20130128Comment.pdf

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Comments to the PUC regarding Case # IPC-E-12-27
By Courtney White, January 28, 2013

As a rate payer, a business person, and a concerned citizen of Idaho, I urge the PUC to decline Idaho
Power’s request to increase the fees and reduce the benefits of net metering. In sum, the proposal does
vastly more harm than good. While the proposal’s stated intent may sound reasonable on the surface, the
actual terms proposed create greater inequities, establish perverse incentives, misrepresent the
economics, and cause far more problems than the dollars involved could possibly merit. Below are
comments in two sections: impacts of the proposal, and the flaws in its logic.

Impacts of the Net Metering Proposal

Destroys jobs. The mere threat of this
proposal passing has already caused layoffs.
Idaho stands to lose not only the immediate
jobs but also the critical mass of knowledge
needed to support what other states view as a
growth industry.

Guts the financial benefits of
investing in renewable energy.
The proposed new fees and removal of
benefits are already bringing these
investments to a halt. As a homeowner, I
waited many years to invest in solar until we
could project an affordable return on
investment. We have run the numbers again,
and this proposal would destroy the projected
return on the substantial investment we made only last year.

Creates a high-risk environment for future investments. Allowing Idaho Power this
degree of monopoly power would create risk and uncertainties in the market that further dissuade
investors. Rate changes should correlate with cost changes; Idaho Power has not changed their costs,
they’ve just changed their minds. While 20-year contracts are the norm when companies invest in power
generation, the investments made by individuals are no less significant to those individuals and no less
deserving of respect for established terms. In addition, as I have spoken with multiple people looking to
invest in this field, I hear the same concern repeated - We can manage market risks, but we can’t invest if
a monopoly has the power to arbitrarily and severely change our economics.

Further increases Idaho’s reliance on fossil fuels. As an Idaho Power rate payer, I am
forced to rely on 40-50% of our electrical power from coal, and the company focuses on fossil fuel sources
when adding new capacity. At a minimum, we customers should be free as individuals to invest in
renewable energy without being penalized for it.

Takes Idaho backwards as others go forward. This proposal would make Idaho stand out on a
national level as the only state taking deliberate action to discourage renewable energy. Idaho Power has
already built a reputation for its issues with wind power; rather than wisely put forth better solutions for
working with renewable energy, the company is investing a disproportionate amount of administrative time
and is willing to destroy jobs in order to target a tiny subset of individuals who have invested in renewable
energy, individuals who represent only 0.07% of its customer base. This filing is by no means a long term
solution.

Issue: Not worth it
The 0.07% of customers who net meter do not represent enough money to justify the harm caused by this proposal.
353
495,570
Net Metering Customers Total Customers
(Note: there really is a bar here,
but it is too low to register on the
same scale as total customers)

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Flaws in the Proposal’s Logic

Creates a penalty for net metering. Under the proposed terms, net metering customers
with usage less than about
800 kWh in a month will pay
higher bills than standard
customers with the same net
usage. Idaho Power has long
argued that managing peak
demand is a key driver of
infrastructure costs; if its
past arguments are true, the
company cannot also claim
that customers who reduce
peak demand should pay a
higher share of
infrastructure costs than
standard rate payers with the
same monthly usage.

Idaho Power will sell customer-produced power it doesn’t pay for. For example,
this author’s peak production month
is July, and our lowest is January.
Under the guise of correcting
inequities in its rates, Idaho power
proposes that it will sell our excess
production at summer rates, but
will disallow us to apply the kWh
credits we earn in January. The
majority of net metering customers
have solar panels, yet Idaho Power
proposes that customer credits
should expire 10 days after the
shortest day of the year. This term
ensures that net metering
customers will subsidize other
customers.

Issue: Utility will sell kWh it doesn’t pay for
Solar customers will build kWh credits in summer but
are not allowed to apply balance in Jan/Feb
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
Monthly solar production for this
author; excess is sold at retail
rates by Idaho Power
Projected balance of kWh credits
at the end of December
Credits expire with no compensation, subsidizing other rates payers.
Issue: Penalizes net metering customers
Net metering customers with usage less than ~800
kWh would pay higher bills than standard
customers for the same net usage
Proposed
Current
Policy
Net Meterer
Standard Customer
Standard Customer
Net Meterer
E.g., this compares the cost to customers (kWh, service fees, and base load
charges for 400 kWh) for the 2013 summer rates vs. proposed changes
Net Metering
penalty

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The composition of retail rates is misrepresented.
The filing argues that net metering customers benefit unfairly if they reduce their power bill at
the same price per kWh that they pay for power because retail prices include other infrastructure
costs. This grossly misrepresents the economics:

 Price = Value. Regardless of how a price is derived, it represents the value of a unit at the
time & place of purchase. A kWh delivered to a home by Idaho Power is the same value as a
KWh produced and consumed at that home. The price may be derived from Idaho Power’s cost
structure, but both Idaho Power and homeowners have costs to cover.

