20130703final_order_no_32846.pdf

Office of the Secretary
Service Date
July 3,2013
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER )
COMPANY’S APPLICATION FOR )CASE NO.IPC-E-12-27
AUTHORITY TO MODIFY ITS NET )
METERING SERVICE AND TO INCREASE )
THE GENERATION CAPACITY LIMIT )ORDER NO.32846
________________________________________________________________________________________________
)
On November 30,2012,Idaho Power Company applied to the Commission for
authority to modify its net metering service.The Company initially said its proposal would
impact 350 net metering customers to varying degrees,depending on how they use and generate
energy.During this proceeding,the number of net metering customers was updated to 386.Tr.
at 18.The Company asked the Commission to issue a final Order by July 1,2013.See
Application.
On January 15,3013,the Commission issued a Notice of Application and Notice of
Intervention.See Order No.32715.The Idaho Conservation League;PowerWorks,LLC;
Pioneer Power,LLC;City of Boise;Snake River Alliance;and Idaho Clean Energy Association,
Inc.intervened in the case,and a prehearing conference was held on March 21,2013.The
Commission then issued an Order setting a case schedule,including public workshops.See
Order No.32767.On April 23,2013,the Commission scheduled technical and public hearings
for June 11,2013.See Order No.32794.The workshops and hearings occurred as scheduled.
Having carefully reviewed the record,including the Application,testimony,and
comments,the Commission enters this Order:(1)declining to cap net metering capacity and
instead directing the Company to periodically report on its net metering service;(2)declining to
modify the net metering pricing structure or move residential and small general service net
metering customers into new classes;(3)requiring the Company to issue a per kWh credit for
excess generation,with the credits to expire only when the customer ends service;and (4)
approving Exhibit 8,that resolves parties’concerns about interconnection language proposed in
proposed Schedule 72.The Commission’s Order is more thoroughly explained below.
THE APPLICATION
Idaho Power’s Application asks the Commission to approve four changes to the net
metering service:(1)increasing the net metering cap;(2)changing the net metering pricing structure;
ORDER NO.32846 1
(3)changing how excess net energy is billed;and (4)changing tariff provisions regarding
interconnection with net metering customers.The proposed changes are summarized below.
A.Net Metering Cap
The Company seeks to increase the net metering service capacity cap from 2.9
megawatts (“MW”)to 5.8 MW.Application at 4.The Company says if the cap is not increased,
the Company will reach that limit within six months and will have to refuse new net metering
applications.Id.’
B.Net Metering Pricing Structure
The Company proposes to change the net metering service pricing structure for
residential service and small general service customers.Presently,all net metering customers
take service under Schedule 84,“Customer Energy Production Net Metering.”Id.at 9.Under
the current pricing structure,the Company pays net metering customers a full retail energy rate
for the power they generate.However,the full retail energy rate is higher than the generation-
related revenue requirement embedded in rates.It includes cost recovery for all components of
the Company’s electrical system,including transmission,distribution,and customer-related
costs.The Company says that paying the full retail energy rate to net metering customers
enables net metering customers to unduly reduce what they pay the Company for its costs
associated with the non-generation-related components of revenue requirement.The Company
says this is unfair to standard service customers,who must then compensate the Company for
any revenue shortfall.Id.at 5;Tr.at 38.
The Company proposes to reduce the potential inequity by removing recovery of all
distribution-related fixed costs from the energy charge and changing the pricing structure by
removing residential and small general service customers from Schedule 84 and renaming it
“Large Customer Net Metering.”Id.at 9.The Company would then implement two new tariffs
for residential and small general service net metering customers:Schedule 6 for “Residential
Net Metering Service,”and Schedule 8 for “Small General Net Metering Service”customers.
The proposed changes would (1)increase the monthly customer/service charge from $5.00 to
$20.92 for residential service and from $5.00 to $22.49 for small general service;(2)set up a
basic load capacity charge (“BLC”)of $1.48 per kilowatt (“kW”)for residential and $1.37 per
‘In its Application,the Company asked the Commission to waive the existing cap during this proceeding.The
Commission granted the Company’s waiver request in Order No.32715.
ORDER NO.32846 2
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.Id.at 6.The Company says the proposed rate design addresses
many of the same fixed-cost recovery concerns as the Fixed Cost Adjustment (“FCA”);thus,
Schedule 6 and Schedule 8 customers would not be subject to the FCA rates contained in
Schedule 54.Id.at 7.
The Company asks that modified Schedule 84 and new Schedules 6 and 8 take effect
on October 1,2013.Id.at 11.
C.Excess Net Energy
The Company proposes to change how it bills excess net energy under Schedule 84.
The Company presently pays customers who generate more energy than they use (“Excess Net
Energy”).The Company proposes to stop paying the customers for Excess Net Energy and
instead provide them with a kWh credit for the excess energy they generate in each billing
period,This credit can be carried forward and applied against use in future billing periods,but
any kWh credits remaining after the December billing period will expire.Id.at 7-8.The
Company says that customers who want to continue selling generation for payment can do so as
a qualifying facility by procuring a sales agreement through Schedule 86.Id.at 8.The
Company wants the excess net energy billing changes to take effect at the start of each
customer’s January 2014 billing period.Id.at II.
