20030620Final Order No 29260.pdf

Office of the Secretary
Service Date
June 20, 2003
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE PETITION OF NW )
ENERGY COALITION AND RENEWABLE
NORTHWEST PROJECT TO ESTABLISH NET
METERING SCHEDULES FOR P ACIFICORP.
CASE NO. P AC-03-
ORDER NO. 29260
On February 27, 2003 , NW Energy Coalition and Renewable Northwest Project
petitioned the Idaho Public Utilities Commission (Commission) to initiate proceedings for the
establishment of new net metering schedules for PacifiCorp dba Utah Power & Light Company
(PacifiCorp; Company) addressing 1) procedures, requirements and standards for the
interconnection and operation of small renewable electric generation systems by electric
customers of PacifiCorp; and 2) related provisions for billing such customers for the net of their
electric consumption less their generation.
Petitioner NW Energy Coalition is a non-profit organization which promotes energy
conservation, renewable energy resources, and consumer and low-income protection. In Idaho
the Coalition has 12 member organizations including Idaho Rural Council, Idaho Rivers United
and the Idaho Community Action Association.
Petitioner Renewable Northwest Project is a non-profit organization which promotes
development of renewable energy sources, including wind, solar, and geothermal technologies in
Idaho, Oregon, Washington and Montana.
The Petition seeks to correct an imbalance of opportunity between customers of
Idaho s three major investor-owned utilities and their ability to install small electric generation
systems on their property and generate all or a portion of their electric needs, while remaining
interconnected with the electric grid. Petitioners note that the Commission has recently approved
net metering schedules for Idaho Power Company (under Schedule 84) and Avista (under
Schedule 62). Reference (Idaho Power) Order Nos. 28951 and 29094; (Avista) Order
No. 28035. PacifiCorp has no approved schedule to accomodate net metering. While customers
of PacifiCorp presumably could negotiate with the Company on a case-by-case basis to install
small renewable generation systems and receive payment for the generation under PURP A, these
customers, Petitioners contend, are at a disadvantage to similarly situated customers of Idaho
ORDER NO. 29260
Power and A vista.Specifically, Petitioners contend that customers of PacifiCorp have no
assurance of the type of systems they could install, the interconnection requirements required of
them, and the rate that might be credited for electricity they generate.
Petitioners believe that the new Schedule 84 for Idaho Power Company represents a
good model for PacifiCorp. In its Order approving Idaho Power s tariff, the Commission stated
all customers should be provided the opportunity to participate in net metering, including three-
phase systems and demand metered customers.Order No.28951 at 11; see also Order
No. 29094 (approving 100 kW nameplate capacity limitation for large commercial and irrigation
customers ofldaho Power).
Petitioners assert that the customer profile of PacifiCorp s service territory (with its
high irrigation loads) demands that a higher capacity limit be provided to large commercial and
irrigation customers as with Idaho Power s Schedule 84. However, as Petitioners discussed in
commenting on Idaho Power s proposed amendment to Schedule 84 (Case No. IPC-02-4),
they support a billing methodology that credits excess monthly generation at the customer
retail rate on a per kilowatt hour basis, and allows for a continuous carryover of such credits.
PacifiCorp Answer and Proposed Net Metering Tariff Schedule No. 135
On March 20, 2003 , PacifiCorp filed its Answer to the Petition and a Request for
Approval of Proposed Electric Service Schedule No. 135, Net Metering Service. PacifiCorp
states that the Company was in the process of developing such a schedule in response to the
perceived desire for net metering in Idaho.
PacifiCorp agrees that Idaho Power s Schedule 84 represents a good model for
PacifiCorp and contends that its proposed Electric Service Schedule No. 135 is patterned after
Idaho Power Company s Schedule 84.
Consistent with Idaho Power s Schedule 84, PacifiCorp s proposed Schedule No. 135
provides a capacity limit of 100 kW for large commercial and irrigation customers, and 25 kW
for customers taking service on electric service schedules applicable to residential and small
commercial customers (Schedules 1 , 36, 23 and 23A).
While PacifiCorp proposes to credit residential and small commercial customers for
excess generation at the customer s retail rate, PacifiCorp opposes such an approach for larger
commercial irrigation customers and proposes that the larger customers be credited an amount
ORDER NO. 29260
equal to 85% of the Dow Jones Mid-C Index Price for non-firm energy. Such an approach, the
Company contends, is intended to avoid the subsidy that would exist by paying full retail rates.
The proposed Schedule No. 135 provides that the costs associated with
interconnection of the customer s generating facility with the Company system, including the
cost of any additional metering necessary for service under the schedule, will be paid by the
customer. This requirement, the Company contends, will help avoid other customers subsidizing
net metering customers.
