20020722_211.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
CO MMISSI 0 NER SMITH
CO MMISSI 0 NER HANSEN
JEAN JEWELL
RON LAW
LOUANN WESTERFIELD
TONY A CLARK
DON HOWELL
DAVE SCHUNKE
RICK STERLING
RANDY LOBB
LYNN ANDERSON
GENE FADNESS
WORKING FILE
FROM:SCOTT WOODBURY
DATE:MARCH 1, 2002
RE:CASE NO. IPC-01-38 (Idaho Power)
AMENDMENT TO TARIFF SCHEDULE 72
INTERCONNECTION TO NON-UTILITY GENERATION
On November 9, 2001 , Idaho Power Company (Idaho Power; Company) filed an
Application with the Idaho Public Utilities Commission (Commission) requesting approval of
proposed amendments to the Company s tariff Schedule 72-Interconnections to Non-Utility
Generation.
BACKGROUND
On April 12, 1991 , the Commission issued Order No. 23631 approving the current
tariff Schedule 72. Since approval of Schedule 72 in 1991 , Idaho Power states that it has
continued to review its generation interconnection practices and has determined that it would be
beneficial to modify Schedule 72 to bring the Schedule into conformance with current standards
of best utility practices for non-utility generation interconnection. The purpose of these proposed
changes, the Company states, is to provide a template for non-utility generation interconnection
that provides a safe, economic and reliable interconnection while at the same time ensuring that
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Idaho Power s other customers do not subsidize the costs associated with non-utility generation
interconnections.
Description of Changes
Idaho Power s experience gained by interconnecting non-utility generation projects
of varying sizes from the extremely small (300 watts) to the moderately large (10 MW) has led
Idaho Power to propose that Schedule 72 be amended to accommodate a range of
interconnection requirements with increasing levels of sophistication depending on the size
the generating facility. As a result, the Company is proposing a simple interconnection process
for net metering projects, and a more streamlined and simple interconnection process for projects
100 kWs and smaller. Projects greater than 100 kWs and less than 1 MW and projects 1 MW
and greater will be required to comply with more complex interconnection standards. Reference
Application Attachment 1.
The proposed Schedule 72 interconnection policy requires customer generators to
pay for any necessary equipment, modifications and upgrades to insure safety and reliability.
The policy requires submission of designs, plans and specifications; proof that all required
permits, licenses, inspections and approvals have been obtained; proof that adequate protective
and disconnection equipment has been installed; and spells out other provisions regarding
ownership, operation, maintenance, and inspection of necessary equipment.
On November 23 2001 , the Commission issued Notices of Application and Modified
Procedure in Case No. IPC-01-38. The deadline for filing written comments was
December 21 , 2001. Comments were filed by the Renewable Northwest Project, Idaho Rivers
United, the Northwest Energy Coalition, Northwest Seed, Climate Solutions and American Wind
Energy Association--collectively the "Renewable Energy Advocates , the Idaho Rural Council
Commission Staff and a few ofthe Company s customers. Idaho Power filed reply comments on
January 25 2002. The comments can be summarized as follows:
Idaho Rural Council (IRC)
It is IRe's contention that the interconnection requirements proposed by Idaho Power
are too cumbersome and expensive. Interconnection equipment, it states, has met the tests and
standards of reliability and safety. While it makes sense to have those installations inspected in
the beginning, it is, IRC contends, totally unnecessary to impose the economic burden of annual
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inspections. New certification, it suggests, should only be required if the system is changed or
repaired.
Commission Staff
One of the primary obj ectives of an interconnection policy for non-utility generation
Staff states, is to insure that a safe, reliable electrical system is maintained. Idaho Power
objective in revising the existing interconnection policy is to simplify the interconnection
requirements for very small generation facilities and for net metering installations. Staff believes
that for the most part, the proposed revisions to the interconnection policy accomplish that
objective.
One area, however, in which Staff does have some concerns is the net metering
system requirement for annual certifications from an independent qualified party licensed in the
State of Idaho, certifying that the generation facility and equipment are in compliance with all
current applicable electrical and safety codes and are able to safely and reliably continue to
operate. Staff certainly agrees in principle that periodic inspections and certifications are
important, especially for larger generation facilities. However, Staff believes that annual
inspections and certifications may be excessive for net metering systems smaller than 25 kW.