D.Interconnection Requirements
The Company proposes re-organizing Schedule 72,“Interconnections to Non-Utility
Generation,”to define the net metering application process and add an unauthorized installation
section.The Company proposes that modified Schedule 72 take effect on October 1,2013.Id.
at 11.
PUBLIC TESTIMONY AND COMMENTS
The Commission received hundreds of written comments in this proceeding.In
addition,26 customers testified at the public hearing.The public participants included private
citizens and businesses,civic groups,and municipalities.Much of the public input reinforced
the parties’testimony on the issues in this case.For example,private resident Sienna White,
whose family installed solar panels on their home,testified that with the Company’s proposed
ORDER NO.32846 3
changes,“this previously logical and good investment doesn’t make financial sense.These
proposed changes destroy many of the original incentives to install solar.”Tr.at 570-571.Greg
Olson,who installs small and large solar net metering projects,testified that the Company’s
proposal would shut down his net metering business and constrain him to installing solar panels
for persons who are not connected to the grid.Tr.at 56 1-563.Kelley Dagley,who owns a
private residential net metering system,explained that if he had not previously installed his net
zero system,as a large consumer of electricity he would have been able to manipulate the
Company’s proposed rules:“[I]f I hadn’t put the system in,it would be very advantageous to me
because I could just go out and buy one panel,throw it on,and save a lot of money on my rates
without actually doing anything good for the environment or being net zero or helping out Idaho
Power or helping out my neighbors by sending electricity over to them.”Tr.at 551.Mary
McGown,who testified for The League of Women Voters of Idaho,stated:
The proposed changes ...would negatively affect the opportunities to
generate renewable energy from residential and small businesses’rooftops,
farmsteads,and other decentralized facilities.Like investing in better
windows or more insulation to conserve energy and lower electric bills,net
metering is a way that customers can exercise some control over their energy
bills.In doing so,they are generating electricity that has value to the Utility
and other customers.
The electric utility industry has been and is undergoing radical changes in how
electricity is generated,how it is conserved,how rates are structured,even
what services a utility provides.Idaho Power Company’s net metering
proposal is backward-looking when a forward-looking approach would benefit
customers.
About 20 years ago,Idaho Power Company had a program to help customers
design and install off-the-grid solar systems if a distribution line extension
beyond a certain length would be required to provide electricity to those
residences.Maybe the Company should consider reviving and updating a
rooftop solar program.What would be the energy outcome of investing even
half the amount of money in distributed generation as it proposes to spend
updating a coal-fired plant?
Tr.at 536-538.
Apart from public testimony on the merits of the Company’s proposal and the impact
it will have on customers and others,the Company was criticized for not clearly advising the
public that it would propose these changes.For instance,John Ryan testified:“I regret very
ORDER NO.32846 4
much how Idaho Power’s proposal was launched in late 2012 without any prior input from
stakeholders.Instead of seeking mutual solutions,Idaho Power chose to take an aggressive
adversarial stance against its ratepayers.”Tr.at 566.
Many other comments were received along these lines.We will not repeat them here,
but will discuss many of the points made by the public when we discuss the parties’testimony
below.
Commission Decision:The Commission greatly appreciates the extent of public
participation in this case.The public input was especially thoughtful and thorough and,based on
the record before us,we find that the public overwhelmingly opposes the Company’s
Application.Moreover,we are concerned that the Company did not seek out or consider
customer input before proposing such dramatic changes to the net metering provisions.We
applaud the Company for bringing this case and these issues to our attention.However,we
advise the Company that it would enhance consideration of future major program-specific
changes if it informed and obtained feedback from its customers and other stakeholders before
proposing them.
TESTIMONY OF PARTIES
The Company supported its Application through direct testimony discussing the
above information.See Tr.at 21-54.The Commission Staff,ICL,ICEA,Pioneer Power,and
the City of Boise responded with their own testimony,and the Company then filed rebuttal
testimony.In this section,we address the parties’positions on the four main issues in this case:
i.e.,the Company’s proposed changes to the net metering capacity cap,rate structure,excess net
energy compensation,and interconnection rules.
A.Net Metering Cap
The Company proposes doubling the net metering service capacity limit from 2.9 MW
to 5.8 MW.Staff concurred with the Company’s proposal.Other parties and members of the
public generally opposed it.The arguments for and against the proposed cap are discussed
below.
1.Commission Staff.Staff supports the Company’s proposal to double the cap.Tr.
at 333.In Staff’s view,the cap establishes a check point for the Company and Commission to
re-evaluate the net metering program’s impact on the Company’s system and customer rates and
ensure the program is not harming standard service customers.Staff believes the interest in
ORDER NO.32846 5
having a check point outweighs the uncertainty that a cap might cause potential net metering
customers and solar installers.Id.at 35 1-355.
