metering customers by standard service customers
through the crediting of net metering generation at the full retail energy rate. However,
at that time the Company believed that administrative ease and cost savings associated
with a simplified pricing structure outweighed the potential for inequities between those
customers. To limit potential inequity, the Commission implemented a 2.9 MW cap on
cumulative installed net metering generation capacity under the current net metering
pricing structure. Order No. 28951, p. 12.
5.In Order No. 29094 issued in Case No. IPC-E-02-04, the Commission
directed the Company to make a filing before the Commission when the cumulative
nameplate generation capacity limit set forth in Order No. 28951 was reached:
We accept for now the Company's proposed cap to Schedule 84,
i.e., the 2.9 MW cumulative nameplate capacity limit. We
apprise Idaho Power, however, that when the cap is reached, the
Company is to immediately notify the Commission in writing that
the Company is in the position of having to refuse further
applications. At that point, this Commission will look at the cap
APPLICATION -3
again and determine whether it continues to be reasonable or if
there is a better measure of what's appropriate or if there is a
need for a cap at all.
Order No. 29094, p. 7.
The Company is making this filing in accordance with the Commission's directive
issued in that case. While the Commission's directive states that the Company is to
provide notification when the cap is reached, the Company believes the timing of this
request is appropriate in order to prevent the refusal of new applications for net
metering service.
6.Between 2002 and 2010, installed net metering capacity steadily
increased from 39 kilowatts ("kW") to just under 1,000 kW in 2010. Since 2010, growth
has increased dramatically, rising by nearly 1,500 kW over two years. As of November
1, 2012, Idaho Power has 353 customers participating in net metering service,
accounting for installed generation capacity of interconnected net metering systems of
2.246 MW, with applications pending for an additional .279 MW, for a grand total of
2.525 MW. Given recent growth trends and the current level of installed net metering
generation, the Company expects to reach the cumulative nameplate generation
capacity limit of 2.9 MW within the next six months.
IL REQUEST TO INCREASE GENERATION CAPACITY LIMIT
7.The Company is proposing to increase the current cumulative nameplate
generation capacity limit of 2.9 MW to 5.8 MW. As described in Mr. Larkin's direct
testimony, it is important to maintain a capacity limit to provide the Company with the
ability to appropriately evaluate this service as it expands.
APPLICATION -4
8. To prevent the Company from turning away new net metering customers,
the Company is requesting a temporary waiver of the 2.9 MW cumulative nameplate
generation capacity limit if it is reached prior to the Commission's final determination
regarding the appropriate capacity limit. Customers acquired during the waiver period
will be subject to the terms of the current Schedule 72, "Interconnections to Non-Utility
Generation," and Schedule 84.
III. REQUEST TO MODIFY PRICING AND IMPLEMENT NEW TARIFFS
9.Under the current net metering service, customers receive the full retail
energy rate for the generation offset provided by net metering systems; however, the full
retail energy rate includes cost recovery associated with all components of the
Company's electrical system, including transmission, distribution, and customer-related
costs. As described in Mr. Larkin's direct testimony, the full retail energy rate creates a
potential inequity between net metering and standard service customers because it
allows net metering customers to unduly reduce cost recovery associated with non-
generation-related components of revenue requirement. The Company proposes to
mitigate this potential inequity by modifying the charges through which the Company
collects revenue requirement from Residential and Small General Service net metering
customers.
10.Under the current rate structure, Residential and Small General net
metering customers have a flat monthly service charge and per kilowatt-hour ("kWh")
energy charges that vary by total consumption and season. Due to the lack of demand-
related charges, energy rates for Residential and Small General net metering service
reflect not only the energy-related components of revenue requirement, but fixed costs
APPLICATION -5
associated with generation, transmission, and distribution as well. To reduce the
potential inequity between net metering customers and standard service customers, the
Company is proposing to remove recovery of all distribution-related fixed costs from the
energy charge, ensuring that Residential and Small General Service net metering
customers pay a more equitable share of costs associated with the distribution system.
