20160429Annual Net Metering Report.pdf

fiEffi*
An TDACORP Company
LISA D. NORDSTROM
Lead Counsel
I nordstrom@idahopower. com
April29, 2016
Ms. Jean D. Jewell
Secretary
ldaho Public Utilities Commission
PO Box 83720
Boise, lD 83720-0074
RICEIVED
;il16,*.PR 29 PH 3: 35
l-...: l l:l l::r l:*: 1,-r t i,'r_j ._i, .,ii1sla+
RE: Compliance Filing in Case No. IPC-E-12-27
Annual2016 Net Metering Status Report
Dear Ms. Jewell:
Pursuant to Order Nos. 32846 and 32925 in the above-mentioned case, ldaho Power
Company ("ldaho Powe/' or "Company") hereby submits its 2016 Annual Net Metering Status
Report. On page 19 of Order No. 32846, the ldaho Public Utilities Commission ('Commission')
indicated that "the report shall discuss, without limitation, the net metering service provisions and
pricing and how distributed generation may be impacting system reliability." The attached report
responds specifically to the Commission's directive to provide such information.
ldaho Power recognizes that in Order No. 32846 the Commission directed the Company to
raise issues related to rate design in the context of the Company's next general rate case. However,
for the reasons described in the report, ldaho Power believes its net metering service has reached a
pivotal point; that is, the Company is able to quantify that cost shifting is occurring between
residential net metering customers and residential standard service customers and can reasonably
predict that future cost shifting between these customer groups will grow exponentially in the next
few years. Because the Company does not know when it will next file a general rate case, Idaho
Power believes it is prudent to begin the net metering conversation now.
ldaho Power plans to hold customer and stakeholder workshop(s) during 2016 to share the
results of this report and solicit feedback on a potential rate design proposal for future net metering
customers that the Company may consider filing with the Commission. !f the Commission wishes to
open a docket and issue a Notice of Workshop(s) to facilitate customer participation, ldaho Power
willwork with the Commission to establish a mutually agreeable schedule.
lf you have any questions regarding this filing, please direct procedural questions to me and
substantive inquiries to Senior Regulatory Analyst Connie Aschenbrenner at [phone] or
caschenbrenner@idahopower. com.
Very truly yours,
"(,^. !fl^,at ^,
LDN/KKI
Enclosures
cc: Kar! Klein, IPUC
Lisa D. Nordstrom
ldaho Power Company
Annual Net Metering Status Report
April 29,2016
ldaho Power Company ('ldaho Powef or "Company') presents its 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 April 2015 and a discussion
about ldaho Power's average residential net metering customer and how that customer
segment's usage profile is changing over time. The report then details key issues related to the
Company's net metering service, including a quantification of the current and potential future
amount of cost shifting occurring between the net metering residential customer segment and
the residential standard service customer class, an update on excess net energy credit
transfers, and an assessment of the impact of distributed generation on system reliability.
l. Existinq Net Meterinq Service
Current Participation and Growth
As of December 31,2015, ldaho Power's net metering service consisted of 731 active
systems with a cumulative nameplate capacity of 5.31 megawatts ("MW'). During calendar year
2015, participation in net metering service increased by 234 active systems (a 47 percent
increase) with incremental nameplate capacity totaling 1.79 MW. The additional systems were
entirely comprised of new solar photovoltaic ("PV') installations.
During the first quarter of 2016, growth continued with the Company adding 59 new
active systems with aggregate nameplate capacity of 0.827 MW. ln addition, the Company has
77 pending applications totaling 0.938 MW of nameplate capacity. At the end of the first quarter
2015,ldaho Power reported 584 active and pending systems, and at the end of the first quarter
of 2016, ldaho Power has 867 active and pending systems, which represents a 48 percent
growth rate since this time last year.
Tables 1 and 2 provide the total number of active and pending net metering systems and
nameplate capacity by resource type, jurisdiction, and customer class.
IDAHO POWER COMPANY'S ANNUAL NET METERING STATUS REPORT - 1
ldaho Solar PV Wind Hydro/Other Tota!
