20130930Supplemental Comments.pdf

S!ffi*.
An IDACORP Company
LISA D. NORDSTROM
Lead Counsel
[e-mail]
September 30, 2013
3$fi STP 3B
VIA HAND DELIVERY
Jean D. Jewell, Secretary
ldaho Public Utilities Commission
472 West Washington Street
Boise, ldaho 83702
Re: Case No. IPC-E-12-27
Net Metering - ldaho Power Company's Comments in Response to Order
No. 32880
Dear Ms. Jewell:
Enclosed forfiling in the above matterare an original and seven (7) copies of ldaho
Power Company's Comments in Response to Order No. 32880.
Sincerely,
o{^, P ru^/-he,*-
Lisa D. Nordstrom
LDN:evp
Enclosures
1221 W. ldaho St. (83702)
P.O. Box 70
Boise, lD 83707
LISA D. NORDSTROM (lSB No. 5733)
JULIA A. HILTON (lSB No. 7740)
ldaho Power Company
1221West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
Telephone: [phone]
Facsimile: [phone]
I no rd strom @ ida hopower. com
ih i lton@ idaho power. com
Attorneys for ldaho Power Company
!N THE MATTER OF IDAHO POWER
COMPANY'S APPLICATION FOR
AUTHORITY TO MODIFY ITS NET
METERING SERVICE AND TO INCREASE
THE GENERATION CAPACITY LIMIT.
'ir
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. IPC-E-12-27
IDAHO POWER COMPANY'S
COMMENTS IN RESPONSE TO
oRDER NO. 32880
ldaho Power Company ("ldaho Powe/' or "Company") respectfully submits the
following Comments in response to the ldaho Public Utilities Commission's
("Commission") Order No. 32880, in which the Commission posed: "lf a net metering
customer takes service through multiple meters at one or more premises, should the
customer be allowed to apply net metering credits to offset usage on the other meters?
lf so, what conditions should apply?"1
Within the context of net metering, ldaho Power defines meter aggregation as the
ability to use generation at one net meter to offset consumption at one or more separate
meters. ln the paragraphs that follow, ldaho Power responds to the questions posed by
the Commission, beginning with a description of the challenges meter aggregation
' Order No. 32880 at 1, Case No. IPC-E-12-27.
IDAHO POWER COMPANY'S COMMENTS IN RESPONSE TO ORDER NO.32880.1
presents to a utility and its customers. The Company then discusses its preferred
approach to limit the offset of consumption to the single retail service point associated
with a net metering system. The Company concludes with a discussion of specific
provisions that should be applied if the Commission ultimately determines that some
level of meter aggregation should be allowed.
I. METER AGGREGATION CHALLENGES
A. Meter Aoqreqation Exacerbates the Potential Under-Recoverv of Fixed Costs
from Net Meterino Customers.
As discussed in the Company's initial filing, a potential cross-subsidy between
net metering and standard service customers exists in the crediting of net metering
customers at the full retail rate for each kilowatt-hour ("kwh") of energy produced. For
example, a residential net metering customer who achieves net zero usage over the
course of a billing month pays a flat charge of $5.00. According to the Company's class
cost-of-service study, however, the cost of providing customer-related services and
infrastructure to a residential customer is approximately $21 per month, and the cost of
providing one kilowatt ('kW') of capacity on the local distribution system is
approximately $1.50 per kW per month. Because the flat $5.00 charge does not cover
the fixed costs required to serve a residential customer, residential net metering
customers can avoid paying for a portion of the services and infrastructure utilized by all
customers. Consequently, recovery of these costs is shifted to customers without the
means or desire to install their own net metering systems, resulting in a cross-subsidy
between net metering customers and standard service customers.
