20150430Annual Net Metering Report.pdf

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'lT il-'tt;'i,,iI'-1.:'. l\'ri;iLISA D. NORDSTROTT'I
Lead Counsel
I [e-mail]
April 30,2015
Ms. Jean D. Jewell
Secretary
!daho Public Utilities Commission
PO Box 83720
Boise, lD 83720-0074
RE: Compliance Filing in Case No. IPC-E-12-27 - Annual Net Metering Report
Dear Ms. Jewell:
Pursuant to Order Nos. 32846 and 32925 in the above-mentioned case, ldaho Power
Company hereby submits its Annual 2015 Net Metering Report.
lf you have any questions regarding this filing, please contact Connie Aschenbrenner at
[phone] or [e-mail].
Very truly yours,
X,r^, &.Z/AH**
Lisa D. Nordstrom
LDN/KKI
Enclosures
cc: Karl Klein, !PUC
Idaho Power Company
Annua! Net Metering Status Report
April 30, 2015
The following document contains ldaho Power Company's ("ldaho Power" or
"Company") annual net metering status report to the ldaho Public Utilities Commission
("Commission") as required by Order Nos. 32846 and 32925 in Case No. IPC-E-12-27. The
report begins with updated participation and growth data since the Company's last update to the
Commission in February 2014. The report then details key issues requested by the
Commission, including potential cost shifting associated with pricing, the ability of the
Company's billing system to accommodate net metering transactions, an update on excess net
energy credit transfers, and the impact of distributed generation on system reliability.
l. Backqround
ln November 2012,ldaho Power filed an application in Case No. IPC-E-12-27 requesting
authority to modify the provisions of its net metering service to facilitate expansion in a fair, safe,
and reliable manner. On July 3,2013, the Commission issued final Order No. 32846 approving
in part and denying in part the Company's application. On page 19 of Order No. 32846, the
Commission ordered the Company to file an annual status report discussing the net metering
service, its provisions, pricing, and how distributed generation may be impacting system
reliability. Upon reconsideration in that same case, the Commission issued final Order No.
32925, expanding the scope of the Company's annual reporting requirements to also update the
Commission regarding ongoing expenses associated with customization of the Company's
billing system to accommodate net metering transactions, as well as the number of customers
for whom the Company is manually billing aggregated net metering accounts.
The Company filed the first annual net metering status report with the Commission on
February 28, 2014. At the time of that initial report, the Company envisioned filing the annual
report at the end of each February thereafter. However, upon starting preparation of the second
annual report, the Company determined it would not be able to fully report on the number of
manual excess net energy credit transfers required in order to facilitate the billing of aggregated
net metering accounts until after the impacted customers' March billing cycles. The Company
discussed the issue with Commission Staff and reached an understanding whereby the
Company would file the annual report by the end of April of each year. To ensure the
ldaho Power Company's Annual Net Metering Status Report - 1
Commission is provided with the most upto-date information available, the Company's report
will contain information through March 31't of each year. Because last year's report contained
information through the end of calendar year 2014, the Company will first provide a summary
update on the year-over-year changes in customer counts and installed net metering capacity,
and then will provide the detailed breakdowns through the end of March 2015.
ll. Gurrent Participation and Growth
As of December 31, 2014, ldaho Power's net metering service consisted of 509 active
systems with a cumulatlve nameplate capacity of 3.7 megawatts ('MW"). During calendar year
2014, the Company's net metering service increased by 101 active systems with a cumulative
nameplate capacity of 0.89 MW. The additional systems were almost entirely comprised of new
solar photovoltaic ('PV') installations which accounted for 100 of the new systems and 99.6
percent of the capacity.
Between December 31, 2014, and March 31, 2015, the Company added 41 new active
systems with a cumulative nameplate capacity of 0.28 MW. ln addition, the Company has 34
pending applications totaling 0.39 MW of nameplate capacity.
The tables below provide the total number of active and pending net metering systems
and nameplate capacity by resource type, jurisdiction, and customer class.