2.ICEA.ICEA opposes the proposed cap because the Company has not
demonstrated a reliability or economic need for a cap.ICEA notes even without a cap,Idaho has
a regulatory process that allows the Company to evaluate its net metering service and apply for
changes if needed.Further,the proposed cap is the lowest in the nation,and even without a cap
the Company’s net metering capacity would lag behind other states’because of Idaho’s low
electricity rates.The Company will likely reach the proposed cap by 2017,which introduces
uncertainty into the system and increases the risk of investing in customer-owned generation.Id.
at 271-275,317-318,and 322.The proposed cap unnecessarily disrupts distributed generation
businesses,negatively impacts most net metering customers,and is inconsistent with Idaho’s
policy of encouraging customer-owned generation.Tr.at 275-278,317-3 19,322,and 260-262.
3.City of Boise.The City opposes the proposed cap.It notes that the proposed cap
represents l/6 of 1%of the Company’s peak load,and 1120th of 1%of generation,and that even
if the cap is reached in three years the impact on the Company’s system will be de miniinis.
Further,the FCA shields the Company against fixed-cost-related loss from net metering
generation;the Company has no operational concerns related to net metering;and the Company
can apply to the Commission at any time to address any perceived impacts that might arise.
Thus,there is no need for a cap,the current cap should be lifted,and the proposed cap should be
rejected.Id.at 207-215,233
4.Company Rebuttal.The Company disagrees with testimony that the proposed cap
has introduced uncertainty and financial risk to the local solar industry and future solar
installations.The Company stresses that neither it nor the Commission has ever suggested that
net metering rates provide certainty for customers.Rather,consistent with the Commission’s
view in Order No.30227,IPC-E-06-07,the Company reminds potential net metering customers
that there is no contract associated with the service and that rates are subject to change.The
capacity cap does not change this fact;it simply puts in place a known trigger for review.
Despite testimony opposing the proposed cap,the Company supports it because it provides an
opportunity to review net metering service and how it impacts system reliability.Further,the
cap limits the potential cost assignment inequities that result from applying traditional bundled
rate design to net metering service.If the Commission rejects the Company’s net metering rate
ORDER NO.32846 6
design proposal,there will be an even greater need for a cap to limit the potential cost
assignment inequities.Tr.at 405-407.
Commission Decisio,z:We find that a cap may disrupt and have a chilling effect on
the investment in and installation of distributed generation.Accordingly,we decline to adopt a
cap at this time.That said,we find it reasonable and prudent for the Company to closely monitor
the net metering service and to provide an annual appraisal of the service’s status and impact on
the reliability of the Company’s system.Further,we expect the Company to promptly notify us
of any changes in the net metering service that materially affect the system.
B.Net Metering Pricing Structure
The Company proposes changing the net metering pricing structure by implementing
new Schedules 6 and 8 for net metering customers.The parties oppose changing the net
metering pricing structure.Their comments and testimony,along with the Company’s rebuttal
testimony,are summarized below.
1.Commission Staff.Staff opposes the proposed change to the net metering pricing
structure because the proposal:(1)singles out a small group of customers within the residential
class when other,similarly situated customers exist in that class (Tr.at 336-345);(2)implements
a BLC charge,which has never been previously used in the Residential or Small General Service
standard classes (Id.at 345-346);(3)incents high usage residential customers to install small
generation facilities simply to qualify for the more favorable net usage metering rate (Id.at 346-
348);(4)uses the results of a cost-of-service study that was never intended to be used for
changing the design of base rates for a small group of customers within a class (Id.at 348-351);
and (5)ignores that the overall dollar impact of net metering on the rest of customers within the
class is de mininiis (less than a rounding error given the $409 million revenue requirement of the
residential class).Id.at 337-338,350-351.Because it opposes a change to base rates,Staff also
opposes the Company’s proposal to exclude net metering customers from the FCA mechanism.
Id.at 333,341.
2.ICL.ICL used a ratepayer impact measure (RIM)test to evaluate net metering
costs and benefits.A RIM test is a standard test that utilities use to evaluate the ratepayer
impacts of demand-side management (DSM)programs.ICL used the RIM test to evaluate net
metering because most of the output of a net metering system serves the customers on-site load
without ever touching the grid,and in this respect looks to the utility like an energy efficiency or
ORDER NO.32846 7
DSM source.ICL’s analysis compared the retail rate credits paid to solar net-metered customers
(the primary costs of net metering)to the cost that the Company avoids by not having to procure
and deliver alternative power supplies to net-metered customers (the benefits of net metering).
Based on this analysis,which assumes that a solar PV net metering system is a “firm”source of
power,2 ICL concludes that,for the Company’s ratepayers today,the benefits of net metering
significantly exceed the costs,by a factor of 1.6 to 1.9.Thus,crediting net metering generation
at the retail rate actually undervalues that generation source.Tr.at 163-165,175.
3.ICEA.ICEA opposes the proposed net metering rate structure as being arbitrary,
discriminatory,and punitive.Tr.at 260-262,271,317 and 322.
First,the proposal ignores that net metering provides benefits like peak power,
reducing need for new infrastructure,and making the electrical grid more efficient.Id.at 260-
261.Second,the proposal severely and negatively impacts distributed generation businesses.Id.