Residential 658 55 6 719
Commercial & lndustrial 105 6 4 115
lrrioation 3 1 4
Total ldaho 766 62 10 838
Oregon
Residential 11 1 12
Commercial & lndustrial 8 I
lrrioation I 9
Total Oreoon 28 1 29
Total Company
Residential 669 56 6 731
Commercial & lndustrial 113 6 4 123
lrrigation 12 1 13
TotalCompanv 794 53 10 867
Tabte 1: Number of Net Metering Systemsr - Pending and Active as of March 31, 2016
Table 2: Nameplate Gapacity (MW) - Pending and Active as of March 31, 2016
Chart 1 details cumulative net metering system counts by customer class from 2001
through the first quarter of 2016 (including pending applications).
1 The net metering database the Company maintains reports a new application as a "system." Some
customers have increased capacity of an existing system or have installed a second system that is a
different resource type; these expansions or additional systems would be counted in Tables 1 and 2 as its
own system. This allows the Company to report capacity in the year in which it came online. Additionally,
because an expansion of an existing system requires the filing of a new application, it is treated
separately for tracking purposes.
IDAHO POWER COMPANY'S ANNUAL NET METERING STATUS REPORT - 2
ldaho Solar PV Wind Hvdro/Other Tota!
Residential 3.53 .29 .06 3.88
Commercial & lndustrial 1.89 .05 .09 2.03
lrrioation .21 .04 .25
Total Idaho 5.63 .38 .15 6.16
Oreqgn
Residential .08 .08
Commercial & lndustrial .15 .15
lrrioation .69 .69
TotalOreoon .92 0 0 .92
TotalGomoanv
Residential 3.61 .29 .06 3.96
Commercial & lndustrial 2.04 .05 .09 2.18
lrrioation .90 .04 .94
Total Comoanv 6.55 .38 .15 7.08
Ghart 1: Gumulative Net Metering System Gounts (by Customer Type)
From a capacity perspective, interconnected net metering generation expanded in
accordance with the increasing system counts described above. Chart 2 details cumulative
capacity growth from 2001 through the first quarter of 2016 (including pending applications).
Ghart 2: Cumulative Net Metering Gapacity (by Customer Type)
The majority of growth in the Company's net metering service is related to the
installation of residential PV systems. PV has comprised 90, 98, 99, and 100 percent of the
1,00o
900
800
700
500
500
400
300
200
100
0
2016
(YrD)
r Residential r C&l r lrrigation
-I200s 2006
I
2002 2003 2004.
:rr,iiill
2007 2008 2009 2010 20tt 2012 2013 2014 2015
n-:
2002 2003 2004 2005 2006
8i
7:-
6i
l
5 ;-..
3.i
2:
1
0
2001 20t6
(YTD)
r Residential r C&l r$e lrrigation
IDAHO POWER COMPANY'S ANNUAL NET METERING STATUS REPORT - 3
incremental resource mix in the years between 2012 and 2015, respectively. All but one of the
incremental active and pending installations in 2016 are PV.
The exponential growth in net metering service since 2001 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, it may require additional staff to facilitate both the
processing of net metering applications at the time of interconnection, as we!! as processing the
annual transfer of excess net energy credits.
Gharacteristics of the Average Residential Net Metering Customer
ldaho Power examined the load characteristics of its current residential net metering
service customers to determine differences, if any, between them and current residential
standard service customers for a few reasons. The Company determined the current residential
net metering customers were different for a few reasons: the most obvious difference is that
they use the Company's electrical system bi-directionally, both to take service from the utility
and to put excess generation back onto the grid. Further, because net metering customers are
billed based on net energy consumed over the course of a month, a net metering customer may
be billed for net zero consumption and avoid paying for fixed costs associated with service
during hours of the month they consumed energy from the grid and other hours of the month
they supplied excess net energy to the grid. Based on an analysis of 2015 actual billing data,
the net metering customers also tend to be larger energy users, with an average monthly
kilowatt-hour ("kWh") usage of 9952 compared to an average residential standard service
customer who used approximately 9473 kWh per month during 2015. While this relationship
may appear counter-intuitive on its face, a further examination of the usage characteristics of
2 This is the monthly average of the total 2015 actual billed kWh for these customers (net of net metering
system generation). Because the Company uses a single meter to measure consumption over a billing
period, it does not have the ability to measure total consumption and total generation separately.
3 Based on 2015 actual billed kWh for the residential class.
IDAHO POWER COMPANY'S ANNUAL NET METERING STATUS REPORT.4
the cunent net metering segment shows that there are a small number of unusually large
energy users skewing the average consumption of the segment.