PacifiCorp proposes that Schedule 135 be available on a first come, first serve basis
until the total rated generation capacity of net metering systems connected under the Schedule
equals 714 , which is l/10th of 1 % of the Company s Idaho retail peak demand in 2002.
Further, in order to make these schedules available to a wider range of customers, the Company
proposes that no single customer may connect more than 20% of the total nameplate capacity
connected under the schedule.
PacifiCorp proposes that credits for excess generation be provided each month, rather
than allowing for carryover or "banking.Providing a credit each month, the Company
contends, appropriately recognizes the different values of energy during the different months of
the year.
On April 14, 2003 , the Commission issued Notices of Application and Modified
Procedure in Case No. P AC-03-4. The deadline for filing written comments or protests was
May 2, 2003. Timely comments were filed by the Northwest Energy Coalition, Renewable
Northwest Project and Northwest Sustainable Energy for Economic Development, collectively
the Renewable Energy Advocates or Advocates, the Idaho Farm Bureau, Commission Staff and
one of the Company s irrigation customers.On May 12 a letter was filed by PacifiCorp,
declining further reply comment and recommending approval of its proposed tariff Schedule
135.
The filed comments in this case can be summarized as follows:
Renewable Ener2:V Advocates
The Renewable Energy Advocates are generally supportive of PacifiCorp s net
metering proposal. Specifically, the Advocates support the following features of the Company
proposed net metering tariff:
ORDER NO. 29260
1. The relative system size limitations of 25 kW and 100 kW (although
acknowledging that the upper limit will exclude some large customers);
2. The proposal to credit excess generation for smaller customers at the
customers retail rate; and
3. The incorporation of established standards for interconnection of net
metered generation systems.
The Advocates contend that the Company s net metering proposal can be modified to
better encourage the installation of clean, distributed generation. The benefit to be realized by
net metering, the Advocates contend, include (a) increased system reliability, (b) better
diversification of generation resources, and (c) the environmental benefits of clean energy. Also
cited by the Advocates are the Department of Energy identified consumer-side and grid-side
benefits of distributed generation. To improve the net metering tariff the Advocates recommend
the following changes:
1. Implementation of an annual rather than a monthly "true-up" of excess
generation; or provide an indefinite carryover without opportunity for cash
payment.
2. All systems under 25 kW should be credited at retail rate, regardless of
customer class.
3. Net metering availability should not be limited to the proposed cumulative
cap (714 kW), however, the Company could petition the Commission to
end or modify its availability after that limit is reached.
4. Credit for excess generation should be carried over to the next billing
cycle, or paid at the customer s request.
Idaho Farm Bureau Federation
The Farm Bureau contends that the Company s net metering proposal must be
significantly improved to be of any practical value to agricultural customers. The Farm Bureau
recommends the following changes:
1. Pay large generators full Dow Jones Mid-C prices for non-firm energy for
excess generation, not 85%.
2. Carry forward at full retail price all power generated under the net
metering program until it is offset by consumption. Monthly netting, the
Farm Bureau contends, unfairly penalizes the generator.
ORDER NO. 29260
3. Do not restrict nameplate capacity of generating equipment to 100 kW.
Instead, only allow generation up to a certain percentage over
consumption at each meter, say 3-, on an annualized basis. This
change, the Farm Bureau contends, would enable farmers to put in larger
more cost-effective equipment and take advantage of economies of scale.
4. Increase the proposed cap of 714 kW of cumulative nameplate capacity
(l/10th of 1 % of retail peak demand) to 7.14 MW.
Commission Staff
Staff recommends that the Commission approve PacifiCorp s proposed new Schedule
135 net metering tariff as filed.
The Company s tariff proposal, Staff notes, is virtually identical to the Schedule 84
Net Metering Rules already in place for Idaho Power Company. Reference Case
No. IPC-01-, Order Nos. 28951 , 29094. Staff notes that crediting residential and small
commercial customer generators at full retail rates will pay customers more than the actual value
of the generation. Staff contends that the utility cost of service is not fully recovered in the fixed
monthly minimum charge.
Staff supports the excess generation credit value approach for larger customers (85%
of the Dow Jones Mid-C Index price for non-firm energy) and believes that the Company
proposal to provide financial credits for excess generation each month rather than allowing for
carryover or "banking" of excess kW hours appropriately recognizes the different values of
energy during the different months of the year. Staff agrees that all additional costs of
interconnection and metering related to net metering service should be paid by the net metering
customer. Staff also agrees with the proposed capacity limits for Schedule 135 eligibility (100
kW for large commercial and irrigation customers; 25 kW for residential and small commercial
customers) and with the proposed Schedule 135 cumulative generation capacity limit (714 kW
which is 1/l0th of 1 % of the Company s Idaho retail peak demand in 2002). Should the cap be
increased, Staff believes that a more accurate cost-based rate may need to be established.