Third,the proposal focuses on a claimed inequity that is driven by a few customers
with excess generation.Notably,the total potential inequity for 2012 was about S74,000.Of
this amount,the 86%of net metering customers who do not generate excess energy but merely
offset their bills are responsible for only $6,000.This small financial impact does not justify
moving net metering customers to a new schedule.Id.at 271,278-281.
Fourth,moving net metering customers to a separate schedule is inconsistent with:(1)
Idaho’s 2012 State Energy Plan,which encourages the Commission and utilities to “ensure non
discriminatory policies for ...net metering”;and (2)the Interstate Renewable Energy Council’s
best practices position that “Utilities should not be permitted to force customers to switch to a
different tariff.”Id.at 281-282.
Fifth,the proposed rate structure creates inequity between standard service and net
metering customers because:(1)standard customers would be able to Lower their bills by
lowering consumption in a manner that would be denied to net metering customers due to the
proposed,higher monthly fees;(2)the proposal puts a negative value on customer-generated
energy,such that more than 20%of net metering customers would be better off financially if
they turned off their systems in order to be billed like standard customers;(3)the Company
would impose a BLC on net metering customers without showing that it would be unfair to apply
2 In contrast,the City indicates that rooftop solar is “firm”generation,because it’s “not a form of generation that is
sold to the Utility for use to meet the Utility’s load.In other words,it’s not dispatched by the Utility.As [the
Company]said,its a form of generation that’s used by customers to reduce their consumption.”Tr.at 241.
ORDER NO.32846 8
a BLC to standard service customers;3 and (4)the proposal enables net metering customers with
high kWh usage to pay lower bills than standard customers with the same net usage,but the
Company lacks any cost-based justification for treating these similarly-situated residential
customers differently.Id.at 282-286.
Sixth.the proposed rate structure creates inequity between customers with low energy
use and high energy use because low use customers would see a net increase in their power bills
while high use customers would enjoy a savings.Id.at 286-287;318-319.
4.cjtofciise.The City opposes the Company’s proposed rate changes because it
does not align with the City sustainability and economic growth goals.Tr.at 247-254.Further,
the proposed changes would:(1)create rate shock for existing customers who have invested in
net metering:(2)create a rate-gaming opportunity for large residential customers,which would
harm non-participating customers;(3)introduce a new rate methodology •for recovering fixed
costs that applies only-to a small group of customers and eliminates the existing rate design that
promotes the efficient use of resources and energy conservation;(4)impose inequitable rates for
customers with similar consumption patterns;and (5)limit customer choice and restrict
economic growth.Id.at 250-254.The City notes that the Company has not analyzed the cost
basis for such dramatic changes,4 and that if such changes are to be made they should first be
addressed in a comprehensive rate proceeding where the Commission and stakeholders can
scrutinize all elements of the revenue requirement and cost of service.Further,the Commission
should increase the individual net-metered system size limit to 120%of consumption (or 2MW),
applicable to any customer in any class.Id.at 211-219,233.Lastly,the Commission should
issue a policy statement that reassures prospective investors that any future rate redesign will
follow the principle of gradualism.Id.at 2 19-226,233-234,240.
5.Company Rebuttal.The Company’s rebuttal to the testimony of Staff.ICEA.the
City of Boise,and ICL is summarized below.
In this regard,ICEA believes the Company ultimately wishes to impose a BLC charge on all residential customers,
and that such a “dramatically different type of tariff..,should be discussed in the proper venue so that all affected
parties can be represented and the full impact of the change in policy can be evaluated.”Tr.at 285.
On cross-examination,the City was asked whether it still believes that the Company had not detailed which costs it
is proposing to recover through the new BLC and Service charges.The City acknowledged that when it prefiled its
testimony,it had not seen that the Company had provided basic cost data to Staff in a discovey response.However,
the City still believes that the Company has failed to provide sufficient information tojustiI why it is appropriate to
apportion recovery’of the distribution charge between the Service Charge and the BLC Charge.Tr.at 240.
ORDER NO.32846 9
a.Rebuttal to Staff The Company disagrees that its proposed rate design
unfairly singles out a small group of customers within a broad rate class.The Company believes
net metering customers should he considered a separate and distinct rate class from standard
residential and small general service customers,and thus be subject to different rates.Tr.at 57.
Because the Company historically has provided bundled services including generation,
transmission,distribution and customer services,rates were designed to recover these costs in a
similarly bundled fashion.Id.at 395.But residential customers with net metering systems differ
from other residential customers in that they produce power,can offset their usage of power,use
the transmission and distribution services in a different manner,and require backup services.Id.
at 395.The unique nature of net metering requires unbundling reliability,standby,and power
quality services from traditionally bundled services.In most instances,the Company recovers
most of its costs through volumetric (per kWh)charges,including the Company’s fixed
distribution costs and other fixed administrative costs.Id.at 396.But residential and small
general service customers with net metering systems can avoid paying for the fixed costs for
distribution and administrative services even though they continue to use them.Id.