Allowing customers to apply generation from a net metering system to multiple
premises increases the potentia! for this cross-subsidy to occur. Under an unlimited
IDAHO POWER COMPANY'S COMMENTS IN RESPONSE TO ORDER NO. 32880 - 2
meter aggregation approach, net metering customers can avoid paying for not only the
infrastructure utilized to deliver electricity to the service point associated with the net
metering system, but also the infrastructure necessary to serve other premises located
throughout the Company's service area. This is problematic in that it allows net
metering customers to further avoid paying for the costs of infrastructure and services
they are using, thus increasing the potential magnitude of the fixed cost cross-subsidy.
ln the case of a customer who owns multiple premises in varying geographic locations,
aggregated credits enable the customer to avoid paying for the cost of local distribution
infrastructure that is not directly tied to the net metering system. lt is not logical to allow
generation in one geographic area to offset the amount a customer pays for local
distribution infrastructure in another.
B. Meter Aqoreoation Does Not Aliqn With the lntent of Net Meterinq Service as an
Avenue to Offset Usaoe and Diminishes the lncentive for Customers to Rioht-
Size Generation Units.
As stated on page 15 of Commission Order No. 32846, "The net metering tariff is
for those who wish to offset a portion of their load." The Company agrees, and believes
that a net metering system should be installed at a nameplate capacity that is
commensurate to the load it is intended to offset. While the Company recognizes that
disparate seasonal consumption and generation profiles may result in over-or under-
production during certain months, the Company does not believe that a net metering
customer should receive financial benefits for over-sizing a system that consistently
generates more electricity than is consumed at the associated retail service point. An
overly broad ability to aggregate meters would allow net metering customers to game
aggregation rules to effectively become power sellers compensated at full retail rates.
IDAHO POWER COMPANY'S COMMENTS IN RESPONSE TO ORDER NO. 32880 - 3
As long as a customer has sufficient load located throughout the Company's service
area in his or her name, an oversized net metering system at a central location could be
utilized to generate financial benefits by offsetting consumption at different geographic
locations. As stated by the Commission on page 15 of Order No. 32846, "Those
wishing to be wholesale power providers should look to Schedule 86 as the vehicle for
that type of transaction." The Company agrees, and believes Schedule 86 is the
appropriate avenue for customers who wish to sell power to the Company for financial
compensation.
C. Utilitv Billinq Svstems Are Not Desiqned to Bill Net Meterino on an Aooreoated
Basis.
A key consideration for any proposed modification to the billing treatment of
excess energy is the ability of the Company to bill customers in an accurate, consistent,
and efficient manner. As discussed in its Petition for Clarification, ldaho Power recently
implemented a new customer billing system in September of 2013. The aggregation of
positive and negative reads among multiple meters is not a built-in functionality within
this system nor within any utility billing system available on the market. Consequently,
the only option for billing aggregated meters involves customization of the billing system
combined with manual intervention.
It should be noted that based on current participation levels, an estimated 24 net
metering customers would potentially benefit from meter aggregation. Due to the
incremental cost of customizing the billing system to support aggregated billing and the
ongoing administrative costs of performing manual intervention, the Company does not
believe the increase in functionality necessary to bill net metering on an aggregated
basis would justify the cost. Based on the Company's current experience with its new
IDAHO POWER COMPANY'S COMMENTS IN RESPONSE TO ORDER NO. 32880 - 4
Customer Relationship & Billing (CR&B) system, it estimates that the customization
necessary to support aggregated net metering billing would initially cost approximately
$60,000. Additional costs would be incurred with each system upgrade to ensure the
customization remains in place and continues to work as initially intended. On an
ongoing basis, the administrative costs to manually bill aggregated net metering
accounts would be approximately $10.00 per meter transaction based on an estimated
15 minutes for each transaction and the fully-loaded hourly labor cost for a Customer
Service Representative ll. This ongoing administrative cost would vary depending on
the complexity of the meter aggregation rules, the complexity of the rate schedules
associated with each meter, and the total number of meters eligible for aggregation. !n
addition to incremental administrative costs, manual intervention would also increase
the potential for human error throughout the billing process.
II. IDAHO POWER'S POSITION AND RECOMMENDATION
Generation Should Onlv be Allowed to Offset Consumption at the Retail Service
Point Associated with the Net Meterino Svstem.