Chart 3 demonstrates the load shape of the Company's residential customer class on
June 29, 2015, the day of the 2015 Idaho Power adjusted system peak.a Chart 3 also includes
the load shape of the Company's residential net metering customer segment on that same day.
As mentioned above, Chart 3 illustrates that these customers are generally Iarger users than the
Company's average residential standard service customer and demonstrates the residential net
metering customer's ability to offset usage when, in the case of a PV system, the sun is shining.
Chart 3: 20{5 Adjusted System Peak Day (June 29, 2015}
3.50
3.00
2.50
2.00
1.50
1.00
0.50
0.00
L 2 3 4 5 6 7 8 9 1011t213t4 1516171819202L222324
Hour ending
-fts5idsntial
Net Metering Customers
-ftg5idgntial
Customer Class
ll. Quantification of Cost Shiftinq
As discussed in Case No. IPC-E-12-27 and in prior net metering status reports to the
Commission, the current practice of applying standard retail rates to net metering service is
problematic because it creates the potentialfor inappropriate cost shifting between net metering
customers and standard service customers. The potential for cost shifting is especially large
within the Company's residential and small general service classes because a higher
a The reported system peak was June 30, 2015, at 4:00 pm; the adjusted system peak day represents the
hour at which the system would have peaked had the Company not dispatched its demand response
programs. This methodology is consistent with the filed class cost-of-service study from the Company's
last general rate case (lPC-E-11-08).
IDAHO POWER COMPANY'S ANNUAL NET METERING STATUS REPORT - 5
percentage of fixed costs are collected through a volumetric energy rate from these customers
as compared to other customer classes. Residential and small general service customers are
currently billed through a two-part rate design consisting of a $5.00 monthly service charge and
volumetric energy rates.
Quantification of Current Cost Shift
The Company performed an analysis of its residential net metering customer segment to
determine what, if any, cost shifting is currently occurring.s First, the Company quantified the
amount of base rate revenue collected during 2015 from its residential net metering customers.G
Then, using a methodology similar to that used to assign costs to customers during a general
rate case process, the Company determined the ldaho-jurisdictional revenue requirement for
those same net metering customers.
Cost allocation for the 366 customers used the hourly metered data to determine their
use of the system by analyzing demand at the time of the monthly system peak, at the time of
the residentia! class peak, as well as average energy consumed by month. The results of this
analysis was an estimated cost-of-service specific to how these customers utilize ldaho Power's
electricalgrid.
Table 3 details the results of the net metering revenue requirement analysis, which are
functionalized by production, transmission, and distribution and classified by utility services
provided as represented by customer, demand, and energy. Table 3 also presents the
percentage difference in revenue requirement between existing residential net metering
customers and residential standard service customers.
u The Company focused its analysis on the residential customer class for two reasons: (1) the majority of
the recent growth in the net metering service is in the residential class and (2) the residential customer
class has a two-part rate design with most of the customer-related fixed costs and all of the demand-
related fixed costs being recovered through a volumetric charge. Cost shifting may be occurring in other
customer classes, but the focus of this year's annual status update to the Commission will be on the
current and potential cost shift from residential net metering customers to residential standard service
customers.
6 ln order to compare a full year of billed revenue with an estimated annual revenue requirement, the
analysis contains all residential net metering customers who had a full 12 months of billing data availabb
for 2015. This data set is comprised of 366 customers.
IDAHO POWER COMPANY'S ANNUAL NET METERING STATUS REPORT - 6
Table 3: Functionalized and CIassified Residential Net Metering Customer Segment
Revenue Requirement Compared to Average Residential Standard Service Custome/
Residential Net
Metering Customers
54O,296
81,516
35,721
t2L,647
47,294
Compared to Avg Residential
Standard Se rvice Customer
PRODUCTION
Demand, Summer
Demand, Non-summer
Energy, Summer
Energy, Non-summer
-l3o/o
36%
5%o
L7%
2L%
8%o
OYo
Lt%
DISTruBIMON
Demand
Customer
50,458
87,6LL
TOTAT
The net metering revenue requirement compared to the revenue collection for those
same customers is represented in Chart 4.
Chart 4: 2015 Residential Net Metering Cost Shift
Using the above described process, the Company quantified the revenue requirement
for the 366 residential net metering customers to be $464,532. The total base rate revenue
received from these customers during 2015 was $408,820, resulting in an estimated cost shift of
$55,712, or 12 percentof thetotal revenue requirement. As denoted in Chart4, the $464,532
'The "Compared to Avg Residential Standard Service Custome/'column in Table 3 represents the "per
custome/' net metering customer segment revenue requirement relative to the "per customer'' residential
customer class revenue requirement.