 Cost-based price must remove legacy hydro. When a utility dissects the composition of its
rates, it should look at the whole picture. The rates on all our power bills represent the
combination of exceptionally cheap hydro power built by a prior generation and the higher
costs of more recent capacity. When Idaho Power adds capacity, it costs more than the
historical average, so they ask for rate increases. When individuals invest in solar, they don’t
get to argue how their capacity costs more than legacy hydro, they make do trying to earn a
return at the prevailing retail rates. Yet Idaho Power argues the price is still too high. If one
doesn’t believe that the retail price is a fair market price which should apply to everyone, and
that a cost-based price is appropriate, then the entire composition of retail prices must be
considered. A credible effort to propose retail rates for net metering customers would begin
by breaking down current retail rates to remove the below-average rate needed for a fair
return on legacy hydro and to include the above-average rate Idaho Power expects to earn a
return on recent or future investments. Focusing on half the equation misrepresents the
economics and is inconsistent with the logic Idaho puts forth whenever the company proposes
new infrastructure.

Note that Idaho Power proposes the electricity we net metering customers produce should be
valued at – for example – 5.4¢ per kWh, yet net metering customers in Washington who buy
their systems from Washington manufacturers are paid 54 ¢ per kWh produced, 10 times more.

The proposal is grossly inequitable in terms of the seasonal value of power.
According to the proposal, a kWh produced in mid-day July is worth the same as a kWh produced
in October. In the past, Idaho Power
has stressed the value of time-of-day
pricing, and they charge customers
more for power in summer. This
proposal reverses that logic. When, for
example, a solar customer produces
excess power during July, Idaho Power
sells that power at full retail summer
rates; under the proposal, the
customers giving Idaho Power that
electricity cannot even reduce their
own service charges or base load
charges.

For this author, we would be start to
consume more than we produce in
October, and would be allowed to
Issue: Exploits customer-produced power
Idaho Power will sell customer-produced power at summer
rates, customer reduces bill months later at 40% less value
$0.049
$0.078
$0.054
$0.096
Customer
benefit
months later
at 40% less
Idaho Power
Sells
customer-
produced
energy
2013 Summer rates for stanrdard customers
Proposed Non-summer rates for Net Metering
Per-kWh Rates, residential
(Note -Customer forfeits any
balance of credits on Dec 31.)

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apply our kWh credits at non-summer, net metering rates, which are 40% less than the value at
which Idaho Power would sell our electricity.
Power is worth more in summer than non-summer, thus solar net metering customers will be
subsidizing standard customers.

The proposal creates perverse incentives. Idaho Power is proposing high monthly fixed
fees and a lower per-kWh charge for
net metering customers. If you own
a large home and consume high
amounts of energy (anywhere over
2000 kWh/month), you will be able
to save money by installing a tiny
system that qualifies you as a net
metering customer: you can bring
your bill down because you would
qualify for the lower per-kWh rates.
E.g., a net metering customer with a
net usage of 2500 kWh in a month
would pay a lower bill than a
standard customer with the same
net usage. Standard rate payers
will be subsidizing net metering
customers with high net usage.

The proposal accelerates future rate increases for all rate payers. When
homeowners invest in solar, it doesn’t raise rates – it mitigates peak demand, reduces the need
for higher cost capacity additions, and buffers other rate payers from the disproportionately high
rate at which fossil fuel based power costs will increase. By actively discouraging net metering,
Idaho Power unfairly exposes all rate payers to future rate increases.

Again, it’s not worth it.

Even if one disagreed with every issue raised in this document, the potential financial benefits to
other rate payers gained by quadrupling fees on net metering customers are negligible. For
example, the increase in service fees to be collected from current net metering homeowners,
though a big hit to those individuals, represents less than $5,000 per month. No logic can
justify that fees in this range outweigh the jobs and talent this state will lose. I implore the PUC
to decline this filing and to advise Idaho Power to focus its resources on creating value rather
than pricing policies that do vastly more harm than good for Idaho.

Thank you.
0
50
100
150
200
250
300
350
400
1100125014001550170018502000215023002450260027502900
Standard Customer
Net Meterer
Net usage over 1100 kWh/ month (note BLC = Estimate)
Issue: Creates perverse incentives
Huge consumers of electricity could sign up for Net Metering
and pay LESS than standard customers for the same usage
Standard
customers will
be subsidizing
net metering
customers