Table 1: Number of Net Metering Systems - Pending and Active as of March 31,2015
ldaho Solar PV Wind Hvdro/Other Total
Residential 396 60 6 462
Commercial & lndustrial 89 I 4 102
lrrioation 1 1
Total ldaho 485 70 10 565
OreEon
Residential 6 2 I
Commercial & lndustrial 7 7
lrrioation 4 4
TotalOreoon 17 2 19
Total Companv
Residential 402 62 6 470
Commercial & !ndustrial 96 I 4 109
lrriqation 4 1 5
TotalCompanv 502 72 10 584
ldaho Power Company's Annual Net Metering Status Report - 2
ldaho Solar PV Wind Hydro/Other Total
Residential 1.76 0.34 0.06 2.16
Commercial & lndustrial 1.43 0.18 0.09 1.70
lrrioation 0.04 0.04
Total ldaho 3.19 0.56 0.15 3.90
Oreqon
Residential 0.02 0.01 0.03
Commercial & lndustrial 0.14 o.14
lrrioation 0.31 0.31
Total Oreqon 0.47 0.01 0.48
Total Comoanv
Residential 1.78 0.35 0.06 2.19
Commercial & lndustrial 1.57 0.18 0.09 1.84
lrrioation 0.31 0.04 0.35
Total Gomoanv 3.66 0.57 0.,l5 4.38
Table 2: Nameplate Capacity (MW) - Pending and Active as of March 31, 2015
ln terms of growth, ldaho Power's net metering service continued to expand during 2014
and the first quarter of 2015. At the end of 2013, ldaho Power reported 428 active and pending
systems, and at the end of the first quarter of 2015, ldaho Power has 584 active and pending
systems, which represents a 36 percent increase in systems since the last report to the
Commission.
The chart below details cumulative net metering system counts trom 2002 through the
first quarter of 2015 (including pending applications).
Cumulative Net Meteri ng System Counts
700
600
s00
400
300
200
100
0
2002 2003 2004 200s 2006 2007 2008
ldaho Power Company's Annual Net Metering Status Report - 3
From a capacity perspective, interconnected net metering generation expanded in
accordance with the increasing system counts described above. The chart below details
cumulative capacity growth from 2002 through the first quarter of 2015 (including pending
applications).
Overall, ldaho Power's net metering service continues to demonstrate steady growth.
The exponential growth in net metering service since 2002 demonstrates how the Company's
grid is evolving, and underscores the need to evaluate the associated service provisions and
pricing to ensure that ldaho Power can continue to offer safe, reliable, fair-priced electrical
service now and in the future. ldaho Power also anticipates that as participation in its net
metering service continues to grow, there will be an impact on staffing requirements to facilitate
both the processing of net metering applications at the time of interconnection, as well as
processing the annual transfer of excess net energy credits.
Ill. Pricinq and Cost Shiftinq
As net metering continues to expand, it is important to apply pricing policies that
minimize cross-subsidies and allow for equitable and sustainable growth. While ldaho Power
recognizes the desire of certain customers to offset their electrical use through the
interconnection of self-owned generation, it is vital that the underlying pricing policies ensure
that the expansion of net metering service does not occur at the expense of the Company's
standard service customers.
As discussed in Case No. IPC-E-12-27, the current practice of applying standard retail
rates to net metering service creates the potential for cost shifting between net metering
customers and standard service customers. The problem of cost shifting is especially
predominant within the Company's Residential and Small General Service classes, which are
currently billed through a flat $5.00 monthly service charge and volumetric energy rates. As
ldaho Power Company's Annual Net Metering Status Report - 4
Cumulative Net Metering Capacity (MW)
5.00
4.00
3.00
2.00
1.00
2003 2004 2005 2006 2007 2008 2009 2010 20LL 20L2 2013 20L4 20Ls
detailed in Case No. IPC-E-12-27, the Company's most recently reviewed class cost-of-service
study from Case No. IPC-E-11-08 indicates that fixed customer-related costs associated with
serving a Residential customer total $20.92 per month, with additional fixed distribution capacity
costs of $1.48 per kilowatt ('kW') per month. For a Small General Service customer, fixed
customer-related costs total $22.49 per month, with additional fixed distribution capacity costs of
$1.37 per kW per month. With a flat monthly service charge of $5.00, the majority of fixed costs
are recovered through volumetric energy rates for these customer classes. Under this rate
design, a cross-subsidy may exist when net metering customers offset energy consumption
through self-generation, enabling them to avoid paying for the majority of the fixed costs they
impose on the Company's system. This may result in cost shifting to standard service
customers who lack the resources or desire to install net metering systems.
