Sunday , September 17, 2017 - 5:00 AM1 comment
When solar and energy consumer advocates reached a settlement with Rocky Mountain Power over net metering this month, the short-term future of rooftop solar looked clear.
However, it turns out not everyone is on board with the terms.
Utility providers large and small have long grappled with how to compensate residential customers with solar panels for the extra energy they send to the grid. The current model, net metering, tallies up how much energy a household produced at the end of the month and subtracted it from their bill at market rates.
Rocky Mountain Power, its parent company PacifiCorp and other utilities argue that net-metering sets up a system where solar customers don’t pay for their fair use of the grid. Those costs instead get passed to non-solar customers.
On the other side, solar advocates claim utilities like Rocky Mountain Power don’t fairly calculate the full value of rooftop solar. They also worried proposed changes to net metering — like peak demand charges, lower credits and higher fixed costs — would cripple the burgeoning renewable energy industry.
That’s where the settlement comes in.
Rocky Mountain Power has agreed to take another look at the value of solar, during something called an “export credit proceeding” with the Utah Public Service Commission. Most involved with the process agree the proceeding will take around three years. In the meantime, new rooftop solar customers would fall under a “transition period” billing regime. That’s where some groups have concerns.
It’s important to note, the settlement means nothing if the Utah Public Service Commission doesn’t agree to it. They’re holding a hearing on the matter on Monday, Sept. 18.
While these groups support many of the settlement’s compromises, like grandfathering in existing rooftop solar customers’ rates until 2036, they both took issue with two specific provisions.
Issue one: 15-minute intervals
Current customers with rooftop solar have their energy being “net metered” over a month-long billing cycle. Under the settlement, customers who sign during the three-year transition period, would have their energy consumption and energy exports metered every 15-minutes.
During 15-minute periods where more energy is exported than consumed, the household would receive a credit to their bill at a per-kilowatt hour rate that’s slightly below market rates. When a household uses more energy than they export, they pay the same rates for that energy as their non-solar neighbors.
The rate rooftop solar customers would receive and pay for their energy hasn’t received much flak. It’s the 15-minute metering interval that’s the sticking point.
Western Resource Advocates declined to comment for this story, but in their testimony, they called it “confusing” for customers and said its future impacts held too much uncertainty.
“To use a measured period of less than an hour would be difficult to administer and difficult for customers to understand,” their testimony says. “Imagine trying to explain to a residential customer that their monthly bill ... will be based upon measuring kilowatt-hours every 15 minutes.”
Rick Gilliam with Vote Solar has similar concerns. The interval will make it hard for solar installers to give customers good estimates on cost savings, according to his testimony.
“We don’t have data to estimate what the impact will be,” Gilliam told the Standard-Examiner. “The main reason I’m concerned is it could hurt the market to a point where, over next three years until we get thorough (the export credit proceeding) the (solar) market won’t be viable and sustainable.”
Dave Eskelsen, spokesman for Rocky Mountain Power, said the utility landed on the 15-minute interval simply because most of the parties involved in the settlement agreed to it.
“The key point is it was a negotiated level,” he said. “The other point I want to emphasize is the 15-minute netting only applies to transition customers during the transition.”
In other words, the utility might use a 15-minute interval once the three-year transition period is up, it might switch back to the monthly cycle or it might find another billing model entirely. It all has to be approved by the Public Service Commission, too.
Michele Beck with the Utah Office of Consumer Services said she doesn’t think energy consumers will be that perplexed by the change.
Beck advocates on behalf of all residential and small business energy customers and was part of the settlement negotiations.
“I understand the concern. It is a very much a change in paradigm,” she said. “But we know there are four 15-minute periods in an hour ... in a way, it’s easier to understand the closer to instantaneous you get — you look at in that moment, are you using or are you exporting?”
Issue two: the energy balancing account
The second concern is the settlement’s provision to let Rocky Mountain Power run its credits to rooftop solar customers through its “energy balancing account” or EBA.
Without getting too much into the weeds of utility rate regulation, the EBA allows Rocky Mountain Power to take the money it generates from customers’ rates and true it up with the actual net costs of producing power. Those costs are embedded in customers’ regular rates.
Basically, PacifiCorp serves its customers partly with resources it owns, like coal mines and hydroelectric dams, and partly from market purchases. Rates for fuel they purchase, like natural gas, fluctuate.
At the end of the year, Rocky Mountain Power looks at how much customers paid and compares it with costs. If customers paid too much because energy market prices were low, they pay slightly lower rates the next year. In 2017, for example, Rocky Mountain Power asked the Public Service Commission for a $14.6 million decrease in electricity bills. It reduced the average customer’s annual bill by around $7.
But if the utility finds they paid more for those variable costs than they charged customers, they get to charge higher rates.
As part of the settlement, Rocky Mountain Power would run the credits it gives rooftop solar customers through the EBA.
“We’re providing retail credit for what customers produce in excess of their use,” Eskelsen said. “Our view is that’s a variable cost of doing business, much like other variable costs.”
Both Western Resource Advocates and Vote Solar wrote in their opposition testimonies that the provision could raise energy rates for all customers.
“The mechanics of calculation itself essentially imply (rooftop solar) is a ‘cost’ to the utility. We disagree with what they are labeling as a cost,” Gilliam said. “I think they haven’t fully valued the energy being provided by rooftop solar. If they did, the amount that would get passed through energy balancing account would be zero, maybe even negative.”
Western Resource Advocates’ testimony calculated the EBA provision could mean Utah customers end up paying Rocky Mountain Power “tens of millions of dollars, without any showing that additional revenues are needed” by the utility.
The settlement, however, caps the amount of rooftop solar that can be installed during the transition period, limiting the amount of credits running through the EBA.
Beck said the EBA is a massive pot with all kinds of variables. Solar credits would only add a drop.
“Will it raise rates? Technically yes, it’s a new cost,” she said. “But the calculations Western Resource Advocates offered are really flawed. They significantly overstate it, there’s no possible way the annual amount will equal what they’ve proposed.”
It’s likely solar’s impact on the EBA will be so small, it’ll be imperceptible in energy customers’s rates, Beck said, adding the change is all a part of compromise and compromises in the world of public utilities are common.
“In my view, the transition solves about half the problems — it’s moving away from netting, changing the paradigm and starting to adjust rates,” Beck said. “There’s give and take on all sides.”
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