Staff contends that such frequent inspections for such small systems could potentially encourage
even less rigorous compliance with electrical and safety codes. The cost of an annual
certification for very small systems would be a significant expense compared to the value of the
energy produced by the system over the course of a year. Inspections could become less
thorough if they become too routine.
As an alternative, Staff recommends that certification for net metering systems be
required of customer generators only once every three years, and whenever any material
modifications or additions are made to equipment. However, Staff also recommends that Idaho
Power be permitted to perform inspections of disconnection and protective equipment at
whatever intervals it chooses using its own personnel or by hiring qualified persons at its own
expense. Because Idaho Power must protect the integrity of its own system and insure its safety,
Staff believes the Company must not relegate complete responsibility for interconnection safety
to customer generators and the inspectors they choose to hire. Schedule 72, as drafted, already
includes a provision requiring customers to submit designs, plans specifications and
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performance data for their generation facility. It also already contains a provision for Idaho
Power to retain the right to inspect customer s equipment at its discretion.
Renewable Energy Advocates (REA)
Renewable Energy Advocates perceIve the Company s suggested changes to
Schedule 72 as imposing unnecessary and expensive bureaucratic burdens for the
interconnection of net-metered generation systems. REA opposes the Company s proposal of an
open-ended requirement that the customer-generator "pay all costs of interconnecting a
generation facility to the Company s system." Unbounded risks of interconnection expenses it
contends would likely be a strong deterrent to installation of net-metered generation systems. As
a practical matter, it states, actual utility experience with net metering facilities across the county
has demonstrated that in the vast majority of cases, the customer s equipment provides the
necessary safety and power quality protection and the distribution system can accommodate the
facilities without any modification. Under these circumstances, it contends that the proposed
language is over broad and does nothing more than create uncertainty for the customer regarding
the total cost of a net metering facility.
The Renewable Energy Advocates suggest that the Commission incorporate a three-
tier review process, which would create a presumption that net-metered systems will be
interconnected to the grid at no cost to the customer, unless the utility makes an affirmative
finding that equipment modifications are necessary to assure a safe and reliable interconnection.
Reference California Three Tiered Review Process for Distributed Generation Facilities. See
Footnote 2, REA Comments, p. 10.
In addition, the Renewable Energy Advocates contend that the Commission should
eliminate Idaho Power s suggested requirement for up-front and annual certifications by an
independent qualified party licensed in the state of Idaho" that a net-metered system will
operate safely and reliably. Such duplicative requirements, they contend, would do little to
ensure grid safety and integrity, particularly considering (1) that practically every net metering
system would require approval by a local or state electrical inspector; and (2) that the vast
majority of interconnection systems already comply with extremely rigorous, uniform technical
standards. Also, it is suggested that Idaho Power s proposed requirement for duplicative
certifications by an independent party would impose an economic barrier to net metering,
particularly for small-scale systems.
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If Idaho Power makes an affirmative determination that additional safety and
reliability equipment for net metering systems is necessary, the Renewable Energy Advocates
agree that is reasonable to impose such costs on the customer generators. However, they contend
that Idaho Power should be responsible for installation of additional meters to measure power
both consumed and generated by the customer, consistent with the utility s traditional metering
responsibilities. The Renewable Energy Advocates suggest that the Commission draw from
Oregon s statutory language as follows:
An electric utility that offers residential and commercial electric service:
(a) Shall allow net metering facilities to be interconnected using a
standard meter that is capable of registering the flow
electricity in two directions.
(b) May at its own expense install one or more additional meters to
monitor the flow of electricity in each direction.
Such allocation of responsibility for meter installation, the Renewable Energy
Advocates contend, would resolve metering and billing concerns, particularly for irrigation and
large customers. In claiming that "installation of additional metering to register the delivery of
energy to Idaho Power s systems negates the concept of net metering," Idaho Power, they
contend, implies that the use of one meter is the essence of net metering. Reference Company
Response to First Production Request of Commission Staff. At its core, the Renewable Energy
Advocates contend that the number of meters involved is a minor issue relative to the primary
issues of customer choice and the ability to pay the "net" of generation against consumption.
They recommend that the Commission provide an option for the installation of additional meters
if necessary to resolve technical or billing considerations for irrigation and large customers.
Idaho Power Reply Comments
System safety and reliability requires periodic inspection of interconnection
facilities.
Idaho Power believes that it would be correct to assume that all of the commentors
recognIze the need for periodic inspections of interconnection facilities for larger projects.
Interconnections of larger generation facilities, the Company contends, certainly pose the
greatest risk to Company personnel, as well as to customer equipment and overall system
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reliability.
inspections.