To accomplish this, the Company proposes to (1) increase the current monthly service
charge from $5.00 to $20.92 for Residential Service and from $5.00 to $22.49 for Small
General Service; (2) institute a Basic Load Capacity ("BLC") charge of $1.48 per kW for
Residential and $1.37 per kW for Small General Service to reflect the full cost-of-service
associated with their use of the distribution system, and (3) uniformly reduce the energy
charges for Residential and Small General Service to target the same level of total
revenue recovery that would exist under the standard service rate design.
11.To implement the proposed pricing structure, the Company is requesting
approval of two new tariff schedules: Schedule 6, "Residential Net Metering Service"
("Schedule 6"), and Schedule 8, "Small General Net Metering Service" ("Schedule 8")
The Company has provided a comparison of current and proposed Residential and
Small General Service net metering rates as Exhibit No. I to Mr. Larkin's direct
testimony. Draft versions of tariff Schedules 6 and 8 are included as Mr. Larkin's Exhibit
Nos. 2 and 3, respectively. Idaho Power requests that Schedules 6 and 8 become
effective October 1, 2013.
12.Because the proposed rate design addresses much of the same fixed cost
recovery concerns that are addressed by the Fixed Cost Adjustment ("FCA"), the
Company is proposing that customers taking service under Schedule 6 or Schedule 8
APPLICATION -6
will not be subject to FCA rates contained in Schedule 54. Schedule 54 will continue to
apply only to customers receiving service under Schedules 1, 3, 4, 5, or 7.
13.The Company is proposing to maintain the current pricing structure for
Schedules 9, 19, and 24. Because a portion of fixed costs are already collected through
BLC, billing demand, and customer charges, the cost recovery concerns associated
with the current Schedule I and Schedule 7 rate designs are much less applicable.
IV. REQUEST TO MODIFY BILLING OF EXCESS NET ENERGY
14.The Company is proposing to modify its current method for billing Excess
Net Energy. Schedule 84 defines "Excess Net Energy" as "the positive difference
between the kWh generated by a [Customer] and the kWh supplied by the Company
over the applicable Billing Period." As described in Mr. Larkin's direct testimony, the
Company currently provides financial credits to customers calculated by applying retail
or market-based energy rates to the amount of Excess Net Energy measured per billing
period. However, the intent of the Company's net metering service is to allow customers
to generate electricity to reduce all or part of their monthly energy usage, not to provide
customers with an avenue outside of Schedule 86 to sell power generation to the
Company in excess of their monthly usage.
15.Further, since the Commission last reviewed the Company's net metering
service, decisions issued by the Federal Energy Regulatory Commission ("FERC") have
indicated that providing financial payments to net metering customers for Excess Net
Energy may be considered wholesale transactions subject to FERC jurisdiction under
16 U.S.0 § 824(a)-(b). The FERC noted in Order No. 2003-A, that:
Under most circumstances the [FERC] does not exert jurisdiction
over a net energy metering arrangement when the owner of the
APPLICATION -7
generator receives a credit against its retail power purchases
from the selling utility. Only if the Generating Facility produces
more energy than it needs and makes a net sale of energy to a
utility over the applicable billing period would the [FERC] assert
jurisdiction.
106 F.E.R.C. ¶1 61,220 at 1 747, 2004 WL 436282 (F.E.R.C. 2004). See also Sun
Edison LLC, 129 F.E.R.C. 161,146 at 61,620, 2009 WL 3932884 at *4 (F.E.R.C. 2009).
Moreover, "When there is a net sale to a utility, and the individual's generation is not a
QF, the individual would need to comply with the requirements of the Federal Power
Act." MidAmerican Energy Company, 94 FERC 161,340 at 62, 263, 2001 WL 306484
at *4 (F.E.R.C. 2001). To ensure that its net metering program can be fully
administered at the state level in a manner that complies with federal law, Idaho Power
believes that it must cease its current practice of providing financial payments to
customers in the context of net metering.
16.To address these concerns, the Company is proposing to eliminate the
practice of providing financial payments to customers who generate Excess Net Energy.