Customer Comments - Dean Turnblom
The comment filed by Mr. Turnblom, an irrigation customer of PacifiCorp, strongly
supports net metering. The customer contends that the net metering credit for excess generation
for large customers should be set at full retail rate, that the credit amount should be carried
ORDER NO. 29260
forward on a monthly basis and that at the end of the year the account should be squared. The
customer contends that the overall proposed limit of 714 kW is too low and that it should be
increased to at least 2 MW.
COMMISSION FINDINGS
The Commission has reviewed and considered the filings of record in Case
No. PAC-02-4 including the Company s proposed Schedule 135-Net Metering Tariff and the
related comments of the Renewable Energy Advocates, the Idaho Farm Bureau Federation
Commission Staff and Dean Turnblom. The Commission continues to find it reasonable to
process this case pursuant to Modified Procedure. Reference IDAP A 31.01.01.204.
The Commission notes that the net metering proposal submitted by PacifiCorp is
closely modeled on the tariff we approved for Idaho Power in Case No. IPC-01-39. The
comments submitted in this case, while presenting some additional arguments and factual
variations, raise similar issues and recommend similar changes.All commentors support
increased opportunities for distributed/alternative and renewable electric energy production.
The net metering filing ofPacifiCorp, we find, corrects what Petitioners characterized
as an imbalance of opportunity among customers of Idaho s three major electric utilities.
Although changes to the tariff are recommended, we find it reasonable to approve the tariff as
filed. To the extent that the alternative proposals submitted by commentors have administrative
merit we expect the Company to consider the recommendations and propose changes to its tariff
if a change would result in greater efficiency and cost savings. The tariff can be modified as we
gaIn expenence.
The net metering tariff proposed by the Company provides its customers with the
opportunity to offset their electric loads and energy requirements. This opportunity to run the
meter backwards and offset usage is the primary purpose of net metering. Under the Company
proposal, a customer s monthly kilowatt-hour consumption is offset kilowatt for kilowatt at the
customer s retail energy price. Excess generation for the small customers under the net metering
tariff is credited at the retail rate; for larger customers the credit is 85% of the non-firm market
index price. The Company s net metering proposal regarding excess generation and related
pricing, we find, recognizes differences in size and properly recognizes the time and seasonal
value of energy. The purpose of net metering is not to encourage excess generation. Developers
ORDER NO. 29260
of qualifying renewable generation resources who wish to get into the business of selling energy
to the Company should, under PURP A, request firm or non-firm energy purchase contracts.
The Farm Bureau contends that the proposed cumulative cap on net metering is too
low. The proposed cap is 1/10 of 1 % of historic load. The Commission finds that the proposed
714 kW cap is a reasonable initial cap for PacifiCorp s net metering program. We also find it
reasonable, however, that the cumulative capacity limit be reviewed after that limit is reached.
As part of that review, we expect a report from the Company regarding the required level of
subsidization by non-participants. The Commission recognizes that the full cost of the program
we approve today may not be borne only by participants. Raising the cap as recommended by
the Farm Bureau would only increase the level of subsidization. As part of its report to the
Commission, the Company should provide the differential between the net metering purchase
price it pays at retail sales rates and the wholesale cost of alternative power supplies. We also
expect further information from the Company regarding cost shifting and the Company s ability
to recover customer costs from program participants.
CONCLUSIONS OF LAW
The Idaho Public Utilities Commission has jurisdiction over this Petition, and the
Company s proposed net metering tariff schedule pursuant to Title 61 of the Idaho Code and the
Commission s Rules of Procedure, IDAPA 31.01.01.000 et seq.
ORDER
In consideration of the foregoing and as more particularly described and directed
above, IT IS HEREBY ORDERED and the Commission does hereby approve the Company-
proposed electric tariff Schedule No. 135, Net Metering Service, as proposed and without
modification. The effective date we approve is the date of this Order.
THIS IS A FINAL ORDER. Any person interested in this Order (or in issues finally
decided by this Order) may petition for reconsideration within twenty-one (21) days of the
service date of this Order with regard to any matter decided in this Order. Within seven (7) days
after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See Idaho Code ~ 61-626.
ORDER NO. 29260
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this J..O tfo.
day of June 2003.
ATTEST:
Co ission Secretary
vld/O:P ACEO304 sw
ORDER NO. 29260
1J
MARSHA H. SMITH, COMMISSIONER