20030501ID Farm Bureau Comments.pdf

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IDAHO FARM BUREAU FEDERA'Ift9NJ 0
O. Box 167 . 500 West Washington Street
2003 MA Y Boise, Idaho 83701-0167. [phone] -. . 10: 29
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UTILITIES COMMISSION
April 29 , 2003
Ms. Jean D. Jewell
Idaho Public Utilities Commission
472 West Washington
O. Box 83720
Boise, 10 83720-0074
RE: Case No. PAC-03-, PacifiCorp s Net Metering Proposal.
Dear Ms. Jewell:
On behalf of the Idaho Farm Bureau , which represents more than 57 800 Idaho
families, I am pleased to offer the following comments with regard to PacifiCorp
proposed net-metering program.
PacifiCorp s net-metering proposal , schedule 135 , must be significantly improved
if it is to be of any practical value to the agricultural customers it will serve.
appears to simply copy Idaho Power s recently accepted net metering program
which also inadequately addressed agricultural use issues, rather than a good
faith effort to work with business , industry and agriculture to propose a viable
program that would benefit all involved.
Several items in the proposal appear to be aimed at preventing, rather than
fostering participation in the program. For example , paying generators only 85%
of the Dow Jones Mid-Columbia Electricity Price Index (Dow Jones Mid-C Index)
prices for any excess generation is indefensible. PacifiCorp attempts to justify
this based on comments made by PUG staff in the Idaho Power net metering
case.
PUG staff suggest that the discount is reasonable since the utility may not need
the power and would therefore sell it on the open market and would probably
incur transmission loss. That is a lot of assumptions. Granted , that may be the
case some of the time, however, it is also just as reasonable to assume that the
utility will need the power and will actually save money by purchasing it locally
and not incur any line loss. Furthermore, all benefits under the current scenario
accrue to the utility rather than being split equally between the utility and the
Home Office: P.O. Box 4848 . 275 Tierra Vista Drive. Pocatello, Idaho 83205-4848 . [phone]
generator. This inequity would easily be solved by paying full Dow Jones Mid-
prices.
In addition, monthly netting unjustly awards all benefits of the program in favor of
the utility and penalizes the generator. Most agricultural customers (irrigation
pumpers) will be generating the bulk of their power in months when their
electricity consumption is low. For instance , an irrigator using wind turbines will
primarily generate power in the winter and spring, while most consumption will be
in the summer months. Therefore , considering the differential between the price
they will receive when generating (85% of the Dow Jones Mid-C Index), and the
price they will pay when consuming (full retail), they will have to generate more
than 2.5 times the amount of electricity they consume over the course of a year
just to come out even at the end of the year. Therefore, the utility is receiving an
unfair subsidy on the back of the generator.
This should be addressed in two ways. First, excess generation should be
credited at full Dow Jones Mid-C Index prices as previously discussed.
Secondly, all power generated under the net metering program should be carried
over for a one year period so it can offset consumption at other times of the year.
Notwithstanding PacifiCorp s argument that power is worth different amounts
depending on when it is generated or consumed, for net metering to truly serve
its stated purpose of allowing customers to offset all or part of their electrical
consumption , annualized billing is a necessity. This could easily be done by
carrying forward all generation at full retail price until it is offset by consumption
during the year. At the end of the year a check could be cut for any excess
generation over consumption at the wholesale rate.
In fact, we would not object to all excess generation being given to PacifiCorp at
the end of the year, as many other states currently require, as long as all
generation were carried forward for a year and credited against consumption.
Net Metering is not supposed to be a money making project for generators, it is
supposed to be a way to offset their consumption. Unfortunately, PacifiCorp
proposal makes them offset their consumption by a factor of 2.5 to one.
As a side note , it is our understanding that avoided energy cost as used in the
Public Utilities Regulatory Policy Act means the cost avoided if the utility does not
build its next power plant. The cost of power from that next plant is what is
considered avoided cost. This cost reflects capital as well as variable costs
where as the Dow Jones Mid-C essentially reflects only variable costs.
Therefore , at the least, the avoided cost definition in the proposed schedule 135
should be changed to allow for actual avoided cost rates.
Restricting generating equipment to 100 kW of nameplate capacity is far too
restrictive. This requirement, in and of itself, will severely reduce the number of
people interested in participating in this program since many operators will be
unable to come close to offsetting their consumption with the proposed size
limitations.
For example , to offset the power consumption for six months use of a 100
horsepower irrigation pump, a farmer would have to install a 150 kW wind turbine
once you factor in that wind only produces about 20 - 30% of the time over the
course of a year. If you then factor in that during those months when he is not
consuming enough to offset his production , he will only get paid 85% of the Dow
Jones Mid-C Index price, which is currently less than half of the retail rates he is
paying, he has to double again the size of the turbine to hope to break even over
the course of a year. Now he is up to around a 300 kW turbine just to cover the
cost of the electricity of one 100 hp pump.
This is just a small example. What about those larger farmers who have several
pumps? There is no way they can hope to participate with these unrealistic size
restrictions. A better approach would be to not restrict the nameplate capacity of
the generation equipment, but to only allow generation up to a certain percentage
over consumption at each meter, say three to five percent, on an annualized
basis. That way, farmers could take advantage of economies of scale and put in
larger equipment that is more cost effective, yet they will be restricted from
generating excess power.
The interconnection agreement could cover all the details of the feasibility of
interconnecting the proposed equipment. If the proposed installation were too
large for the existing transmission lines, it would be up to the customer to pay for
any upgrades necessary. However, under the current proposal, or any
modifications, it is extremely important that any interconnection fees that are
charged be limited to the actual costs to PacifiCorp. This should not be a windfall
for the utility, nor should it be a subsidy to the customer.
We are also troubled by the proposed cap of 714 kW of cumulative nameplate
capacity. PacifiCorp has indicated that this one tenth of one percent of the
company s retail peak demand is an "industry standard" and it must be in place to
protect their system from any equipment overloads should all net metering
generation cease functioning at one time. This event seems highly unlikely,
especially when you consider the current normal load demand fluctuation
system-wide varies far more than that on a daily basis. We believe a far more
reasonable cap would be one percent or 7.14 MW. This would allow for far wider
participation in the program. The current proposal would only allow seven
participants if all of them installed 100 kW equipment.
It is our contention that the above-mentioned restrictions regarding monthly
netting, discounting wholesale prices, the 100 kW nameplate capacity, and the
714 kW cap will severely restrict the number of people willing and able to
participate in this program. The whole purpose of this petition , as we understand
, was to encourage and promote participation. We believe that there are
equitable solutions to all of these impediments that will allow PacifiCorp to
continue to supply reliable , consistent power while allowing consumers to offset
loads and generate clean , renewable power in a safe and effective way.
Furthermore, we believe that PacifiCorp is missing a golden opportunity for self-
promotion. It could position itself as a company that is environmentally friendly
and is doing all that it can to distribute and diversify generation and support
clean , renewable energy technologies. It could also capitalize on the image of
working with agriculture and business in this time of economic setback to bolster
rural economies and strengthen our electrical energy supply for the future.
We appreciate the opportunity to comment on this important issue. Please keep
us informed of any decisions, discussions or hearings regarding this matter.
Thank you for your consideration.
SinCereIY
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Frank Priestley, P (dent
Idaho Farm Bur Federation
CC:IFBF Officers , Directors & Staff
Idaho Dept. of Water Resources , Energy Division
NW Energy Coalition
PacifiCorp