Instead of financial credits, the Company is proposing to provide customers with a kWh
credit in the amount of Excess Net Energy accrued during a billing period that can be
carried forward and applied against usage in subsequent billing periods. These credits
will expire annually at the conclusion of a customer's December billing period. The
Company is requesting authorization to implement this change at the beginning of each
customer's January 2014 billing period.
17.Customers that wish to continue selling generation to the Company for
financial payment can do so as a Qualifying Facility by procuring a sales agreement
through Schedule 86.
APPLICATION -8
V. REQUEST FOR TARIFF MODIFICATIONS
18.The Company is proposing to reorganize Schedule 72 to clarify sections
applicable to net metering and enhance the ability of the Company to provide net
metering service in a safe and reliable manner. These changes, described in detail in
Mr. Larkin's direct testimony, include adding a section that defines the net metering
application process for the Company and customers, and adding a section governing
the treatment of unauthorized installations. The proposed changes to Schedule 72 are
provided in draft form as Exhibit No. 4 to the Direct Testimony of Matthew T. Larkin.
19.The Company is proposing to rename Schedule 84 from "Customer
Energy Production Net Metering" to "Large Customer Net Metering" and limit its
applicability to net metering service for customers taking service under schedules other
than Schedule 6 or Schedule 8. The proposed changes to Schedule 84 are provided in
draft form as Exhibit No. 5 to the Direct Testimony of Matthew T. Larkin.
VI. MODIFIED PROCEDURE
20.Idaho Power believes that a hearing is not necessary to consider the
issues presented herein and respectfully requests that this Application be processed
under Modified Procedure; i.e., by written submissions rather than by hearing. RP 201
et seq. If, however, the Commission determines that a technical hearing is required, the
Company stands ready for immediate consideration of its Application and will present its
testimony to support the Application in such hearing.
APPLICATION -9
VII. COMMUNICATIONS AND SERVICE OF PLEADINGS
21.In conformance with RP 125, this Application will be brought to the
attention of Idaho Power's net metering customers by means of a customer notice and
press release, copies of which accompany this filing. The customer notice will be
directly mailed on or about December 10, 2012, to current net metering customers,
prospective net metering customers who have provided contact information, dealers
and installers. In addition, a copy of Idaho Powers Application, testimony, and exhibits
will be kept open for public inspection at its offices throughout the state of Idaho. Idaho
Power asserts that this notice procedure satisfies the Rules of Practice and Procedure
of this Commission; however, the Company will, in the alternative, bring the Application
to the attention of its affected customers through any other means directed by the
Commission.
22.Communications and service of pleadings with reference to this
Application should be sent to the following:
Lisa D. Nordstrom
Regulatory Dockets
Idaho Power Company
P.O. Box 70
Boise, Idaho 83707
lnordstrom(idahoDower.com
dockets(idahoDower.com
Matt Larkin
Greg Said
Idaho Power Company
P.O. Box 70
Boise, Idaho 83707
mlarkin(äidahopower.com
qsaidcidahoDower.com
IX. CONCLUSION
23.Idaho Power respectfully requests that the Commission issue an order on
or before July 1, 2013, that:
APPLICATION -10
a. Approves a temporary waiver of the capacity limit if the 2.9 MW
cumulative nameplate generation capacity limit is reached before the Commission
reaches a decision;
b. Approves the cumulative nameplate generation capacity limit
change from 2.9 MW to 5.8 MW;
C. Approves the proposed changes to net metering rates for
Residential and Small General Service net metering customers through the
implementation of Schedule 6 and Schedule 8, with an effective date of October 1,
2013;
d.Approves the proposed changes for the treatment of Excess Net
Energy effective with the beginning of each customer's January 2014 billing period; and
e.Approves the modifications to Schedule 72 and Schedule 84
effective October 1, 2013.
DATED at Boise, Idaho, this 30th day of November 2012.
X,
LISA D. NORDJROM
Attorney for Idaho Power Company
APPLICATION - 11