20201027Comments.pdf

EDWARD J. JEWELL
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-001 4
[phone]
IDAHO BAR NO. 10446
IN THE MATTER OF IDAHO POWER
COMPANY'S APPLICATION FOR
AUTHORITY TO MODIFY SCHEDULE 84'S
METERING REQUIREMENT AND TO
GRANDFATHER EXISTING CUSTOMERS
WITH TWO METERS
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Street Address for Express Mail:
11331 W CHINDEN BLVD, BLDG 8, SUITE 2OI-A
BOISE, ID 83714
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
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CASE NO. IPC.E.2O.26
COMMENTS OF THE
COMMISSION STAFF
The Sraff of the Idaho Public Utilities Commission comments as follows on Idaho Power
Company' s Application.
BACKGROUND
On June 19,2020,Idaho Power Company ("Idaho Power" or "Company") filed an
Application requesting Commission authorization to: 1) replace the present two-meter
requirement in Schedule 84 with a single-meter requirement as of December 1,2020, and; 2)
make customers who sign up for Schedule 84 on or after December L,2O2O subject to any future
Commission-approved changes to the Schedule 84 billing methodology and compensation
structure, and; 3) grandfather customers who have applied to take service under Schedule 84
before December 1,2020 to the present terms in Schedule 84 for 10 years.
On September 4,2020, the Commission issued a Notice of Telephonic Public Hearing and
Notice of Modified Procedure establishing comment and reply comment deadlines and setting a
date for a public hearing. Order No.34777.
STAFF COMMENTS ocToBER 27 ,2020I
STAFF ANALYSIS
In its Application, the Company requests that it be allowed to change Schedule 84's two-
meter requirement to a single-meter requirement for new customers as of December 1,2020. The
Company also proposes a lO-year grandfathering period for existing Schedule 84 customer-
generators.
Staff agrees with the Company's proposal to require new customer-generators to take
service through a single meter. However, Staff has not been able to identify any technical reasons
to require existing Schedule 84 customers to change their current two-meter system to a single
meter. Staff believes that the question of grandfathering existing customer-generators may not be
ripe for determination at this time and believes it would be more appropriate to wait until a
successor program is proposed. However, should the Commission wish to consider
grandfathering at this time, Staff has included considerations about similarities and differences
between IPC-E-18-15 and this case.
a. Staff Supports the Companv's Proposal to Require New Schedule 84 Customer-
Generators to Install a Sinsle Meter.
Staff supports the Company's proposal to require new Schedule 84 customer-generators to
be metered through a single meter system. Because this would place both the customer's
generation and load behind the same meter, the customer would use the energy it produces
directly and only the excess generation would be exported to the Company's system.
Under the current Schedule 84 tarifl customer-generators who do not take service under
Schedules 6 and 8 (Residential and Small General Service On-Site Generation) purchase all of the
power they consume from the Company through a consumption meter, and sell all of the power
they produce to the Company through a generation meter. In addition to measuring the energy
consumed by a customer, the consumption meter also measures demand, which is used to
determine the customer's demand charges and basic load charges ("BLC"). At the end of each
month, the customer's net energy consumption is calculated by subtracting energy produced from
energy consumed. In the event that a customer produces more energy than they consume in a
month, the customer receives a kilowatt-hour ("kWh") energy credit that can be applied to
subsequent months, or transferred to other meters owned by that customer under Schedule 84's
meter aggregation rules. Currently, there is no provision for offsetting either the customer's
demand charge or BLC with the two-meter configuration.
2STAFF COMMENTS ocToBER 27 ,2020
The Company is not proposing a change in rate structure at this time, and the current kWh
for kWh rate structure can be applied to either single-meter or two-meter systems. Under current
rate structures, there would be little difference in the energy charges of customer-generators using
single-meter and two-meter systems. However, because customers with a single meter offset their
consumption directly, it is possible that some customer-generators could realize substantial
reductions in their demand charge and BLC. This is particularly true for Schedule 9 and 19
customer-generators, whose peak demand often occurs during the daytime. On the other hand,
the demand of Schedule 24 (rmgation) customers does not occur at a particular daytime period, so
it is unlikely that Schedule 24 customers will benefit from a single-meter system.