Accordingly,changes must occur in the Company’s rate structure to ensure that net metering
customers pay for all the services they receive.Id.at 396.The proposed Schedules 6 and 8
accomplish this by removing the recovery of fixed distribution and administrative costs from the
energy charge for net metering customers and instead recovering those costs through the
proposed service charge and BLC charge.The proposed change better aligns cost recovery with
cost causation for residential and small general service customers with net metering systems.Id.
at 397.
The Company also believes it is proper to include a new BLC charge for the
residential and small general service customers.The BLC charge is not a new concept.Further,
the Company’s cost-of-service study that details the fixed costs to be recovered through the BLC
charge,and the Company’s Advanced Metering Infrastructure make implementation of the BLC
charge affordable.Id.at 57-58.
The Company acknowledges that a potential for “gaming”and schedule switching
exists;i.e.,that large energy users potentially could take advantage of the proposed lower energy
charges for net metering service by installing minimal generation resources.But the Company
can monitor new installations for such activity and can file to adjust the tariff if needed.This
ORDER NO.32846 10
ability and the proposed cap adequately guard against potential gaming.The Company also
notes that lowering bills through the installation of distributed generation and shifting to a rate
schedule that more accurately reflects the cost-of-service is not necessarily inappropriate.
However,given the concerns expressed,the Company is not opposed to add minimum system
size eligibility requirements for Schedules 6 and 8.Id.at 58-60.
The Company also disagrees that it is improper to develop net metering rates by using
the class cost-of-service study from the Company’s last general rate case,Case No.IPC-E-ll-08.
That study was appropriate for setting fixed cost rates in that case for more than 400,000
residential and small general service customers through the FCA,and if it was sufficient for
widespread application in a general rate case,then it should be sufficient to set net metering rates
in this case.Id.at 60-61.
The Company also disputes the parties’argument that pricing changes are
unnecessary now,when the potential inequity caused by net metering customers currently is
small.The Company believes the current net metering provisions are not scalable or sustainable,
and that delaying the changes until the net metering service expands will only increase the
inequities at issue.Id.at 62.And contrary to what some suggest.the proposed pricing structure
would immediately address the potential inequity between net metering and standard service
customers.Specifically,it would limit the ability of net metering customers to offset
distribution-related and customer-related fixed costs,thus reducing the level of potential cost
shifting to standard service customers.Id.at 63-65.
The Company maintains that,despite the other parties’arguments to the contrary,the
Commission should review the Company’s proposed changes to the net metering pricing
structure here and should not wait to address them in a general rate case.The class cost-of-
service study provides the information needed to address the changes,and a general rate case
would not provide any additional cost information that would bear on the proposed rate design.
Additionally,this case presents a better forum for the Commission and parties to focus in on net
metering issues than would a general rate case addressing many unrelated issues.Id.at 62-63.
h.Rebuttal to JCL.The Company criticizes ICL’s attempt to value the distributed
generation in the form of avoided costs.First,the net metering service is intended to provide
customers with an option to offset their energy consumption with on-site generation,not to
obtain payment for the generation based on the value of the energy produced.Tr.at 399.
ORDER NO.32846 11
Second,ICL wrongly assumes that net metering systems produce “firm”energy when they
actually produce “non-firm power,”i.e.,power that is supplied or available under a commitment
having limited or no assured availability.Id.at 400.Because of these flaws,ICL’s energy-
valuation analysis is irrelevant and should be disregarded.Id.at 401.Further,regardless of
whether one characterizes the energy as “firm”or “non-firm,”the Commission should reject
ICL’s proposed energy valuation method as being inconsistent with the Commission-approved
methods for valuing firm and non-firm generation.Id.at 400-401.
c.Rebuttal to ICEA.The Company disputes ICEA’s argument that the Company
should not change the net metering rate structure to address $74,000 in claimed inequity that is
driven by a few customers with annual excess generation.First,the potential inequity is caused
by pricing and not excess energy.The $74,000 figure is,therefore,wrong.Second,even if
ICEA correctly quantified the potential inequity,the resulting dollar figure would provide little
insight into why the Company filed its proposal.In summary,the Company filed its pricing
proposal in an effort to accommodate growth of the net metering service and address the shifting
of costs from net metering customers to standard service customers before the service grows to
where corrections or rate inequities impact many customers.Tr.at 11-15.
d.Rebuttal to the City.The Company disagrees with the City’s claim that the
Company has not identified the costs it proposes to recover from the new charges set forth in
Schedule 6 and 8.The Company bases the proposed Schedule 6 and 8 rates on the publicly
available cost-of-service study from its last general rate case.Further,in this proceeding the
Company provided the full cost-of-service model to all parties in electronic format,detailed how
the study was used to calculate the new rates,listed each component of the Company’s revenue
requirement by FERC account,and fully described the class allocation and rate design process.
Tr.at 15-16.
(‘ominission Decision:Based on our review of the record,we believe that net
metering customers have some characteristics that could justify moving them into a separate rate
class and onto a different schedule from the general residential and small general service rate
classes.However,we are concerned that the Company’s proposal is inconsistent with State
policy as expressed in the Idaho Energy Plan,will discourage investment in distributed
generation,and encourage rate-gaming.Further,we believe dramatic changes such as those
proposed in this case—including increasing the monthly customer charge,imposing a new BLC
ORDER NO.32846 12
charge,and reducing the energy charge for the residential and small general service customers—
should not he examined in isolation but should be fully vetted in a general rate proceeding.