IDAHO POWER COMPANY'S ANNUAL NET METERING STATUS REPORT. 7
$q6q,s3zs500,000
s400,000
s300,000
s200,000
Sloo,ooo
So
Revenue Requirement Revenue Collection
r Variable : Fixed
revenue requirement is comprised of 66 percent fixed costs and 34 percent energy costs;
however, only 5 percent of the total revenue was collected through the fixed service charge and
the remaining 95 percent was collected through the volumetric energy kWh charge.
While the current cost shift is relatively small, it is important to consider the
demographics of the 366 residential net metering customers who make up the $408,820 of base
rate revenue collection in order to assess the risk for future potential cost shift. The kWh usage
varies significantly between the 366 customers, from one customer who consumed (net of
generation) over 179,000 kWh during 20'15 (annual base rate revenue collected $17,785) to 40
customers who were not billed for any kWh during 2015 (these customers netted usage to zero
and only paid the $5.00 monthly service charge). ln fact, approximately three percent of the
customers accounted for 20 percent of the 2015 revenue collection.
The Company believes that a few large energy users in this group are muting the cost
shift of the net zero customers who effectively avoid paying most of the customer-related costs
required to serve them, and do not pay any of the cost of the distribution, transmission, or
generation systems, even though they may still use these throughout the year. The Company
does not believe the 366 residential net metering customers analyzed for quantification of the
current amount of cost shifting is representative of the future potential for cost shift. As the
economics of installing a residential PV system improve, the Company expects the installation
of these systems will become more attractive and attainable to the Company's average
residential customer.
Potential for Future Cost Shift
To project potential future cost shift that could occur in the residential customer class,
the Company quantified an estimated cost shift per new net metering customer and applied that
quantification against future potential adoption rates of residential net metering.
Estimated Cost Shift Per Customer
To quantify the estimated cost shift per customer, the Company looked at recent
installations of net metering systems within its residential customer class to determine what
IDAHO POWER COMPANY'S ANNUAL NET METERING STATUS REPORT. 8
system sizes are most commonly installed. Chart 5 shows the percentage of systems according
to size installed by ldaho Power's residential customers in each of the last five years. The data
shows that as the costs of PV have declined over the last several years, the size of PV systems
being installed by residential customers has increased. The most commonly installed system in
2015 was a 6 kilowatt ('kW") system and the second most commonly installed system was a 5
kW system. Based on estimates from the National Renewable Energy Laboratory (NREL') PV
Watts@ Calculator, a 6 kW standard fixed (open rack) system located in Boise, ldaho, will
generate approximately 8,731 kWh/year and a 5 kW standard fixed (open rack) system located
in Boise, ldaho, will generate approximately 7,276 kWh/year.
Ghart 5: System Size of Residential Net Metering Customer lnstallations (PV Systems
Only)
ln order to quantify the potential for future cost shifting, the Company compared a
calculated revenue requirement for an average residential customer before and after the
installation of a net metering system. First, the Company looked at the average hourly load
profile of its residential customer class in order to estimate a per customer revenue requirement
(based on the same methodology explained on page 6). The Company then used the hourly
output profile provided by the NREL PV Watts@ Calculator to quantify the net hourly usage of an
average residential customer who installs a 6 kW PV system. Using the net hourly usage, the
Company quantified the estimated annual revenue requirement for an average residential
IDAHO POWER COMPANY'S ANNUAL NET METERING STATUS REPORT. 9
LOO%
90%6
.E BO% tvi
ToYoGE 60%,
i, 50% i
Eqox.
66 30%
l-o 20%
0o/o :
20L2
t 1-3kW r4-5kW
20L3
* 7-9kW r 10kW+
customer after the installation of a 6 kW PV system. The results of that analysis are presented
in Table 4.
