20190405Application.pdf

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An TDACORP Company
LISA D. NORDSTROM
Lead Counsel
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April 5, 2019
VIA HAND DELIVERY
Diane Hanian, Secretary
ldaho Public Utilities Commission
472 West Washington Street
Boise, ldaho 83702
Re:Case No. IPC-E-19-15
Study of the Measurement lnterval, Compensation Structure, and Value of Net
Excess Energy for On-site Generation Under Schedule 84 and Temporarily
Suspend Schedule 84 Net Metering Service to New ldaho Applicants
ldaho Power Company's Application and Testimony
Dear Ms. Hanian
Enclosed for filing in the above matter please find an original and seven (7) copies of
ldaho Power Company's Application. Also enclosed for flling are an original and eight (8) copies
oftheDirectTestimonyofTimothyE.Tatum. Onecopyofthetestimonyhasbeendesignatedas
the "Reporter's Copy." A disk containing a Word version of the testimony is enclosed for the
Reporter.
lf you have any questions about the enclosed documents, please do not hesitate to
contact me.
Very truly yours,
-<,*Q.v(r.*rr*.,,.-
Lisa D. Nordstrom
LDN:kkt
Enclosures
LISA D. NORDSTROM (lSB No. 5733)
ldaho Power Company
1221West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
Telephone: [phone]
Facsimile: [phone]
I n o rd strom @ ida h opowe r. com
Attorney for ldaho Power Company
BEFORE THE !DAHO PUBLIC UTILITIES COMMISSION
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CASE NO. !PC-E-19-15
APPLICATION
Expedited Consideration
Requested
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Large commercial, industrial, and irrigation ("Cl&!") customers are increasingly
considering multi-million-dollar investments in on-site generation systems under the
current net metering rules found in Schedule 84, Customer Energy Production Net
Metering Service ("Schedule 84"). Despite ongoing efforts in Case No. IPC-E-18-15 ("18-
15 Case")1 to study the costs, benefits, and compensation of net excess energy supplied
I ln the Matter of the Petition of ldaho Power Company to Study fhe Cosfs, Benefits, and
Compensation of Net Excess Energy Supplied by On-Site Generation, Case No. IPC-E-18-15.
APPLICATION .1
IN THE MATTER OF IDAHO POWER
COMPANY'S APPLICATION FOR
AUTHORITY TO STUDY THE
MEASUREMENT INTERVAL,
COMPENSATION STRUCTURE, AND
VALUE OF NET EXCESS ENERGY FOR
ON-SITE GENERATION UNDER
SCHEDULE 84 AND TO TEMPORARILY
SUSPEND SCHEDULE 84 NET METERING
SERVICE TO NEW IDAHO APPLICANTS.
by customer on-site generation, ldaho Power Company's ("ldaho Power" or "Company")
Cl&l customers continue to rely on the existing Schedule 84 on-site generation pricing
and compensation structure to calculate their potential return on investment rather than
a more reasonable and sustainable value. ln addition to the customer frustration that this
expensive misunderstanding will likely cause, both the ldaho lrrigation Pumpers
Association ("llPA")2 and the Company are increasingly concerned about cost shifting to
customers without on-site generation.
ln accordance with ldaho Code S 61-502 and RP 052, ldaho Power requests the
ldaho Public Utilities Commission ("Commission") initiate a collaborative process to
explore modifications to the compensation structure and excess energy value applied
under Schedule 84 for implementation by January 1,2020. The Company further
requests that the Commission expeditiously review and temporarily suspend service
under Schedule 84 to new ldaho Cl&l applicants effective as of today's date, April 5,2019,
during the pendency of this case.
ln support of this Application, ldaho Power represents as follows:
I. HISTORY OF SCHEDULE 84
1. Schedule 84 is offered by the Company to provide for the transfer of
electricity to the Company from customer-owned generation facilities with a capacity up
to 100 kilowatts ("kW") to offset all or a portion of a customer's energy usage.