Given current participation levels and the rounding of energy rates to six digits, cost
shifting is not currently impacting customer rates. However, as the Company discussed
throughout Case No. !PC-E-12-27 and further emphasizes in this report, the potential for cost
shifting renders the current rate design for net metering service unsustainable. Current retail
rates were not designed to recover the cost of providing net metering service, and if rate
structures are not corrected as the grid continues to evolve, cost shifting will inevitably have an
adverse financial impact on the Company's customers.
It is also important to understand the potential impact of increased costs directly related
to the administration of the Company's net metering service. As this service continues to grow,
the Company will likely require additional employees to facilitate its administration. Further, as
detailed in the following section, the Company has already incurred substantial costs associated
with modifying billing system capabilities to facilitate the annual manual transfer of excess net
energy credits. Costs incurred to accommodate a small number of customers should be
carefully evaluated to ensure the Company's general body of customers is not impacted.
lV. Billinq Svstem Capabilities
While the Company believes its current rate designs cannot sustainably support the
widespread expansion of net metering, it is important to consider billing system capabilities
when evaluating proposed changes to the pricing of net metering service. As described in detail
in the 2014 status report, in general, utility billing systems are not initially configured to
accommodate net metering transactions, and changes in net metering billing practices often
require resource-intensive customization that not only results in up-front costs, but requires
additional ongoing maintenance costs as well.
Idaho Power Company's Annual Net Metering Status Report - 5
Within the context of the Company's Customer Relationship and Billing ('CR&B')
system, the billing engine is inherently robust with checks and controls that are not designed to
accommodate kilowatt-hour ('kwh") transfers between meters. Because these checks and
controls are largely driven by the data structure and defined by typical relationships between
technical data (such as a service point) and customer data (such as an account), kWh transfers
between meters result in system errors that require manual intervention. This manual process
includes an override of the controls, manual entry of billing data, and additional testing to ensure
proper billing.
ln last year's net metering status report, the Company updated the Commission on the
estimated up-front costs associated with customization of the billing system to accommodate
manual excess net energy credit transfers between eligible meters. At that time, the Company
determined that because net metering service is available to all of the Company's major
customer classes, nearly all existing retail rate schedules, invoicing, and invoice printing would
require modification to accommodate energy credits and transfers between meters. ln addition
to these requirements, ldaho Power determined that potential modifications may include adding
flags to identify aggregated meters, additional operational reporting for billing reversals, manual
transaction creation for excess net energy credit aggregation activity, Sarbanes-Oxley ("SOX")
compliance report changes, and operational report changes. Based on information available at
the time of last year's report, the Company estimated the total up-front customization costs
would range from $120,000 to $200,000.
To facilitate the transfer of inaugural excess net energy credits at year-end 2014, the
Company underwent a project to design and build systems to (1) accommodate changes to the
billing algorithms required to enable accounts to receive credits and offset billed kwh
consumption, (2) apply a meter aggregation fee per transfer, (3) accommodate SOX and
operational reporting necessary to manage the implemented solution, and (4) perform the
excess net energy credit transfers to eligible meters. At this time, the Company has completed
the design process and has completed the first group of transfers requested by customers
during January 2015. To date, the Company has incurred approximately $166,000 in
customization costs.