Table 4: Annual Potential Cost Shift Per Residential Net Metering Customer
Standard Service
Residential
Customer
Net Metering
Residential Customer
(6 kW Systeml
Difference
%
PRODUCTPN
Demand, Summer
Demand, Non-summer
ENERGY
Summer
Non-summer
5t27
L54
93
28s
L07
128
239
s1,143
-
11,810
Sss
151
49
L7L
82
100
239
$72) -s7%
(13) -8Yo
l44l -47Yo
(113) -40Yo
l24l -23%
(29) -22Yo
00%
DISTRIBUNON
Demand
Customer
Revenue Requirement
-lE3g-11,810
(8,731)
3,O79
(s2esl
kWh Usage (Before Net Metering)
ation (6 kW System)
Net kWh Usage 11,810
St,oqt
Sgs
I Utility Bill Ssoa
Ss+o
(s73el -71%
Difference between Rev. Req. and Utility Bill
UAt POTENTIAT COSTSHIFT PER CUSTOMER
Table 4 demonstrates that while a residential net metering customer's self-generation
reduces the cost to serve that customer, it does not eliminate the costs entirely and it does not
reduce them as much as the utility bill is potentially reduced. However, the price signal sent to
the customer through the current rate design may inappropriately send a signal that the cost to
serve them is lower than it actually is. The average sized ldaho Power residential customer
who installs a 6 kW PV system is able to reduce his or her revenue requirement by 26 percent,
however, that same customer's bill is reduced by 71 percent. The potentia! cost shift of $444
per customer is quantified by subtracting the amount paid to the Company ($Oal from the total
estimated annual revenue requirement of $848 and subtracting the $96 existing intra-class
subsidy that exists for a customer of this size.
IDAHO POWER COMPANY'S ANNUAL NET METERING STATUS REPORT - 10
Future Potential Adoption Rates
As reported in the "Current Participation and Growth" section of the report, the
residential customer segment has seen a tremendous rate of growth in the adoption of net
metering. Chart 6 represents the number of ldaho Power residential net metering customers
through the end of 2015.
Ghart 6: Gumulative Growth in Residential Net Metering Customerss
700
600
; s00
oe 400
o
E soo
tn
=e 200
100
2oo2 2oo3 2004 2005 2006 2oo7 2oo8 20og 2070 20LL 20L2 20L3 20L4 20L5
-fts5idsntial
Net Metering Customers
Using the historical growth trends, the Company projected residential net metering
customer counts through the scheduled 2021 expiration of the federal investment tax credit
('lTC").s Three forecasted growth scenarios were developed based on the distribution of year-
over-year growth rates by month as experienced over the past 18-months. The "Median"
scenario represents the median of the growth rate distribution, the "Lovl'' growth scenario is
t Chart 6 represents cumulative growth in residential net metering customers. While Tables 1 and 2
counted expansions of existing systems or installation of multiple resource types as separate systems, for
purposes of forecasting net metering customer growth, the Company is reporting counts based on
customer agreements.
s A taxpayer may claim a credit of 30 percent of qualifled expenditures for a system that serves a dwelling
unit located in the United States that is owned and used as a residence by the taxpayer. The
Consolidated Appropriations Act, signed in December 2015, extended the expiration date for PV and
solar thermal technologies, and introduced a gradual step down in the credit value for these technologies.
The 30 percent ITC was extended through 2019 and it will reduce to 26 and 22 percent in 2020 and 2021,
respectively. The credit for all other technologies will expire at the end of 2016.
(http://enerqy. qov/savi nqs/residential-renewable-enerqy-tax-cred it)
IDAHO POWER COMPANY'S ANNUAL NET METERING STATUS REPORT - 11
based on the 1Otr percentile of growth rates and the "High' growth scenario is based on the 70s
percentile of growth rate.
The year in Chart 7 represents the year the customer installs a system.
Chart 7: Forecasted Growth in Residential Net lf,etering Customers
Potential lmpact of Grid Paritv
"Grid parity" refers to the point in time when the levelized cost of energy ('LCOE') from a
PV system becomes cost competitive with the retail rate of energy. The LCOE is determined by
performing a net present value ("NPV') calculation that takes into account the total cost of the
system (up front capital cost, ongoing operations and maintenance costs, inverter replacement,
etc.), as well as benefits received via state and federaltax incentives, and divides the quantified
NPV by the average annual energy output from the system.
While the Company only considered historical adoption rates to predict possible future
adoption of residential net metering systems, it is important to consider what the potentia!
impact of the cost of rooftop PV reaching grid parity may be. At the point the LCOE is lower
than the retail cost of energy supplied by the utility, it becomes more economica! for customers
to install PV and it is reasonable to predict that the growth in the PV net metering systems will
accelerate considerably. The Company also expects that a broader range of customers may
IDAHO POWER COMPANY'S ANNUAL NET METERING STATUS REPORT. 12
7,000 j-- --
I
6,000 +-
I5,000 1-- -
I
t-
I+-
I
1I-
6b 4,000
Eo
3 g,ooo
2,000
1,000
0
2074 2015 2076 2017 2018 20L9
-lery -Median -High
consider installing PV once the cost of installing that system becomes cost competitive with the
utility rate.