Accordingly,at this time we decline to make these changes,change the rate design,or separate
the net metering customers from the standard residential service and small general service
classes.If the Company wishes to raise these issues again,then it should do so in the context of
a general rate case.We agree with the Company that net metering customers do escape a portion
of the fixed costs and shift the cost burden to other customers in their class.However,we find
that more work needs to be done to establish the correct customer charge for those who net
meter.
We find it fair,just,and reasonable to require net metering customers to continue
paying the customer charge for their class.It is also reasonable to preclude net metering
customers from using their excess net energy credits to offset the customer charge on their bills.
C.Excess Net Energy
The Company proposes to calculate Excess Net Energy as a kWh credit that would
expire each December.The other parties oppose this proposal.The parties’testimony and the
Company’s rebuttal are summarized below.
1.Commission Staff.Staff opposes calculating Excess Net Energy as a kwh credit
because the proposal would price every kWh the same regardless of the season in which the
energy is generated.Instead,Staff proposes that the Company continue crediting customers on a
financial basis using the full retail rate.Excess Net Energy credits would carry forward
indefinitely and only expire when the customer ends service.Staff says its proposal would
encourage customers to right-size their installations,capture the seasonal differences in retail
rates,encourage conservation,and incent future net metering customers to choose generation
types that match the Company’s higher-priced periods for delivering electricity.Tr.at 355-362.
2.ICEA.1CEA does not oppose the Company ending cash payments at retail rate.
Tr.at 319.But ICEA opposes treating Excess Net Energy as a kWh credit rather than a financial
credit at retail rates.First,a kWh credit is less liquid,and thus less valuable to customers,than a
financial credit.Id.at 288-289.Second,the Company’s kWh proposal ignores that the value of
a kWh varies by time of day and season.Crediting Excess Net Energy at retail rates recognizes
this variation in kWh costs.Id.at 289-290.Third,ICEA notes that the Company proposes to
remove distribution costs from the per-kWh energy charge,which prevents the customer from
ORDER NO.32846 13
applying the value of Excess Net Energy to offset the full value of a kWh delivered to the point
of consumption.Id.at 290-291.Because a net metering customer has chosen to invest in
generation near the point of consumption,ICEA believes the customers should be able to offset
the Company’s charges for delivering electricity to that point.Id.ICEA says a financial credit
accomplishes this.Id.at 291.
ICEA also opposes forfeiting the credits each December.The proposed December
forfeiture date is arbitrary.Id.at 319-320.Further,solar net metering customers build credits
from May through October,begin consuming more energy than they produce in November and
December,and then have increased usage in January.Allowing the credits to expire in December
would prevent customers from being able to offset all of their annual consumption.Id.at 291.
ICEA has its own Excess Net Energy proposal.It suggest that the Company
financially value Excess Net Energy based on the customer’s highest rate tier for the month in
which excess energy is generated,including all rate adjustments applied in that month.Any
Excess Net Energy would:(1)preferably carry forward for as long as the customer has its
account or,(2)alternatively carry forward for three years.At any time,the customer would be
able to transfer any credits to the Company for payment based on avoided cost.And if a three-
year period is set,the Company would buy the expiring credits at avoided costs when that period
ends.Id.at 320-322.
3.Pioneer Power.Pioneer Power opposes credit expiration,and notes that the credits
represent energy that the Company will use to serve other customers.Tr.at 189.In other words,
the Company would take property (electricity)generated by customers at their expense without
paying for it.Id.Further,allowing the credits to expire in December is especially harmful to
irrigation customers.These customers consume energy in the spring and summer,accumulate
credits after September,and then lose those credits in December before they can use them to
offset the next irrigation season’s generation.Id.
As an alternative,Pioneer Power proposes that the irrigation net metering customers’
year should start at the end of irrigation season.Any credits would then carryover indefinitely
until the customer moves,at which time the customer would sell the excess credits to the
Company at the avoided cost rate.Id.at 190-19 1.
4.City of Boise.The City believes the Commission should accept the Company’s
proposal to carry forward energy credits for net excess generation in lieu of financial payments,
ORDER NO.32846 14
but the Commission should move the annual true-up date to March 31 of each year.The
Company would then pay for any net excess generation at an avoided cost rate,or customers
could choose continuous roll over for the excess generation credits.Tr.at 230-231,234.
5.Company Rebuttal.The Company disagrees with ICEA and Pioneer Power
proposals to have the Company financially compensate excess net generation at avoided cost
rates.The Company remains concerned that this practice involves a wholesale transaction that is
subject to federal jurisdiction.The Company’s proposal to stop the financial payments ensures
that net metering can be fully administered at the State level,if a customer wants to continue
selling net generation to the Company for financial payment,the customer may do so via a sales
agreement under Schedule 86.Tr.at 13-14.