The Company's initial proposal in this case was to implement a kWh credit
system that allows net metering customers to offset billed kWh charges at the retail
service point associated with the net metering system. Following the issuance of Order
No. 32880, the Company maintains its position that meter aggregation should not be
allowed for net metering customers with multiple meters and/or premises. !n light of the
challenges described above, the Company believes that allowing generation to offset
consumption at a single metered service point provides a simple and effective approach
that preserves the intent of net metering as an avenue to offset consumption, while
IDAHO POWER COMPANY'S COMMENTS IN RESPONSE TO ORDER NO. 32880 - 5
allowing net metering customers to receive the benefits of their systems as long as they
are utilized in a manner consistent with the intent of this service.
ln regard to fixed cost recovery, the Company's preferred approach limits the
potential cross-subsidy between net metering customers and standard service
customers by limiting the ability of net metering customers to avoid paying for
infrastructure and services utilized to serve different metered sites. Limiting meter
aggregation also encourages customers to right-size systems to correspond to the
associated retail load at the site of the net metering system, as customers would only
receive financial benefits if generated energy is utilized to offset consumption at the
metered site. Additionally, this approach would allow the Company and its customers to
avoid the incrementa! administrative costs associated with billing potentially complex
meter aggregation transactions by hand.
For these reasons, ldaho Power believes its initial approach to meter aggregation
is still appropriate. The Company's preferred approach aligns the provisions of net
metering with the intent of this service and eliminates the costs associated with meter
aggregation that would eventually be passed on to customers. The Company believes
this approach offers a simple and efficient solution that adequately addresses each of
the challenges described above.
III. ALTERNATIVE APPROACH
lf the Commission Believes Meter Aqqreoation is Appropriate. Elisibilitv Should
be Limited to Meters Located on the Same Contiouous Propertv as the Net
Meterinq Svstem. Subiect to Specific Qualifvinq Criteria.
While Idaho Power maintains that meter aggregation should not be allowed for
net metering customers with multiple metered sites, the Company recognizes that the
IDAHO POWER COMPANY'S COMMENTS IN RESPONSE TO ORDER NO. 32880 - 6
Commission may ultimately determine that some level of meter aggregation is
appropriate. ln the event that meter aggregation is approved, several important
provisions must be included to ensure that it is implemented in a logical, efficient, and
effective manner.2
ln developing its alternative approach, ldaho Power researched the impacts of
meter aggregation rules currently in effect for PacifiCorp, Portland General Electric, and
Puget Sound Energy in Oregon and Washington. !n both jurisdictions utilities are
subject to state legislative rules regarding meter aggregation.3 Because these rules
address many of the issues relevant to the questions posed by the Commission in
Order No. 32880, ldaho Power used existing meter aggregation provisions in
Washington and Oregon as a starting point for its alternative proposal in this case.
Representatives from the Company's Finance, Metering, Regulatory Affairs, Billing, and
Customer Service departments then developed an ldaho Power-specific proposal that
would reasonably address the challenges associated with meter aggregation in the
Company's seryice area.
The specifics of the Company's alternative approach are detailed in the sections
that follow. The Company has included specific proposed language and supporting
rationale for each provision.
A. Elisibilitv Criteria
Proposed Language: kWh credits from a Net Metering System may be
applied to consumption at a separate meter if the following conditions are met:
'While Section 5 of Rule C prohibits the aggregation of meter readings for billing purposes, the
Company does not believe the transfer of kWh credits proposed in this section violates Rule C.
t oAR 860-039-0065, RCW 80.60.020, and RCW 80.60.030(4).
IDAHO POWER COMPANY'S COMMENTS IN RESPONSE TO ORDER NO. 32880 - 7
Meter is located at the customer's net metering site or on the
same contiguous property as the Net Metering System.
Contiguous property is defined as a single piece of land
even if it is separated by public or railroad rights of way; and
Meter is served by the same primary feeder as the Net
Metering System at the time the new system application is
submitted; and
Electricity recorded by the net meter and the aggregated
meter is solely for the net metering custome/s requirements.