Future Potential Cost Shift
The starting point in Chart 8 represents the residential net metering customers the
Company had at the end of 2014 who had a full year of billing data for 2015. That is, the
Company's quantified current cost shift of $55,712 conesponds to the customer count at the
end of 2014 (366 customers). ln order to pQect potential future cost shift, the Company
applied the average per-residential net metering customer cost shift of $444 lo the potential
near-term adoption of residential net metering service.
Chart 8 shows the potential future cost shift by 2021 could be as high as $1.9 million per
year or as low as $755,000 per year, with the median growth rate yielding a potential future cost
shift of $1.3 million per year by 2021.
Chart 8: Cumulative Annual PotentialCost Shift
s2,000,000
s1,500,000
s1,000,000
Ssoo,ooo
So
Addressing the potential cost shift
The Company believes its net metering service has reached a pivota! point; that is, the
Company is able to quantify that cost shifting is occuning and can reasonably predict that future
cost shifting will continue to occur at an increasing rate. The cunent rate design of billing
residential and small general service customers a nominal service charge coupled with the
IDAHO POWER COMPANY'S ANNUAL NET METERING STATUS REPORT. 13
remaining variable and fixed cost recovery through a volumetric rate is concerning for two
reasons: (1) new residential customers installing PV systems are creating a real and
quantifiable cost shift to residential standard service customers who either choose not to install
PV systems or do not have the means to do so, and (2) the current rate design sends an
incorrect price signal to residential and small general service customers who are evaluating
whether or not to install a PV system. The Company's analysis demonstrates that while the
revenue requirement associated with serving a residential PV net metering customer is
estimated to be reduced by 26 percent, that same customer's bill is reduced by 71 percent.
The Company is not the first to look at addressing the potential for cost shift that exists
with net metering customers and the Company continues to believe that proper rate design is
the appropriate means for addressing the cost shift that is occurring and will grow with the
continued adoption of distributed generation in its service area. Utilities across the country are
examining how to best address the issues created by existing rate designs and the historical
practice of a 1:1 kWh credit established at the retail rate and have started introducing means for
better fixed cost recovery for their net metering customers.to tn 2015, other state commissions
overseeing three utilities established a separate class for distributed generation customersll
and three other requests by utilities to do the same are being considered.l2
lll. Billinq Svstem Capabilities
While ldaho Power continues to believe 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 the Company's net metering
service. ln general, utility billing systems are not initially configured to accommodate net
10 Alabama Power charges a capacity reservation fee, Arizona Public Service charges a grid access fee,
California utilities (Pacific Gas and Electric, Southern California Edison, and San Diego Gas & Electric)
charge an interconnection fee that was previously paid by all customers and future distributed generation
customers will default to a time-of-use rate, Hawaiian Electric companies charge minimum bills, and
Dominion Virginia and Appalachian Power charge standby fees.
11Westar, Nevada Power, and Sierra Pacific Power
" UNS Electric and Tucson Electric in Arizona both filed to establish mandatory three-part rates for
distributed generation customers. El Paso Electric in Texas filed for establishment of three part rate
structures for partial-requirements customers.
IDAHO POWER COMPANY'S ANNUAL NET METERING STATUS REPORT - 14
metering transactions, and changes in net metering billing practices often require resource-
intensive customization that not only result in up-front costs, but require additional ongoing
maintenance costs as well.
lV. Svstem Reliabilitv Considerations
Net metering systems in Idaho Power's service area are dispersed across hundreds of
distribution feeders. Because the cunent penetration level is relatively small compared to
distribution feeder loads, as of the end of 2015, there was no significant impact on distribution
system reliability attributed to net metering system operation.
As of March 31,2016, the Company's 789 active net metering systems were dispersed
across roughly 282 of its approximately 650 distribution feeders. That compares to 550 active
systems across 229 distribution feeders that were reported on March 31,2015. 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
net metering 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
sixteen. From a capacity perspective, eight generators (all solar) rated at approximately 398 kW
are located on a single distribution feeder. That feeder serves mostly rural customers with a
calculated summer peak load of approximately 1,600 kW. The percentage of connected net
metering kW capacity to the feeder's calculated summer peak load is approximately 24 percent.