The Company also disagrees with indefinitely carrying over Excess Net Energy
credits,and says indefinite carryover does not align with the net metering service’s purpose of
allowing customers to offset all or part of their usage through self-owned generation.Tr.at 73.
Although the Company still believes that financial payments are improper and that
credits should annually expire,the Company is willing to modify its original proposal by
accepting an excess net energy credit system that would allow customers to self-select the annual
expiration date of unused kWh credits.Tr.at 15.
co,miussio,,Decision:Based on our review of the record.we find it fair,just and
reasonable for the Company to compensate net metering customers for Excess Net Energy using
a kWh credit instead of a financial credit or payment.While we want to encourage net metering,
we believe a financial credit or payment may incent potential net metering customers to
overbuild their systems.The net metering tariff is for those who wish to offset a portion of their
load.Those wishing to be wholesale power providers should look to Schedule 86 as the vehicle
for that type of transaction.We believe that removing the cash payment takes away this gaming
opportunity and encourages customers to right-size their systems.Further,we find it fair,just,
and reasonable for the kWh credit to indefinitely carry forward to offset future bills for so long
as the customer remains on the net metering service at the same generation site.Allowing the
credits to carry forward indefinitely ensures that customers will be able to use their credits when
they need them and thus receive the benefits of their systems.
ORDERNO.32846 15
D.Interconnection
1.Idaho Clean Energy Association.ICEA initially expressed concerns with the
Company’s proposed changes to the Schedule 72 interconnection procedures.ICEA reports that
it subsequently met with the Company and Staff and was able to resolve those concerns.
Accordingly,ICEA recommended the Commission accept the Company’s proposed modified
interconnection rules that were negotiated with ICEA’s input.Tr.at 32 1-322.
2.Idaho Conservation League.ICL did not submit testimony on the interconnection
issue.However,in its Application for Intervenor Funding (discussed below),ICL urges the
Commission to approve the revised Schedule 72 covering interconnection procedures.See ICL’s
Application for Intervenor Funding at 2.
3.City of Boise.The City initially opposed the Company’s proposed changes to
Schedule 72.The City also recommended the Commission open a separate docket to look at
new,statewide interconnection rules.Tr.at 226-230,234.However,the Company’s rebuttal
testimony has since proposed a resolution to the interconnection issues,and the City says it does
not take issue with that resolution so long as the local solar developers accept it.The City still
recommends the Commission open a separate docket to develop statewide interconnection rules.
Tr.at 24 1-242.
4.Company Rebuttal:As noted above,after parties expressed concerns about the
proposed interconnection procedures,the Company,Staff,and ICEA met and resolved those
concerns as set forth in Exhibit 8.Although certain details must be finalized,the Company
recommends that the Commission approve Exhibit 8.The Company will work with interested
parties to finalize the details and file conforming tariff language.
Commission Decision:With regard to the Company’s proposal to re-organize the
service provisions in Schedule 72,“Interconnections to Non-Utility Generation,”we note that
initial objections to the changes have since been resolved.We find the proposed resolution,as
reflected in Exhibit 8,is fair,just,and reasonable,and we approve it.The Company shall work
with Staff,ICEA,and other interested parties to finalize the details of Exhibit 8,and the
Company shall file conforming tariff language for our approval before the proposed,October 1,
2013 effective date.
ORDER NO.32846 16
INTERVENOR FUNDING
On June 17,2013,ICEA petitioned the Commission for $10,902.13 in intervenor
funding to cover expenses that ICEA incurred in this case (i.e.,attorney fees—$10,700 based on
a $200/hour billable rate;costs—$202.13).See ICEA’s Petition for Intervenor Funding and
supporting affidavits.On June 18,2013,ICL also petitioned for intervenor funding to cover its
expenses in the amount of $17,000 (consisting of attorney fees—$7,247.50 based on a $130/hour
billable rate;expert witness fees/costs—$9,812.46 based on a $300/hour rate).See ICL’s
Application for Intervenor Funding.No one opposed the funding requests.
Intervenor funding is available under Idaho Code §61-61 7A,which declares it is the
“policy of [Idaho]to encourage participation at all stages of all proceedings before this
Commission so that all affected customers receive full and fair representation in those
proceedings.”The statute empowers the Commission to order any regulated utility with
intrastate annual revenues exceeding $3.5 million to pay all or a portion of the costs of one or
more parties for legal fees,witness fees and reproduction costs not to exceed a total for all
intervening parties combined of $40,000.Id.The Commission must consider the following
factors when deciding whether to award intervenor funding:
(a)A finding that the participation of the intervenor has materially contributed
to the decision rendered by the Commission;
(b)A finding that the costs of intervention are reasonable in amount and
would be a significant financial hardship for the intervenor;
(c)The recommendation made by the intervenor differed materially from the
testimony and exhibits of the Commission Staff;and
(d)The testimony and participation of the intervenor addressed issues of
concern to the general body of users or consumers.
Idaho Code §6l-617A(2).
To obtain an intervenor funding award,an intervenor must comply with Commission
Rules of Procedure 161 through 165.Rule 162 provides the form and content for the petition.
IDAPA 31.01.01.162.