In Order No. 2895 I , the Commission stated, " . . .we believe that the primary thrust of net
metering is to provide customers the opportunity to offset their own load and energy
requirements." By permitting customer-generators to offset both energy and demand, a single-
meter system better accomplishes this goal than a two-meter system does. Staff agrees that new
Schedule 84 customer-generators should be metered using a single meter system.
b. StaffBelieves the Commission Should Allow Existins Schedule 84 Customer-Generators
to Retain Two-Meter Svstems Indefinitelv.
Existing Schedule 84 customers would incur costs associated with converting from a two-
meter system to a single-meter system. Although these costs would be small for most customers,
other customers could see conversion costs as high as $2,000. Company Response to Staffs
Production Request Nos. 2 and 3. Because Staff was not able to identify any incremental costs to
the Company associated with retaining two-meters for existing customers under the current rate
structure, Staff does not believe requiring customers to fund a conversion to a single-meter system
is currently justified. Staff believes that existing Schedule 84 customer-generators should be
allowed to convert from a two-meter system to a single-meter system, if they choose, at their own
expense.
Staff considered the possibility that it may become difficult to support the particular type
of generation meter currently used by the Company; however, if this occurs, any two-way meter,
including the Company's current AMI meters, can measure current flow in a single direction and
can be used to replace either meter in a two-meter system.
Even if the Company does change the rate structure sometime in the future, Staff believes
that it would be appropriate for the Commission to permit existing customers to continue using
STAFF COMMENTS ocToBER 27 ,20203
their two-meter systems indefinitely. Staff believes it is unlikely there will be a technical reason
for replacing the current two-meter infrastructure already in place including: equipment, meters,
metering infrastructure, and billing systems. Retention of the existing two-meter system would
not preclude a change from a kWh for kWh credit to an avoided cost credit; however, those
customer-generators remaining on a two-meter system would not be able to use their consumption
to offset demand and BLC.
c. StaffBelieves it mav be Prudent to Defer a Decision on Grandfatherins Existins
Customer-Generators.
Staff does not believe that the change from a two-meter requirement to a single-meter
requirement is the kind of fundamental programmatic change that justifies differential treatment
between existing customers and new customers. The Company proposes grandfathering existing
Schedule 84 customers at the current kWh for kWh compensation structure for a period of l0
years. Staff believes that the Commission should defer a decision on grandfathering existing
Schedule 84 customers until a successor program is proposed. On Page No. 19 of Company
Witness Aschenbrenner's direct testimony, she states that "in a future docket, the Company plans
to study the compensation structure and export credit rate ... the future study may result in
changes to the measurement interval and compensation structure applicable to Schedule 6, 8, and
84 customers." Staff believes that it would be appropriate for the Commission to wait until the
Company has submitted this study before rendering its decision on grandfathering.
Although Staff believes a decision on grandfathering existing Schedule 84 customer-
generators should be deferred, Staff acknowledges the Commission's decision in IPC-E-18-15 on
authority to grandfather existing customer-generators, and includes the following considerations
on grandfathering for Commission consideration.
Idaho Code $ 6l-315 states,
No public utility shall, as to rates, charges, service, facilities or in
any other respect, make or grant any preference or advantage to any
corporation or person or subject any corporation or person to any
prejudice or disadvantage. No public utility shall establish or
maintain any unreasonable difference as to rates, charges, service,
facilities or in any other respect, either as between localities or as
between classes of service. The commission shall have the power
to determine any question of fact arising under this section.
STAFF COMMENTS ocroBER 27 ,20204
In IPC-E-18-15, the Commission, after considering the legal briefs submitted by the parties in that
case and the unique facts before it, determined it had the legal authority to grandfather existing
residential and small commercial customer-generators with on-site generation based on
reasonable differences between existing customer-generators and new customer-generators. In
Order No. 34509, the Commission summarrzed the arguments of parties,
Commission Staff argued that this case presents an issue of first
impression because it has unique facts that did not exist in prior
cases. Namely, in this case, existing customers have incurred
substantial costs to invest in on-site generation systems because they
relied on the Company's longstanding net-metering program, the
fundamentals of which have remained unchanged since its
inception, to continue under its existing or similar terms.