2. Prior to Schedule 84's creation in 2002, customers taking service under
ldaho Power's Schedule 1 (Residential Service) and Schedule 7 (Small GeneralService),
2 A letter prepared by llPA more particularly describes its concerns and support for the temporary
suspension of Schedule 84 to new ldaho applicants. The letter can be found as Exhibit No. 1 to Mr. Tatum's
testimony and will be filed separately by llPA with the Commission.
APPLICATION - 2
took net metering service from Schedule 86, Cogeneration and Small Power Production
Non-Firm Energy ("Schedule 86"). As part of the order creating Schedule 84, the
Commission directed the Company to make an additionalfiling within six weeks extending
net metering eligibility to the Company's remaining customer classes, essentially the Cl&l
classes.3
3. ln the Company's proposed Cl&l net metering program, the C!&l net
metering customer would continue to utilize a standard utility meter that measures the
customer's demand and energy, and a second meter would be installed to measure the
energy provided by the customer's generating facility. lf at the end of the billing period,
the Cl&l net metering customer had delivered excess energy to the Company, each
kilowatt-hour ("kWh") of net energy was to be credited at a price equal to 85 percent of
the most recently calculated monthly per kWh Avoided Energy Cost - the price for non-
firm energy identified in the Company's Schedule 86. The Commission subsequently
approved the Company's proposed Schedule 84 net metering program proposal, also
finding that expenses related to excess power purchases under Schedule 84 could be
reasonably collected through ldaho Power's Power Cost Adjustment mechanism.a
4. When growth in the Schedule 84 net metering program approached the 2.9
megawatt ('MW') cap, ldaho Power sought to make changes in Case No. IPC-E-12-27
to make the program more sustainable. As part of that proceeding, the Commission
3 ln the Matter of the Application of ldaho Power Company for Approval of a New Schedule 84 -
Net Metering Tariff, Case No. IPC-E-O1-39, Order No. 28951 at 12 (February 13, 2002).
a ln the Matter of the Application of ldaho Power Company for Amendments to Schedule 84 - Net
Metering, Case No. IPC-E-02-04, Order No. 29094 at 7 (August 21,2002).
APPLICATION - 3
approveds substantial changes to Schedule 84's Excess Net Energy6 to compensate net
metering customers for Excess Net Energy using a kWh credit that would carry over
indefinitely to offset the customer's electricity usage instead of a financial payment. Under
certain circumstances, net metering customers who take service through multiple meters
at one or more premises were also permitted to aggregate and apply net metering credits
to offset usage on the other meters.
II. SCHEDULE 84 GROWTH
5. From 2012 through 2018, Schedule 84 has experienced a 32 percent
compound annual grourth rate ("CAGR") in active cumulative generation capacity. From
year-end 2018 through the end of March 2019, there has been a 114 percent increase in
Schedule 84 net metering capacity, including pending net metering customers.z
6. Recent Schedule 84 growth has been primarily driven by the irrigation class,
which has a 73 percent CAGR from 2012 through 2018; most of that growth occurring in
the last year. ln just the three months between year-end 2018 and March 31,2019, active
and pending capacity in the irrigation customer class has grown 366 percent, from 1.09
MW to 5.06 MW.
7. ln addition to the active and pending applications described above, the
Company is aware of an additional 5.79 MW of capacity from irrigation customers who
5 ln the Matter of ldaho Power Company's Application for Authority to Modrfy /fs Nef Metering
Servlce and to lncrease the Generation Capacity Limit, Case No. IPC-E-12-27, Order Nos. 32846 (July 3,
2013) and 32925 (November 19, 2013).
6 Schedule 84 defines "Excess Net Energy" as "the positive difference between the kWh generated
by a Customer and the kWh supplied by the Company over the applicable Billing Period." lt is the amount
of energy a customer generates above and beyond what that customer consumes.
7 Pending net metering customers are customers who have sent in their completed application and
paid a $100 application fee. Historically, 96 percent of customers that have applied for net metering service
have transitioned to Schedule 84.
APPLICATION - 4
have requested the Company provide detailed information on their meter data points,
including geographic information system data flagging contiguous property, names of
distribution feeders for each meter, transformer sizes, and rate schedule detail for each
meter, with an interest in installing photovoltaic systems on their properties. lf all these
systems come on-line, this would represent a March 31, 2019, year-to-date over year-
end 2018 increase in irrigation net metering capacity of 900 percent. Figure 2 from Mr.