The Company agrees that small net-metered projects may not need annual
Net metering projects, even very small ones, the Company contends, present a real
dichotomy to an electric utility. On the one hand, most very small net-metered projects will
utilize inverter technology and other interconnection equipment that has become very
standardized and reliable. When this standardized equipment is properly installed and
maintained, Idaho Power agrees that it will provide a high degree of system protection. On the
other hand, small net-metered projects are also more likely to be of the do-it-yourself variety.
Inspection by the local building authority provides little security because both the inspector and
owner-operator will have very little understanding of how the interconnection equipment
operates in conjunction with Idaho Power s system and will certainly not provide any assistance
in ensuring that the owner-operator will be able to properly maintain the equipment in the future.
In addition, future remodeling projects and other home repair situations can result in the
interconnection safety equipment being relocated or otherwise altered from the original
configuration that was inspected and approved by Idaho Power. As a result, Idaho Power feels
strongly that some interval of periodic inspection is necessary even for the smallest net-metered
projects. Idaho Power would accept the three-year interval as proposed by Staff if clarifying
language can be added to the tariff that specifies that certification of Schedule 84 net metering
systems will be required once every three years and/or whenever material modifications or
additions are made to the generating equipment and/or interconnection facilities. The clarifying
language would also provide that sellers are required to notify Idaho Power of any material
modifications or additions prior to making such modifications or additions, and if at any time
that Idaho Power determines that such material modifications have been made without notice
Idaho Power will have the ability to disconnect the facility until such time as certification of the
modified facility is submitted to and accepted by Idaho Power. Idaho Power believes this
modification strikes a reasonable balance between the Company s need for safety and the
customer s desire to minimize interconnection costs.
Customers Choosing to Develop Net Metered Projects should pay the costs of interconnections.
Idaho Power believes that in all likelihood very small net-metered projects utilizing
standardized disconnection equipment will not require the expenditure of extraordinary
interconnection costs on the part of Idaho Power. The Renewable Resource Advocates urge the
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Commission to adopt language that is equivalent to a presumption that small net metered
projects will not have to pay interconnection costs unless the utility specifically identifies
required cost items and notifies the customer of the required additional costs. This proposed
presumption, the Company contends, makes sense only when the net metering option is limited
to small projects, i., projects 25 kW or less. Projects larger than 25 kW are much more likely,
the Company contends, to require additional interconnection expenditures.
That being said, Idaho Power still believes that it is important for the tariff to
explicitly state that all interconnection costs will be borne by the customer-generator. In the case
of small net-metered projects, in most instances, the customer may satisfy that requirement by
providing an inverter and other interconnection equipment meeting nationally recognized
standards, which have been reviewed and approved by Idaho Power in advance. However
language in a tariff, the Company contends, should not create ambiguity. There should be no
misunderstanding that if an interconnection requires more than the customer-furnished standard
equipment, it will be the customer-generator responsibility to bear those additional
interconnection expenses.
Idaho Power contends that there are no great differences between what it has filed
and the comments of Commission Staff and the Renewable Energy Advocates, so long as the
size of net metered projects remains small. If the size of net-metered projects is expanded
beyond 25 kW, the Company feels strongly that annual inspections are imperative to ensure the
safety of its employees and the reliability of the system.
Commission Decision
Idaho Power proposes changes to its Schedule 72 tariff to establish streamlined
procedures for interconnecting non-utility generation to the Company s system without
compromising safety and reliability. The commenting parties suggest changes in the Company
requirements for 1) annual inspection and certification of interconnection facilities and 2) the
Company proposed tariff language that the customer-generator "pay all costs of
interconnecting a generation facility to the Company s system.
For small net metering projects (25 kW) utilizing an invertor and other
interconnection equipment meeting naturally recognized demands, the Company agrees that a
three year inspection period (with clarifying language regarding modification or additions) is
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acceptable.For larger projects (greater than 25 kW) the Company maintains that annual
inspection and certification is required.
Regarding interconnection cost responsibility, the Company cautions that the net-
metering tariff should be unambiguous in stating that all interconnection costs will be borne by
the customer-generator. The Renewable Energy Advocates fear that an "open ended
requirement" will have a chilling effect on construction of small net metering projects and urge a
presumption of interconnection at no cost, with a three tiered review process.
Scott Woodbury
vld/MIPCEO138 sw2
DECISION MEMORANDUM