Commission Staff argued policy and equity considerations justify
the Commission recognizing this reasonable difference between
existing net-metering customers and future net-metering customers.
Idaho Clean Energy Association, Idaho Conservation League and
Vote Solar, and City of Boise argued that systems designed and
installed to conform with the rules proposed in the Settlement
Agreement would have different characteristics from, and would
interact with the grid differently than, systems designed and
installed to conform with the existing rules. This argument was
joined in reply by Commission Staff. The Company did not address
the specifics of the parties' arguments that existing net-metering
customers differ from future net-metering customers, but simply
argued that it could not discem any differences between new and
existing customers that would support rate differentiation.
At 5. The Commission grandfathered existing customer-generators but did not approve the
Settlement Agreement. The Commission stated,
Although the Commission is not changing the Company's net-
metering program at this time, the Commission finds it prudent and
justifiable to distinguish between existing customers and new
customers based on the customers' reasonable expectations when
making significant personal investments in on-site generation
systems. We find that before the service date of this Order,
customers reasonably assumed the net-metering program
fundamentals would not change. Representations made by both
solar developers and the Company, whether explicit or implied,
created a reasonable basis for reliance. After the issuance of this
Order, however, we believe it will no longer be reasonable for a
customer to assume the net-metering program fundamentals will
remain the same over the expected payback period of their
STAFF COMMENTS ocToBER 2l ,20205
investment. We find this is a cognizable and reasonable difference
between classes of customers, which justifies different treatment.
Id. at lO. In its petition for reconsideration and/or clarification, the Company asked whether the
Commission's order put all customer classes on notice that the fundamentals of the net metering
program are subject to change. The Commission declined to determine whether other customer
classes were reasonably on notice of a likely prograrnmatic change as a result of the orders in that
case, stating that IPC-E-18-15 was specific to residential and small general service net-metering
classes. Id. at 12.
The Commission has long acknowledged concerns that the current kWh for kWh rate
structure may create an unfair shift of fixed costs from net metering customers to non-net
metering customers, and that it may become necessary to modify the kWh for kWh rate structure
in order to ameliorate this cost shift. For example, in its final order in IPC-E-06-L7,the
Commission wrote:
In response to the comments of some program participants,
however, we must note that the net metering program price is a tariff
rate. It is not a contract rate. As a tariff rate, it is subject to change.
An impetus for future change is recognition that in addition to the
customer charge, the Company recovers some of its fixed costs for
serving customers in its energy charge. A persuasive argument
could be made that net metering customers are being subsidized by
other customers. lndeed, in our Order approving net metering we
recognized that the full cost of the program may not be borne by
participants. OrderNo.28951. . . . Customers therefore should not
rely on continuation of the tariff rate in cost effectiveness
calculations to justify net metering equipment investment decisions.
Order No. 3O227 at1 . In IPC-E-18-15, the Commission made note of similar warnings in which
the Commission stated that tariffs are not contracts and are subject to change, but found that they
were not sufficiently clear to indicate that the fundamental program might change. Order No.
34509 at 12-13.
The Idaho State Supreme Court has generally held that the Commission may not
discriminate between customer groups based solely on priority of service, but that the
determination of reasonable differences is largely within the specialized and technical expertise of
the Commission to be determined by the special facts of each case. In describing previously
upheld reasons for distinction, the Court stated,
STAFF COMMENTS ocToBER 27 ,20206
This Court has previously determined that cost of service is but one
criterion among many for consideration in forming a basis for rate
differentiation between classes of service and between classifications
of customers within a certain schedule. . . . Specifically, as between
classes of customers within a schedule, the criteria included
contribution to peak load, costs of service on peak demand days,
costs of storage and economic incentives. (Citations omitted). We
find such criteria as being valid considerations for rate differentiation
as between classes of service, whether those classes be as between
schedules or as between customers within a schedule. We do not find
one criterion to be necessarily more essential than another. Nor do
we find the criteria as listed above as being exclusive. As this Court
has stated in the past: 'Each case must depend very largely upon its
own special facts and every element and every circumstance which
increases or depreciates the value of the property, or of the service
rendered, should be given due consideration, and allowed that weight
to which it is entitled. It is, after all, very much a question of sound
and well-instructed j udgment.'
