20030528_490.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
CO MMISSI 0 NER SMITH
COMMISSIONER HANSEN
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:SCOTT WOODBURY
DATE:MAY 22, 2003
RE:CASE NO. PAC-03-4 (PacifiCorp)
PETITION OF NORTHWEST ENERGY COALITION AND RENEWABLE
NORTHWEST PROJECT TO ESTABLISH NET METERING SCHEDULES
FOR P ACIFICORP
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.
As represented, 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
DECISION MEMORANDUM
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 regulate 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 Power and A vista.Specifically, Petitioners contend that customers of
PacifiCorp have no assurance of what type of systems they could install, what interconnection
requirements will be required of them, and what rate they 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 of Idaho 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), the
Petitioners support a billing methodology that credits excess monthly generation at the
customer s retail rate on a per kilowatt hour basis, and allows for a continuous carryover of such
credits.
PacifiCorp Answer and Proposed Net Metering Schedule
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.
DECISION MEMORANDUM
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 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
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.
Similar to Idaho Power s Schedule 84, PacifiCorp proposes that Schedule 135 be
available on a first come, first serve basis, until the total rated generated capacity of net metering
systems connected under the Schedule equal 714 kW, which is lIlOth of 1 % of the Company
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, therefore mitigating subsidization of large commercial and irrigation net-metering
customers, which credits are based on market prices.
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
DECISION MEMORANDUM
one of the Company s Irrigation Customers.On May 12 a letter was filed by PacifiCorp,
declining further comment and recommending approval of its proposed tariff Schedule 135.
The filed comments in this case can be summarized as follows:
Renewable Energy 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:
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 be permitted to continue beyond the
proposed cumulative cap (714 kW) provided that 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.
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Idaho Farm Bureau
The Farm Bureau contends that the Company s net metering proposal must
significantly improved if it is to be of any practical value to agricultural customers. The Farm
Bureau recommends the following changes:
1. The Farm Bureau recommends paying large generators full Dow Jones Mid-
prices for non-firm energy for excess generation, not 85%. Rather than assuming that excess
generation will be sold on the open market and the Company will incur transmission losses, the
Farm Bureau contends that it is just as reasonable to assume that the utility will need the power
for local demand and not incur such losses.
2. The Farm Bureau recommends that all power generated under the net
metering program be carried forward at full retail price until it is offset by consumption.
Monthly netting, the Farm Bureau contends, unfairly penalizes the generator. At the end of the
year, the Farm Bureau recommends that a check at the wholesale rate be cut for any excess
generation over consumption. Alternatively, the Farm Bureau recommends that any excess
generation at the end of a calendar year be surrendered without payment. Notwithstanding
PacifiCorp s argument that power is worth different amounts depending on when it is generated
or consumed, the Farm Bureau contends that 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.
3. The Farm Bureau contends that restricting generating equipment to 100 kW of
nameplate capacity will severely reduce the number of program participants and will prevent
many operators from offsetting their consumption. A better approach, the Farm Bureau
contends, would be to not restrict nameplate capacity but to 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. The Farm Bureau contends that the proposed cap of 714 kW of cumulative
nameplate capacity (lIl0th of 1 % of retail peak demand) is too low. The current low demand
fluctuation system-wide, it states, varies far more than that on a daily basis. A far more
reasonable cap, it suggests, would be 7.14 MW.
DECISION MEMORANDUM
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 comments in this case mirror its comments in
the Idaho Power case.
Staff continues to believe 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
mlmmum.
Staff supports the excess generation credit value approach for larger customers (85%
of the Dow Jones Mid-C Index price for non-firm energy).
Staff believes that the Company s 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 ofthe 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 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).
Staff agrees with the proposed Schedule 135 cumulative generation capacity limit
(714 kW, which is 1/10th 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
The comment filed by the irrigation customer of PacifiCorp is strongly supportive of
net metering. The customer contends that the net metering credit for excess generation for large
customers should be set at full retail, that the credit amount should be carried forward on a
monthly basis and that at the end of the year the account should be squared. The customer
DECISION MEMORANDUM
contends that the overall proposed limit of714 kW is way too low and that it should be increased
to at least 2 MW.
Commission Decision
In response to the Petition filed by the Northwest Energy Coalition and Renewable
Northwest Project, PacifiCorp has submitted a proposed Schedule 135 Net Metering Tariff.
PacifiCorp s proposal mirrors the net metering tariff recently approved by the Commission for
Idaho Power.Should the proposed net metering tariff be approved?With or without
modification?
Scott Woodbury
Vld/M:PACEO204
DECISION MEMORANDUM