Tatum's testimony represents active and pending growth between 2012 and 2019 for the
irrigation class and includes the capacity associated with the informal inquiries.
Idaho Schedu1e 84 (Irrgiation OnJ.y)
Tota1 Nameplate Capacity
20L2 - 20t9 Q1 YTD
L2
10
I
5
4
2
!{I{
MW
!{9il
M9r
!419I
MIV
!,49r
1.09 l{I.,
0.04 r.{w 0.04 }rvr
2012 20L3
0.04 llhl 0 .09 I.{w
20L4 2015
0 .12 r,4r{ 0 .13 MW
rCumulative Capaci.ty rPending Capacity
2OL6 2OL'7 2OL8 2019 Q1
YTDrlnformal Inguiry Capacity
8. The Company is concerned that flawed economic signals and incentives
provided through retail rate net metering may mislead customers considering multi-
million-dollar investment decisions in on-site generation. Specifically, potential irrigation
net metering customers may not be considering the financial impact that a change to the
Excess Net Energy credit may have on their investment decisions, if Excess Net Energy
were to be credited at a value-based rate, as is currently being discussed in the 18-15
Case.
5.79 Mw
3.29 Mw
1.77 r'fifl
APPLICATION - 5
9. The current Schedule 84 pricing for Excess Net Energy combined with the
current meter aggregation rules are not aligned with the costs and benefits of on-site
generation, ultimately removing any incentive for customers to right-size their systems,
especially for an irrigation customer. Within the last two years, nearly all of the active or
pending irrigation net metering customers in 2018 and2019 have installed or requested
to install, on average, 99 kW systems to comply with the 100-kW limit at an individual
meter point. Large increases in net metering capacity may result in cost shifts to standard
service customers who are not installing net metering systems.
III. POTENTIAL COST SHIFT IMPACT
10. The current practice of applying standard retail rates to the net metering
service creates the potential for inappropriate cost shifting between net metering
customers and standard service customers. Any reduction in energy consumption
because of on-site generation results in a reduction in the fixed costs recovered through
the volumetric rate. Figure 4 from Mr. Tatum's testimony illustrates the percentage of
fixed costs collected through the fixed and volumetric energy charges of primary C!&l
classes.
11. By using the retail rate to compensate customer-owned generation, the
Company is effectively paying different prices for the same resource type (e.9., solar)
simply based on the rate classification of each individual customer. Figure 5 from Mr.
Tatum's testimony illustrates the likely rate disparities between the current average retail
energy rates for each Cl&l class compared to reasonable proxies for the value of solar
generation on ldaho Power's system:
APPLICATION - 6
Energ-y Rate Comparison
$ /tvltr
Industrial* $0.04335
Large Commercial.
Primary*
Large Commercial
Secondary*
alackpot Solar**
Schedule 85 Non-
Firm* * *
$0.04s?5
$0.0s921
Irrigation* $0.05216
$0.02175
$0.02129
NOTE:* Current average energy rate, including 2018 Power Cost Adjustmentrt .rackpot Solar Power Purctrase Agrement, filst year contract price for 120 Mw*** Schedule 86 - 2018 annual average market based rate
While the retail energy rates for each of the Cl&l classes differ by as much as $0.01g/kwh
or $19.00 per megawatt-hour ("MWh"), the retail rates exceed the Jackpot Solar and non-
firm Schedule 86 proxy valuations by as much as $0.040/kwh, or $40.00/MWh.
12. The rapid growth of net metering and the potentially large disparity between
retail rates and a reasonable value of on-site generation warrant immediate and careful
reexamination of the Schedule 84 compensation structure requested in this case.
IV. CASE PROCEDURE
13. To mitigate the risk of CI&l customers pursuing the installation of net
metering systems that may not prove to be economic under a different compensation
structure, the Company requests the Commission expeditiously consider and
immediately suspend Schedule 84 service available to ldaho Cl&l applicants, as of the
date of this filing.