As noted in last year's report, in addition to up-front customization costs associated with
system modifications and testing, ongoing costs will be incurred to maintain the customized
system above and beyond what would have been required to maintain the system without
customization. Several ongoing maintenance requirements will be complicated by the addition
of the customized configuration, including maintaining rates in accordance with tariff changes,
billing corrections, invoice processing, line item display and messaging, and monitoring of
ldaho Power Company's Annual Net Metering Status Report - 6
system activity related to manual meter aggregation. As the Company continues to work
through the billing changes and understands the ongoing requirements, it will be able to provide
more comprehensive cost detail in future reports.
It is important to note that the cost estimates described above reflect the costs
associated with modifying the billing system to accommodate a manual meter aggregation
process. On page 7 of Order No. 32925, the Commission directed the Company to provide an
estimated timeframe for when the automated billing of meter aggregation would be technically
feasible and cost-justified. After examining the potential for automation within the current
version of CR&B, the Company's billing system experts and third-party consultants determined
that the system cannot be customized to accommodate automated meter aggregation.
Automation of these processes would compromise the billing system and its controls as
described above, making this a non-viable option for the foreseeable future. The Company will
continue to monitor potential opportunities to streamline its processes as the system is updated
and ldaho Power continues to gain more experience in utilizing its CR&B system.
V. 2014 Excess Net Energv Credit Transfers (Manual Meter Aqqresation)
Schedule 84, Customer Energy Production Net Metering Service ("Schedule 84") allows
for customers to submit requests to transfer excess net energy credits between January 1 and
January 31 of each year. Applications received are reviewed against the following criteria from
Schedule 84:
a
a
a
o
The account subject to offset is held by the customer; and
The meter is located on, or contiguous to, the property on which the Designated
Meterl is located. For the purposes of Schedule 84, contiguous property includes
property that is separated from the premises of the Designated Meter by public or
railroad rights of way; and
The meter is served by the same primary feeder as the Designated Meter at the time
the customer files the application for the Net Metering System;2 and
The electricity recorded by the meter is for the customer's requirements; and
For customers taking service under Schedule 1 or Schedule 7, credits may only be
transferred to meters taking service under Schedule 1 or Schedule 7. For customers
taking service under Schedule 9, Schedule 19, or Schedule 24, credits may only be
transferred to meters taking service under Schedule 9, Schedulel9, or Schedule 24.
last year's annual net metering report, ldaho Power committed to inform its net
customers during the second half of 2014 of the approved changes to the billing
ln
metering
'schedule 84 states the Designated Meter "is the retail meter physically connected to the Net Metering
System."
'schedule 84 states the Net Metering System "is a Customer-owned Generation Facility interconnected to
the Company's system under the applicable terms of ScheduleT2 and Schedule 84."
ldaho Power Company's Annual Net Metering Status Report - 7
treatment of excess net energy credits for customers with multiple meters. The Company's Net
Metering Specialists worked to inform all net metering customers of the annual ability to transfer
excess net energy credits both via direct mailings and by information posted to ldaho Power's
website at www. idahopower. com/netmeterinq.
On September 25, 2014, all of the Company's net metering service customers were sent
an initial notification which outlined the process and described the requirements to transfer
excess net energy credits. This letter was intended to give customers advance notice of the
process and draw attention to subsequent communication. On December 3, 2014, a second
letter was sent to all net metering service customers reminding them of the requirements and
deadlines to submit an application for transfer. A copy of the transfer request form and a
Frequently Asked Questions document were sent with the second letter (both of which are
available on the Company's website). Lastly, the Company posted a message on all net
metering service customers' December bills.
Given the costs associated with system customization, the Commission directed ldaho
Power in Order No. 32925 to keep it apprised of the number of customers choosing to transfer
excess net energy credits under the newly-approved meter aggregation rules. As of the
January 31, 2015, deadline, the Company received 24 applications for transfer and those
applications were reviewed February 1, 2015, through February 18, 2015, against the Schedule
84 criteria.