Rationale: Limiting aggregation to meters located on contiguous property
served by the same primary feeder would reasonably limit the potential for increasing
the magnitude of the fixed cost cross-subsidy. These provisions would effectively
discourage customers from over-sizing systems to offset usage at multiple non-
contiguous sites in order to avoid paying for services and distribution equipment not
directly tied to the net metering system.
B. Billins Mechanics
Proposed Language: Unused Excess Net Energy credits will be applied
to eligible meters in the following manner:
i. Transfer of excess credits between metered accounts will
occuron an annual basis; and
ii. Customer must annually declare and confirm eligible
accounts in the month of January; and
lll-
IDAHO POWER COMPANY'S COMMENTS IN RESPONSE TO ORDER NO. 32880 - 8
iii. ldaho Power must annually perform the transfer of credits as
specified by the customer no later than March 31.
Rationale: As discussed above, the Company cannot transfer kWh
credits on an automated basis within its billing system. Consequently, any meter
aggregation must be performed manually by ldaho Power staff, resulting in an
incremental administrative cost for every manual transaction that must be recorded.
Transferring credits on an annual basis allows customers to accumulate and utilize
billing credits while minimizing the number of required manual transactions and the
associated administrative costs. Providing ldaho Power with a reasonable timeframe to
perform these manual transactions allows the Company to avoid potentia! staffing
issues associated with these annual transactions that would result in additional
administrative costs.
C. Aqsresation Prioritv
Proposed Language: For customers with more than one meter eligible
for aggregation, meters must be prioritized to determine the order in which credits will
be applied.
i. Meter priority for eligible meters will be determined by the
customer on an annual basis in January of each year; and
ii. Meters on the same rate schedule as the Net Metering
System must be prioritized above meters on differing rate
schedules.
Rationale: Due to the manual nature of these transactions, meters under
the same rate schedule should be required to be prioritized higher than meters under
IDAHO POWER COMPANY'S COMMENTS IN RESPONSE TO ORDER NO. 32880 - 9
different rate schedules to limit the additional complexity associated with applying
credits across differing rate structures. This provision would also limit cost recovery
issues that would result from the crediting of consumption from one rate class through
generation produced by another. Without this provision, net metering customers could
game the Company's current retail rate structures, thereby increasing the potential for
the under-recovery of fixed costs.
To illustrate, a customer under Schedule 24 would be incented to prioritize a
Schedule 1 meter ahead of another Schedule 24 meter because Schedule 1 energy
rates are higher than those in Schedule 24. These rates are higher because Schedule
1 currently does not have a demand charge, meaning nearly all fixed costs associated
with this rate class are recovered through volumetric energy rates. Because net
metering customers are compensated for generation at retail rates, higher volumetric
energy charges result in higher compensation for each kWh produced. Failing to
include the provisions above would exacerbate the potential for fixed cost cross-
subsidies by allowing customers to prioritize meters in a manner that maximizes the
avoidance of fixed cost recovery.
D. Meter Asqregation Fee
Proposed Language: For each aggregated meter, customers will pay an
annua! meter aggregation fee of $10.
Rationale: Aggregating kWh credits for net metering customers imposes
a real cost on the Company (and subsequently its customers) that would not exist
otherwise. !n its discussions with other utilities, the Company learned that manual
billing for meter aggregation transactions is commonplace, as none of the investor-
IDAHO POWER COMPANY'S COMMENTS IN RESPONSE TO ORDER NO. 32880 - 1O
owned utilities in Oregon or Washington utilize billing systems that can automate these
transactions. Consequently, governing bodies in both Washington and Oregon
approved rules allowing utilities to charge a meter aggregation fee based on the
incremental costs associated with meter aggregation. Puget Sound Energy and
PacifiCorp, for example, currently charge a monthly meter aggregation fee in
Washington that is equivalent to the monthly service charge for the applicable standard
rate schedule. Using ldaho Powe/s Schedule 1 to illustrate, under the terms of the
Washington meter aggregation charge, ldaho Powe/s net metering customers would
pay an additiona! $5.00 service charge per month for each meter requested for
aggregation, equating to an annual charge of $60 per meter. While utilities are
authorized to propose similar charges in the state of Oregon, such fees have not yet
been implemented.