The Commission finds that ICEA and ICL Petitions satisfy the form and content
requirements of our rules.Further,we find that ICEA and ICL generally meet the intervenor
funding requirements.We note that both intervenors participated in the public workshop,
ORDER NO.32846 17
settlement negotiations,prepared and evaluated discovery,and testified and examined witnesses
at the technical hearing.We find their participation materially contributed to our decision,and
that their recommendations materially differ from those expressed in Staff’s testimony and
exhibits.For instance,ICEA recommended against a cap,and TCL addressed the valuation of net
metering benefits.Further,their participation addressed issues of concern to the general body of
customers.However,we are concerned that ICEA seeks recovery of attorney’s fees billed at
$200/hour while ICL seeks recovery of expert fees billed at $300/hour.We do not believe it is
reasonable to ask the Company—and ultimately its customers—to pay these relatively high
hourly rates.Based on the documentation we have reviewed,and for purposes of this funding
award,we approve reasonable rates of $185/hour for ICEA’s attorney and $125/hour for ICL’s
expert witness.Factoring in these new rates,we approve a funding award of $9,799.63 for ICEA
(i.e.,73.50 hours x $185/hour attorney fees +$202.13 costs $4,000 payment)and $11,634.96
for ICL (i.e.,55.75 hours x $130/hour attorneys fees +31 hours x $125/hour expert fees +
$512.46 costs),and find that each intervenor would suffer financial hardship if it were not
granted such an award.These awards shall be chargeable to the residential and small
commercial classes.Idaho Code §61-617A(3).
ULTIMATE FINDINGS OF FACT
AND CONCLUSIONS OF LAW
Idaho Power Company is an electric utility subject to the Commission’s regulation
under the Public Utilities Law.Idaho Code §61-1 19 and 61-129.The Company’s rates,
charges and contracts for electric service in the State of Idaho are subject to the Commission’s
jurisdiction.As more fully described above,we find it fair,just,and reasonable to:(1)
discontinue the current net metering capacity cap and require the Company to instead submit
periodic status reports;(2)maintain the net metering customers on Schedules 6 and 8,and not
alter the rate design and pricing structure at this time;(3)not allow net metering to offset the
customer charge;(4)allow the Company to compensate Excess Net Energy using a kWh credit
rather than a financial credit or payment,with such credits to carry forward to offset customer
consumption unless and/or until the the customer ceases to be a customer at the generation site;
and (5)approve the resolution of interconnection issues as specified in Exhibit 8.
ORDER NO.32846 18
ORDER
IT IS HEREBY ORDERED that the Company’s request to double the capacity cap is
denied.Rather,the Company shall file an annual status report with the Commission discussing
the net metering service.The report shall discuss,without limitation,the net metering service
provisions and pricing and how distributed generation may be impacting system reliability.The
Company also shall promptly file an earlier report if at any time it expects its net metering
service will materially and negatively impact its system.The existing 2.9 MW capacity cap is
removed.
IT IS FURTHER ORDERED that the Company’s request to change the net metering
pricing structure by modifying Schedule 84 to move residential and small general service net
metering customers to newly created Schedules 6 and 8 is denied.The Company shall continue
using Schedule 84 to offer net metering service to all customers.To the extent the Company
wishes to increase the monthly customer charge,or implement a BLC for the residential and
small general service customer classes,it shall raise that issue in a general rate case.Net
metering shall not offset the customer charge.
IT IS FURTHER ORDERED that the Company’s request to change how Net Excess
Energy is billed is granted in part,and denied in part.Specifically,the Company’s request to
compensate net excess generation with a kWh credit instead of a financial credit is granted,but
the Company’s request to have the kWh credits expire each year is denied.Rather,the Excess
Net Energy kWh credits shall carryover to offset the customer’s electricity usage and shall not
expire until the customer is no longer a customer at the site of the net metering generation
system.This change to how excess energy is billed will apply to customers effective October 1,
2013.The Company shall file for our approval a Schedule 84 that conforms to the requirements
of this Order.
IT IS FURTHER ORDERED that the parties’resolution to the Schedule 72
interconnection issues,as reflected in Exhibit 8,is approved.The Company shall work with
Staff,ICEA,and other interested parties to finalize its details and shall file conforming tariff
language for our approval before the proposed,October 1,2013 effective date.
TI IS FURTHER ORDERED,that ICEA’s and ICL’s requests for intervenor funding
are granted in part.The Company shall promptly pay $9,799.63 to the ICEA and $11,634.96 to
the ICL.
ORDER NO.32846 19
THIS IS A FINAL ORDER.Any person interested in this Order may petition for
reconsideration within twenty-one (21)days of the service date of this Order.Within seven (7)
days after any person has petitioned for reconsideration,any other person may cross-petition for
reconsideration.See Idaho Code §6 1-626.
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this
day of July 2013.
ATTEST:
A
jIifl D.JewelI
Cmmission Secretary
O:IPC-E-i 2-27_kk5
L4t4 /!8LL?
MARSHA H.SMITH,COMMISSIONER
MACK A.REDFORD,COMMISSIONER
ORDER NO.32846 20