14. During this suspension, the Company also requests the Commission
establish a schedule in this case that could facilitate a change to the Cl&l dual meter
measurement interval and compensation structure under Schedule 84 by January 1,
2020. ldaho Power requests an intervention period be set to identify interested parties
APPLICATION - 7
that wish to participate in this docket. lf the Commission determines that a technical
hearing is required, the Company has contemporaneously filed Mr. Tatum's testimony
and stands ready to present its testimony and support the Application.
15. For administrative efficiency relative to the issues currently being evaluated
by stakeholders in the 18-15 Case and Case No. IPC-E-18-16 ("18-16 Case"),8 ldaho
Power recommends Cl&l-related on-site generation issues be processed as follows:
o Cl&l dual meter measurement interval and compensation structure for
Schedule 84 in this case;
. Value of net excess energy for all on-site generation classes -
Schedules 6, 8, and 84 - in this case and the 18-15 Case as combined
cases for this single issue; and
. Rate design and rate structures for all classes, including C!&l
customers, in the 18-16 Case.
16. Because the value of on-site generation is resource-specific and not class-
specific, it would be most efficient to address this issue comprehensively for all on-site
generators, rather than in a piecemeal fashion. To accomplish this, the Company
recommends that the Commission issue a notice in this case to invite intervention from
those stakeholders not currently participating in the 18-15 Case, but who may ultimately
be impacted by decisions in that case regarding on-site generation valuation, to
participate and contribute to the outcome.
8 ln the Matter of the Petition of ldaho Power Company to Study Fxed Costs of Providing Electric
Seruice to Customers, Case No. IPC-E-18-16.
APPLICATION - 8
V. COMMUNICATIONS AND SERVICE OF PLEADINGS
17. Communications and service of pleadings with reference to this Application
should be sent to the following
Lisa D. Nordstrom
ldaho Power Company
1221West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
I nordstrom @ ida hopower. com
d ockets@ idahopower. com
Timothy E. Tatum
Connie Aschenbrenner
ldaho Power Company
1221West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
ttatum@idahopower. com
caschenbrenner@idahopower. com
VI. REQUEST FOR RELIEF
18. As described in greater detail above, ldaho Power respectfully requests that
the Commission initiate a collaborative process to explore modifications to the
compensation structure and excess energy value applied under Schedule 84 for
implementation by January 1,2020.
The Company further requests that Commission expeditiously review and
temporarily suspend service under Schedule 84 to new ldaho Cl&l applicants effective as
today's date, April 5, 2019, during the pendency of this case.
DATED at Boise, ldaho, this Sth day of April 2019.
LI D. NOR
Attorney for ldaho Power Company
APPLICATION - 9
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. IPG.E.I9.1 5
IDAHO POWER COMPANY
ATTACHMENT 1
PROPOSED TARIFF
ldaho Power Company Fifth Revised Sheet No. 84-1
Cancels
l.P.U.C. No. 29. Tariff No. 101 Fourth Revised Sheet No. 84-1
SCHEDULE 84
CUSTOMER ENERGY PRODUCTION
NET METERING SERVICE
AVAI LABILITY
Service under this schedule is available throughout the Company's service territory within the
State of ldaho for Customers intending to operate Net Metering Systems to generate electricity to reduce
all or part of their monthly energy usage.
Effective June 1, 2018, Schedule 84 is closed to service for ldaho residential and ldaho small
general service customers; and,
For prospective ldaho participants who submit an application on or after Apri! 5, 2019, Schedule
84 is temporarily suspended untilfurther notice.
APPLICABILITY
Service under this schedule is applicable to any Customer that:
1. Does not take service under Schedule 4 or Schedule 5; and2. Owns and/or operates a Generation Facility fueled by solar, wind, biomass, geothermal,
or hydropower, or represents fuel cell technology; and3. Maintains its retail electric service account for the loads served at the Point of Delivery
adjacent to the Generation lnterconnection Point as active and in good standing; and4. Meets all requirements applicable to Net Metering Systems detailed in the Company's
Schedule 72 lnterconnections to Non-Utility Generation; and5. Takes retail electric service under:
a Schedule 1 or Schedule 7; and
Owns and/or operates a Generation Facility with a total nameplate capacity rating of 25
kilowatts (kW) or smaller that is interconnected to the Customer's individual electric system on
the Customer's side of the Point of Delivery, thus all energy received and delivered by the
Company is through the Company's existing watt-hour retail meter.