The percentage of connected kW capacity to summer peak loads for the remaining 281 feeders
with active net metering systems remains less than 4 percent. The Company has not yet
experienced significant operational impacts on these feeders.
Because net metering installations are typically 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
IDAHO POWER COMPANY'S ANNUAL NET METERING STATUS REPORT - 15
the generators, and if the phasing (single- versus three-phase) of the system matches the
service infrastructure. Additionally, in 2015, the Company performed its first feeder-level
feasibility study for a75 kW system requesting interconnection onto the feeder that contains the
greatest amount of connected capacity (24 percent) mentioned above. The result of that study
indicated that the system could be incorporated without any modification to the existing
distribution feeder. ln fact, 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.
The Company wil! continue to monitor the effects of net metering service on its system
including 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.
V. 2015 Excess Net Enersy Credit Transfers (Manual Meter Aqqreqation)
Schedule 84, Customer Energy Production Net Metering Service ("Schedule 84")
provides for net metering 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:
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
Meterl3 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;14 and
'3 Schedule 84 states the Designated Meter "is the retail meter physically connected to the Net Metering
System."
'o Schedule 84 states the Net Metering System "is a Customer-owned Generation Facility interconnected
to the Company's system under the applicable terms of Schedule 72 and Schedule 84."
IDAHO POWER COMPANY'S ANNUAL NET METERING STATUS REPORT - 16
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
transfened 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, Schedule 19, or Schedule 24.
On December 3, 2015, all of the Company's net metering service customers were sent a
letter outlining the meter aggregation process, the requirements, and the deadlines for
customers to submit an application for transfer of eligible excess net energy credits. A copy of
the transfer request form and a Frequently Asked Questions document were sent with the letter
(both of which are available on the Company's website).1s Lastly, the Company posted a
message on all net metering service customers' December bills informing them of the upcoming
transfer window.
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 31,2016, deadline, the Company received 26 applications for transfer and those
applications were reviewed during February against the Schedule 84 criteria.
Based on the above criteria, the Company determined that 19 of the requests were
eligible for transfer. The total amount transferred was 250,204 kwh generated from net
metering systems taking service under Residential (19 percent), Small General (60 percent),
and Large General (21 percent) rate schedules. The 250,204 kwh were transferred to
customers taking service under Residential (79 percent) and Large General (21 percent) rate
schedules.
The Company received seven applications that were ultimately found to be ineligible for
transfer based on the following:
o Six applicants did not have excess net energy credits.
o One applicant requested a transfer to a meter on a property that was not contiguous.
15 https://www.idahopower.com/AboutUs/BusinessToBusiness/GenerationlnterconnecVnetMeterinq.cfm
IDAHO POWER COMPANY'S ANNUAL NET METERING STATUS REPORT - 17
The Company contacted by phone 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.
Vl. Conclusion
ldaho Power continues to believe that in order to facilitate the expansion of distributed
generation in a safe, reliable, and fair manner, net metering rate design must be addressed
sooner ratherthan later. Between the first quarters ot2O15 and 2016, pending and active net
metering systems in ldaho Power's service area have increased 48 percent. This growth brings
the potential for significant cost shifting to occur from the Company's net metering customer
segment to the standard service customer classes, most prominently within the residentia! and
small general service customer classes. As demonstrated by the analysis presented in this
report, an average-sized ldaho Power residential customer who installs a six kW system is able
to reduce his or her revenue requirement by 26 percent, however, that same customer's bill is
reduced by 71 percent. As a result, the potential future cost shift by 2021 could be as high as
$1.9 million or as low as $755,000, with a median growth rate yielding potential future cost shifts
of $1.3 million by 2021.
As the economics of installing a residential PV system improve, the Company expects
the installation of these systems will become more attractive and attainable to the Company's
average residential customer. At the point the LCOE of rooftop PV is lower than the retail cost of
energy supplied by the utility, it becomes more economical for customers to install PV and the
groMh in the PV net metering systems may accelerate considerably. The Company also
expects that a broader range of customers may consider installing PV once the cost of installing
that system becomes cost competitive with the utility rate.
The exponential growth in net metering service since 2001 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.
IDAHO POWER COMPANY'S ANNUAL NET METERING STATUS REPORT - 18