130703_IPCnetmeterfinal.pdf

Idaho Public Utilities Commission
Case No. IPC-E-12-27, Order No. 32846
July 3, 2013
Contact: Gene Fadness [phone], 890-2712

Most of Idaho Power net metering proposals denied

State regulators have denied nearly all of an Idaho Power Company application to
change how customers who generate their own power should be treated. The utility
proposed that residential and small commercial customers who net meter by generating
their own power be moved into new customer classes and be paid differently for the
energy they generate.

Even though the Idaho Public Utilities Commission denied most of Idaho Power’s
application, the commission said the company raises valid issues that are more
appropriately addressed in a general rate case.

Idaho Power has about 386 net metering customers who offset their electrical use by
connecting their own generating resources (such as solar panels or wind turbines) to the
utility’s transmission grid.

Capacity cap
Idaho Power proposed to double the current capacity limit on the amount of energy
that can be generated from net metering customers from 2.9 MW to 5.8 MW. Current
generation is nearing the 2.9 MW limit. The commission said a cap “may disrupt and
have a chilling effect” on net metering. However, the commission directed the company
to provide an annual appraisal of net metering status and its impact on the reliability of
the company’s system.

Pricing
Idaho Power proposed to increase the monthly service charge for residential net
metering customers from $5 to $20.92 and for small-business net metering customers
from $5 to $22.49. To more fully reflect the cost of service associated with net metering
customers’ use of Idaho Power’s distribution system, the utility proposed to establish a
basic load capacity charge of $1.48 per kW for residential net metering customers and
$1.37 per kW for small-business customers. It also proposed to decrease the retail
energy rates net metering customers pay. (For example, a residential net metering
consumer would pay a non-summer rate of 4.85 cents per kWh compared to a standard
residential customer’s rate of 7.23 cents per kWh for the first 800 kWh of use.)

The pricing changes are needed, Idaho Power said, because net metering customers are
credited at the full retail rate and are able to avoid paying distribution expense as well
as other fixed costs, such as billing, that other retail customers pay. As a result, those
costs are passed on to other customers.

Idaho Power said residential customers with net metering systems differ from other
residential customers in that they produce power, can offset their use of power, use
transmission and distribution facilities in a different manner and require backup
services.

The commission agreed that net metering customers “have some characteristics that
could justify moving them into a separate rate class,” but is concerned that the
company’s proposal is inconsistent with state energy policy, will discourage net
metering and encourage “rate-gaming” where large customers would install a small
solar system to qualify for lower retail energy rates.

The commission also agreed that net metering customers “do escape a portion of the
fixed costs and shift the cost burden to other customers in their class.” However, the
commission said “more work needs to be done to establish the correct customer charge
for those who net meter” and that “dramatic changes such as those proposed in this
case ... should not be examined in isolation but should be fully vetted in a general rate
proceeding.” Idaho Power countered that this case presented a better forum to focus on
net metering issues than would a general rate case addressing many unrelated issues.

Excess net energy

For those net metering customers who generate more power than they consume, Idaho
Power proposed to stop paying customers and instead provide them with a kilowatt-
hour credit that can be applied to future billing periods. Those credits would expire after
the December billing period, the company proposed, with the excess applied against the
annual Power Cost Adjustment to benefit all customers.

The commission approved the proposal to compensate net metering customers with a
kilowatt-hour credit instead of a financial credit or payment. “While we want to
encourage net metering, we believe a financial credit or payment may incent potential
net metering customers to overbuild their systems.” The net metering tariff is designed
for those customers who wish to offset a portion of their load, not to be wholesale
power providers. There already is a tariff schedule for small-power producers desiring to
sell energy to the company, the commission noted.

However, the commission denied the company’s proposal to allow the credits to expire
at the end of December. The commission said the credits should carry forward to offset
future net metering customer bills for as long as the customer remains on the net
metering service at the same generating site.

The commission approved the company’s proposal to modify the procedures net
metering customers use to interconnect to Idaho Power’s distribution grid.

The case generated hundreds of comments to the PUC and large attendance at
workshops and hearings. Many customers said the changes proposed by Idaho Power
would make it difficult, if not impossible, for net metering customers to recoup their
investment and that net metering customers are such a small part of the overall
company’s revenue base that any rate inequities are insignificant.

Idaho Power maintained that while the current inequities in the pricing system are not
significant numerically, the current provisions are not sustainable and that delaying the
changes until net metering service expands will only increase the inequities.

The commission said it appreciated the extent of public participation in the case. “The
public input was especially thoughtful and thorough and, based on the record before us,
we find that the public overwhelmingly opposes the company’s application,” the
commission said.

“Moreover, we are concerned that the company did not seek out or consider customer
input before proposing such dramatic changes to the net metering provisions,” the
commission said. “We applaud the company for bringing this case and these issues to
our attention. But we advise the company that it would enhance consideration of future
program-specific changes if it informed and obtained feedback from its customers and
other stakeholders before proposing them.”

Several parties intervened in the case including the City of Boise, Idaho Clean Energy
Association, Idaho Conservation League, Pioneer Power LLC, Powerworks LLC and Snake
River Alliance.

The commission’s order is final. Interested parties may petition the commission for
reconsideration by no later than July 24. Petitions for reconsideration must set forth
specifically why the petitioner contends that the order is unreasonable, unlawful or
erroneous. Petitions should include a statement of the nature and quantity of evidence
the petitioner will offer if reconsideration is granted.

Petitions can be delivered to the commission at 472 W. Washington St. in Boise, mailed
to P.O. Box 83720, Boise, ID, 83720-0074, or faxed to 208-334-3762.

To read the commission’s order or other documents related to the case, go to
www.puc.idaho.gov. Click on the electric icon, then on “Open Cases” under the
“Electric” heading and scroll down to Case No. IPC-E-12-27.

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