b. Schedules other than Schedule 1, Schedule 4, Schedule 5, or Schedule 7; and
Owns and/or operates a Generation Facility with a total nameplate capacity rating of 100
kW or smaller that is interconnected at a Generation lnterconnection Point that, at the
Company's discretion, is located either adjacent to or on the Customer's side of the Point of
Delivery and is metered through a meter that is separate from the retail load metering at the
Customer's Point of Delivery. A separate meter from the existing retail load metering at the
Customer's Point of Delivery is not required if the Customer meets the criteria below. The One
Meter Option is available if:
i. The Generation Facility has a total nameplate capacity rating of 25 kW or
smaller; and
ii. The Generation Facility has a total nameplate capacity rating that is no
more than 2o/o of the Customer's Basic Load Capacity (BLC) or comparable average
maximum monthly Billing Demands.
IDAHO
lssued per Order No.
Effective - April 5,2019
lssued by IDAHO POWER COMPANY
Timothy E. Tatum, Vice President, Regulatory Affairs
1221 West ldaho Street, Boise, ldaho
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. IPC-E-I9-1 5
IDAHO POWER COMPANY
ATTAGHMENT 2
TARIFF IN LEGISLATIVE FORMAT
ldaho Power Company F€u14hEjth Revised Sheet No. 84-1
Cancels
l.P.U.C. No. 29. Tariff No. 101 ThidFourth Revised Sheet No. 84-1
SCHEDULE 84
CUSTOMER ENERGY PRODUCTION
NET METERING SERVICE
AVAILABILITY
Service under this schedule is available throughout the Company's service territory within the
State of ldaho for Customers intending to operate Net Metering Systems to generate electricity to reduce
all or part of their monthly energy usage.
Effective June 1, 2018, Schedule 84 is closed to service for ldaho residential and ldaho small
general service customers: and,
For prospective ldaho participants who submit an application on or after April 5. 2019. Schedule
84 is temporarily suspended until further no .
APPLICABILITY
Service under this schedule is applicable to any Customer that:
1. Does not take service under Schedule 4 or Schedule 5; and2. Owns and/or operates a Generation Facility fueled by solar, wind, biomass, geothermal,
or hydropower, or represents fuel cell technology; and3. Maintains its retail electric service account for the loads served at the Point of Delivery
adjacent to the Generation lnterconnection Point as active and in good standing; and4. Meets all requirements applicable to Net Metering Systems detailed in the Company's
Schedule 72 lnterconnections to Non-Utility Generation; and5. Takes retail electric service under:
c,Schedule 1 or Schedule 7; and
Owns and/or operates a Generation Facility with a total nameplate capacity rating of 25
kilowatts (kW) or smaller that is interconnected to the Customer's individual electric system on
the Customer's side of the Point of Delivery, thus all energy received and delivered by the
Company is through the Company's existing watt-hour retail meter.
b. Schedules other than Schedule 1, Schedule 4, Schedule 5. or Schedule 7; and
Owns and/or operates a Generation Facility with a total nameplate capacity rating of 100
kW or smaller that is interconnected at a Generation lnterconnection Point that, at the
Company's discretion, is located either adjacent to or on the Customer's side of the Point of
Delivery and is metered through a meter that is separate from the retail load metering at the
Customer's Point of Delivery. A separate meter from the existing retail load metering at the
Customer's Point of Delivery is not required if the Customer meets the criteria below. The One
Meter Option is available if:
t.
smaller; and
The Generation Facility has a total nameplate capacity rating of 25 kW or
ii. The Generation Facility has a total nameplate capacity rating that is no
more than 2o/o of the Customer's Basic Load Capacity (BLC) or comparable average
maximum monthly Billing Demands.
IDAHO
lssued per Order No. 34046
Effective - +une4-Apttl-5-20 1 89
lssued by IDAHO POWER COMPANY
Timothy E. Tatum, Vice President, Regulatory Affairs
1221 West ldaho Street, Boise, ldaho