Based on the above criteria, the Company determined that 14 of the requests were
eligible for transfer. The total amount transferred was 206,629 kWh generated from Net
Metering Systems taking service under Residential (4o/o), Small General (68%), lrrigation (4%),
and Large General (24o/o) rate schedules. The 206,629 kwh were transferred to customers
taking service under Residential (72o/o), Large General (24o/o), and lrrigation (4Yo) rate
schedules.
The Company received 10 applications that were ultimately found to be ineligible for
transfer based on the following:
. Two applicants did not have excess net energy credits.
o Two applicants did not have a second meter.
o Four applicants did not have a second meter under a compatible rate schedule.
o One applicant (two applications) requested two transfers to a meter on a property
that was not contiguous.
The Company contacted by phone or email all of the customers who had requested a
transfer but whose applications were ultimately denied to explain the reason the requested
transfer could not be completed.
ldaho Power Company's Annual Net Metering Status Report - 8
Vl. Svstem Reliabilitv Considerations
Net metering systems in ldaho Power's service area are dispersed across hundreds of
feeders. Because the current penetration level is relatively small compared to distribution
feeder loads, as of the end of 2014 there was no significant impact on distribution system
reliability attributed to net metering system operation.
As of March 31,2015, the Company's 550 active net metering systems were dispersed
across roughly 229 of its approximately 650 distribution feeders. That compares to 385 active
systems across 206 distribution feeders that were reported in 2013. The feeders that contain
the greatest number of net metering systems are largely located in northeast Boise and in the
Wood River area, while the feeders that contain the greatest amount of connected capacity tend
to be located in mostly agricultural and rural areas. The greatest number of active net metering
systems that currently exist on a single distribution feeder is ten. From a capacity perspective,
six generators (all solar) rated at approximately 233 kW are located on a single distribution
feeder. That feeder serves mostly rural customers with approximately 7,880 total connected
transformer kilovolt-ampere ("kVA"), and the percentage of connected net metering kW capacity
to total connected transformer kVA is approximately 3.25 percent. The Company has not yet
experienced significant operational impacts on these feeders.
Because all net metering installations are unique in both customer-specific system
attributes as well as the Company's facilities in a particular location, the Company reviews
several factors when determining the feasibility of connecting a new net metering system. This
review may include determining if there is adequate transformation at the point of connection, if
the existing service conductor has adequate capacity to serve the total connected capacity of
the generators, and if the phasing (single- versus three-phase) of the system matches the
service infrastructure. To date, the Company has not denied any net metering applications due
to system limitations, but continues to carefully monitor requests for connection to ensure
ongoing reliable service is available to both existing and new customers.
Although the Company has not yet experienced significant system reliability issues as a
result of current net metering penetration, it will continue to monitor the effects of net metering
service on its system. This monitoring includes tracking the locations and connected capacities
of net metering customers and comparing connected capacities to minimum feeder loads. As
net metering system penetration increases, ldaho Power will keep the Commission apprised of
experienced or anticipated system reliability impacts and will propose mitigation as needed
which may include additional inverter requirements, e.9., smart inverters.
ldaho Power Company's Annual Net Metering Status Report - 9
Vll. Conclusion
ldaho Power is committed to carefully analyzing the impacts of growth in distributed
generation and the issues that must be addressed to accommodate the expansion of the
Company's net metering service. The Company acknowledges that there are many issues
related to the expansion of distributed generation on its system, and does not contend that this
report is an all-encompassing view of the potential impacts of this technology on ldaho Power
and its customers.
As with all services provided by ldaho Power, the Company will continue to monitor the
status of net metering and keep the Commission apprised of any changes it feels are necessary
to offer this service in a sustainable, safe, and reliable manner. From establishing appropriate
pricing to ensuring the reliability of the grid, distributed generation presents a number of
challenges that must be addressed as penetration continues to increase. ldaho Power
appreciates the opportunity to provide the Commission with an update on the status of its net
metering service, and looks forward to working through these issues as the nature of the
electrical grid continues to evolve.
ldaho Power Company's Annual Net Metering Status Report - 10