Grindstone Butte MuL Canal Co. v. Idaho Public Utilities Comm'n,102 Idaho 175,
(1e81).
The public testimony in this case demonstrates that Schedule 84 customers have been
making investment decisions under many of the same assumptions that Schedule 6 and Schedule
8 customers made their decisions. The Company argues that Schedule 84 customer-generators
who would be grandfathered under the Company's proposal differ from the Schedule 6 and 8
customer-generators who were considered by the Company in IPC-E-18-15. The Company
argues that Schedule 84 customer-generators are commercial, industrial, and irrigation customers
who have the resources to fully understand the Commission's orders, and that it is reasonable to
assume that these customer-generators either were aware or should have been aware, that the net
metering program structure could change. However, knowing that such customers understand
regulatory principles, it is also reasonable to conclude that such customers would look at the
treatment that Schedule 6 and Schedule 8 customers received, and reasonably conclude that the
Commission would grant them grandfathering treatment on the same or similar terms.
Furthermore, the rate design for Schedule 84 customers, which includes a demand charge and a
BLC whereas residential and small general commercial rates do not, diminishes concern about a
potential cost-shift from program participants to non-participants, thus making an argument for
grandfathering Schedule 84 customers even more persuasive.
STAFF COMMENTS ocroBER 27 ,2020
179-80
7
The Commission's decision in IPC-E-18-15 grandfathered existing customer-generators
under Schedules 6 and 8 to the one to one kilowatt hour credit for which those customers signed
up. The Commission did not freeze in time, lock in, or grandfather the rates for consumption.
Order No. 34509 at 14-15. Cf. Idaho Power Co. v. Thompson, 19 F.2d 547 (1927). As in IPC-E-
18-15 for Schedule 6 and Schedule 8 customers, in this case Schedule 84 customers have made
significant investments in on-site generation systems based on the reasonable expectation that
program fundamentals would not change.
Reas onable expectation p ro gram fundamentals w ould remain
Customers in this case have testified that they believed that the net metering program and
fundamentals would not change. It would be consistent to grandfather Schedule 84 customers
based on the reasonable expectation that program fundamentals would not change, which
contributed to the 25-year Commission grandfathering decision made for Schedule 6 and 8
customers and could apply to Schedule 84 customers on the same grounds in this case.
S i gnifi c ant inv e s tment
The Commission stated that "customers who have made significant investments in on-site
generation systems reasonably differ from customers who have not yet made significant
investments in on-site generation systems, and this difference justifies separate treatment." IPC-
E-18-15, Order No. 34509 at 12. Existing Schedule 84 customers have made the same, if not
more substantial types of investments as Schedule 6 and 8 customers, based on many of the same
principles:
o Belief that contracts signed with the Company were definitive and used as a
baseline for financial calculations;
o Return on investment and payback calculations with a25-year expected life of the
asset;
o Investment mechanism to control increasing power costs;
o Contribution to sustainability;
o Business decisions to maintain viability and competitiveness;
o Offset consumption to control costs; and
o Significant investments in on-site generation systems.
8STAFF COMMENTS ocToBER 27 ,2020
Schedule 84 customers with two-meters also have the additional requirement of
collaborating with Idaho Power design and engineering teams, who drive aspects of customer
system design and configuration at the customers' additional expense, to meet the Company's
Schedule 84 two-meter requirement. When evaluating the "significant investment" criteria of
Order No. 34509, the Commission may consider Schedule 84 customers for similar
grandfathering treatment.
Grandfathering period
A grandfathering period of 25-years would be consistent with public and customer
appeals, common warranty and expected life of on-site assets, and align with decisions made in
previous Commission orders. A grandfathering period of 25 years by system location would align
with decisions made in both IPC-E-18-15, Order No. 34546, and PAC-E-19-08, Order No. 34752.