The Company's proposed meter aggregation fee was calculated based on the
expected labor cost associated with completing a manual meter aggregation
transaction. As described above, based on an estimated 15 minute manual process
and the fully-loaded hourly labor cost for a Customer Service Representative ll, each
transaction would result in an estimated $10 labor cost. Unlike the monthly charges
currently in effect in Washington, the Company is proposing to apply this fee on an
annual basis to align with the annual transfer of kWh credits. As stated above, the
annual transfer of credits is intended to minimize administrative costs for both the
Company and its customers.
IDAHO POWER COMPANY'S COMMENTS IN RESPONSE TO ORDER NO. 32880 - 11
IV. CONCLUSION
Billing net metering customers on an aggregated basis presents a utility and its
customers with many challenges, including a potential increase to the magnitude of
fixed cost cross-subsidies between net metering and standard service customers, a
lower incentive to right-size systems to coincide with consumptive needs, and an
increase to administrative costs for the Company and its customers. ln light of these
challenges it is the Company's recommendation that generation from net metering
systems be limited to offset usage at the single metered service point associated with
each system. If the Commission ultimately decides to permit some level of meter
aggregation, ldaho Power recommends that it does so as outlined in Section lll above
to ensure that the challenges detailed in these comments are adequately addressed.
DATED at Boise, ldaho, this 30th day of September 2013.
Attorney for Idaho Power Company
IDAHO POWER COMPANY'S COMMENTS IN RESPONSE TO ORDER NO. 32880 - 12
CERTIFICATE OF MAILING
I HEREBY CERTIFY that on the 30th day of September 20131 served a true and
correct copy of the within and foregoing IDAHO POWER COMPANY'S COMMENTS IN
RESPONSE TO ORDER NO. 32880 upon the following named parties by the method
indicated below, and addressed to the following:
Commission Staff
Karl T. Klein
Deputy Attomey General
ldaho Public Utilities Commission
472 West Washington (83702)
P.O. Box 83720
Boise, ldaho 83720-007 4
ldaho Conservation League
Benjamin J. Otto
ldaho Conservation League
710 North Sixth Street (83702)
P.O. Box 844
Boise, ldaho 83701
PowerWorks LLC
Chris Aepelbacher, Project Engineer
PoweMorks LLC
5420 West Wicher Road
Glenns Ferry, ldaho 83623
Pioneer Power, LLC
Peter J. Richardson
RICHARDSON ADAMS, PLLC
515 North 27th Street (83702)
P.O. Box 7218
Boise, Idaho 83707
John Steiner
24597 Collett Road
Oreana, ldaho 83650-5070
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IDAHO POWER COMPANY'S COMMENTS IN RESPONSE TO ORDER NO. 32880 - 13
Gity of Boise
R. Stephen Rutherford
Chief Deputy City Attorney
Boise City Attorney's Office
150 North Capital Boulevard
P.O. Box 500
Boise, Idaho 83701 -0500
John R. Hammond, Jr.
BATT FISHER PUSCH & ALDERMAN, LLP
U.S. Bank Plaza, Tth Floor
101 South Capitol Boulevard, Suite 701
P.O. Box 1308
Boise, ldaho 83701
ldaho Clean Energy Association lnc.
Dean J. Miller
McDEVITT & MILLER LLP
420 West Bannock Street (83702)
P.O. Box 2564
Boise, ldaho 83701
Board of Directors
ldaho Clean Energy Association lnc.
P.O. Box 1212
Boise, ldaho 83701
Snake River Alliance
Ken Miller, Clean Energy Program Director
Snake River Alliance
P.O. Box 1731
Boise, ldaho 83701
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IDAHO POWER COMPANY'S COMMENTS IN RESPONSE TO ORDER NO.32880 - 14