Idaho Power is committed to supporting small-scale renewable energy development through our net-metering service. Through this service we provide a pathway to customers interested in investing in renewable energy systems for their home or business. That commitment comes with a responsibility to ensure the service remains fair and reasonable for all of our customers.
Customers participating in net metering generate power on their property for their own consumption while also receiving the benefits of being connected to the company’s grid. Most customers using this service have small-scale solar installations. Generally speaking, these customers rely on the company’s local distribution system to receive electric service and to place power on the grid when they generate more than they need. They receive a credit on their bill for this excess energy.
Idaho Power recently asked the Idaho Public Utilities Commission to for permission to expand the cap that limits net metering systems installed throughout our service territory. This cap has nearly been exhausted, prompting our request to double the current limit.
To allow for this expansion in a fair and equitable manner, the company’s filing includes a proposal to change the way electric service is priced for net metering customers, and to modify the treatment of energy produced by customers in excess of what they actually use. In light of recent media coverage, I’d like to address a few issues that may be misunderstood.
First, this proposal won’t increase the revenue Idaho Power receives from net metering customers; some customers will see increases to their bills, and others will see decreases. While Idaho Power is proposing to increase fixed charges for net metering customers, we are also proposing to lower the amount charged per kilowatt-hour. Overall, the rate changes are designed to generate the same amount of revenue collected under current rates.
To better understand the rationale for this change, it is necessary to consider the way current electricity rates are structured. For residential and small commercial customers, current kilowatt-hour rates are designed to recover certain “fixed” electric system costs that don’t vary with the amount of electricity a customer consumes. These costs include investment in transformers, meters and other equipment, as well as certain administrative costs like bill preparation and customer services. These services and equipment are used by all customers, including those taking net metering service. Because net metering customers can offset their kilowatt-hour consumption, the amount they pay for fixed costs can be reduced, and in some cases, eliminated. This can result in upward pressure on rates for everyone. We believe collecting these fixed components through fixed charges more accurately reflects the cost of providing net metering service, and removes the potential for inequity between customers that participate in net metering and those that don’t.
A second component of the company’s proposal is to stop providing financial payments for excess energy generated by net-metering customers. The company would instead provide a kilowatt-hour energy credit that could offset usage on future bills. Unused credits will expire at the end of the December billing period.
This change recognizes that net metering is designed to provide customers with a simple way to offset energy usage with their own generation, not to provide an avenue to sell power to the company. Customers who wish to sell power to the company are able to do so through a power purchase agreement. These agreements are specifically designed to accommodate the wholesale purchase of small power production, and grant sellers access to rates set by state regulators. The company is required to purchase this power at published rates. If a customer wishes to produce power for financial compensation, acquiring a power purchase agreement is the appropriate avenue to do so, not net metering. This will ensure that the company (and ultimately customers) pays a price that reflects the value of the generation.
Idaho Power believes in providing service choices to our customers. Our actions reflect our interest in allowing more customers to use our net metering service while being mindful of impact to all customers.
Theresa Drake is Idaho Power’s customer relations and energy efficiency manager.