PUBLIC COMMENTS
Due to the significant public interest in the public and telephonic hearing in the
IPC-E-18-15 Residential Net Metering case, Staff held a public workshop on September 28,2020,
and Commissioners held a telephonic public hearing on October 13,2020. During the public
workshop, there were four individuals that provided comments and concerns. During the public
telephonic hearing, the Commissioners heard testimony from 13 individuals. The Commission
continues to see public comments submitted online through the Idaho Public Utilities
Commission website and through email to Commission Secretary. As of October 26 ,2020,
Commission has received 78 public comments. Staff has reviewed all comments, testimonies,
and input and provides a brief summation of the top concerns:
o Grandfathering for 10 years is unfair and should be granted 25 years, similar to
residential net metering customers ;
o Company needs to provide a study before changing or suggesting a new rate
structure, which the Company is not requesting at this time;
o 100 kwh limit needs to be addressed;
o Comment period is not long enough and is during the harvest season which is the
busiest time of year for current Schedule 84 irrigators; and
. Keep the two-meter set-up.
STAFF COMMENTS ocroBER 27 ,20209
STAFF RECOMMENDATIONS
Staff recommends that new Schedule 84 customer-generators should be metered using a
single meter system. Furthermore, Staff believes that existing Schedule 84 customer-generators
should be allowed to retain their current two-meter system indefinitely and allowed the option to
convert to a single-meter system, if they choose, at their own expense.
Staff recommends that the decision to grandfather existing customer-generators should not
be considered until the Company presents a new rate structure in a future case filing. Should the
Commission decide existing Schedule 84 customers currently meet grandfathering status criteria,
Staff recommends the Commission grandfather existing Schedule 84 customers with two-meter
configurations by system location, for a period of 25 years.
Respectfully submitted this e+h day of October 2020.
F>.&*tl
Edward J. Kdt
Deputy Attorney General
Technical Staff: Travis Culbertson
Mike Morrison
Rachelle Farnsworth
i :umisc/commentVipce20.26ejtncmrrf comments
STAI]F COMMENTS 10 ocToBER 27 ,2020
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 27th DAY OF OCTOBER 2020,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. IPC-E-20-26, BY E-MAILING A COPY THEREOF, TO THE FOLLOWING:
LISA D NORDSTROM
REGULATORY DOCKETS
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
E-MAIL: [e-mail]
dockets@ .com
BENJAMIN J OTTO
ID CONSERVATION LEAGUE
710 N 6TH STREET
BOISE D 83702
E-MAIL: [e-mail]
KELSEY JAE
LAW FOR CONSCIOUS LEADERSHIP
920 N CLOVER DR
BOISE ID 83703
E-MAIL: kelsey @kelseyjaenunez.com
ANTHONY YANKEL
I27OO LAKE AVE
UNITE 2505
LAKEWOOD OH 44101
E-MAIL: [e-mail]
AUSTIN RUESCHHOFF
THORVALD A NELSON
HOLLAND & HART LLP
555 7TH ST STE 32OO
DENVER CO 80202
E-MAIL: [e-mail]
tnelson @ hollandhart.com
aclee @ hollandhart.com
gl garganoamari @ hollandhart.com
CONNIE G ASCHENBRENNER
TIMOTHY E TATUM
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
E-MAIL: [e-mail]
ttatum @ idahopower.com
IDAHO SIERRA CLUB
LISA YOUNG
MIKE HECKLER
503 W FRANKLIN ST
BOISE D 83702
E-MAIL: lisa.vouns@ sierraclub.org
Michael.p.heckler @ gmail.com
ERIC L OLSEN
ECHO HAWK & OLSEN PLLC
PO BOX 6119
POCATELLO ID 83205
E-MAIL: [e-mail]
RUSSELL SCHIERMEIER
29393 DAVIS ROAD
BRUNEAU ID 83604
E-MAIL: [e-mail]
JIM SWIER
MICRON TECHNOLOGY INC
8OOO S FEDERAL WAY
BOISE D 83707
E-MAIL: [e-mail]
CERTIFICATE OF SERVICE
ABIGAIL R GERMAINE
BOISE CITY ATTORNEY'S OFFICE
PO BOX 500
BOISE ID 83701-0500
E-MAIL: agermaine @ cityofboise.org
CERTIFICATE OF SERVICE