For more than a century, getting electrical service to your house was a one-way street. The electric utility produced the power and transmitted it into your home.
But increasingly, customers are sending power back into the grid, mostly using rooftop solar generators. In the near future, customers will be able to store power in batteries and electric cars, and find other applications that blur the lines between generation and use.
Idaho Power now seeks more control over that transition from simply providing power to managing “grid services.”
Currently, if you install solar panels on your house, Idaho Power will essentially pay you at retail rates for any electricity you send back on to its grid. Your production is credited against your consumption, and any excess is carried forward indefinitely.
In a case now before the Idaho Public Utilities Commission, the company claims the current rate structure could shift costs to other customers and raise their rates. It wants to place such “net metering” customers into a separate rate class, which could change how much they pay for power and how much they’re paid when they export it to the grid.
Dozens of solar customers and renewable energy advocates countered in public hearings in Boise and Pocatello that their investment in solar generation actually reduces other customers’ costs, by helping the utility meet its peak load during the heat of the summer.
“Even though June, July and August make up 25 percent of the year, I produced one-third of my solar production during those hottest months of the year, when it’s most expensive for Idaho Power to produce,” said Lisa Hecht, a retired Hewlett-Packard electrical engineer with a rooftop solar system on her Boise home.
The dispute with its 2,000 solar customers is part of a larger challenge for Idaho Power and other utilities, which have a monopoly on selling electricity under a century-old business model that ensures a profitable return on investments state regulators find “prudent.” Historically, utilities produced the electricity in their own power plants or hydroelectric dams, then transmitted it into people’s homes and businesses, rewarded based on the volume of power sold.
But just as technology has disrupted retailers, broadcast networks, travel agencies and newspapers, digital technology and rapidly dropping costs for solar panels and batteries are threatening the historic utility business plan. The growth of energy-efficiency programs has flattened the demand for electricity. Utilities are worried they and their customers will be burdened with the costs of an existing network of power plants, such as Idaho Power’s coal plants in Wyoming and Nevada, as customers control their own power use with so-called “smart houses,” solar generators and batteries.
And there’s the chance Idaho Power’s most sophisticated customers could eventually leave the grid altogether, using batteries and other technology.
The issue also comes as Idaho Power continues to drop its carbon output. Coal and natural gas in 2017 accounted for only 27 percent of its energy portfolio. Hydroelectricity accounted for 50 percent. Wind, solar and other renewable resources it purchases under contract totaled 19 percent.
“There are cities and states trying to get the carbon-light portfolio we already have,” Adam Richins, Idaho Power vice president of customer operations and business development said.
Just as there are risks, there is new opportunity — especially with the growing demand for electric cars that will plug into Idaho Power’s grid. The company now seeks to build the new regulatory framework for its evolving grid services business.
“We need to make sure we have the platforms and networks ready for whatever comes along,” Richins said
Few customers — for now
Idaho Power serves 535,000 residential and business customers across a 24,000-square-mile area, with a population of more than 1 million people in southern Idaho and eastern Oregon. Both the utility and its critics say the 11 megawatts produced by the existing net metering customers do not have a major effect on its system, which peaks in the summer at around 3,000 megawatts per hour. But the utility predicts the number of those customers could more than triple by 2021, to 7,000, and it wants to have a rate structure for them in place before then.
The benefits of rooftop solar go beyond peaking power. It can improve reliability, help utilities balance supply and demand, and reduce the need to build additional transmission to some areas, cutting the cost to all customers. Idaho Power says the long-term issue is ensuring these customers, who both use and export electricity, pay their share for the entire system.
“(Solar customers) don’t realize they use the grid every hour of every day,” Richins said.
Lots of states are struggling with how to do this, including New York, California, Hawaii and Vermont. All of their utilities have significantly higher rates than Idaho Power. And Idaho Power wants these states, who have more at stake, to go first in testing many innovations for managing the grid.
“We don’t want to be the tip of the spear,” Richins said.
But as the utility worked its way through the solar dispute, it concluded it should develop a separate rate class now. Idaho Power staff have argued the PUC doesn’t necessarily need to know the costs and benefits of the customers who would be in that class.
“We’re not suggesting any rate changes at this time,” Tim Tatum, Idaho Power’s vice president for regulatory affairs, testified before the commission earlier this month. “We want to establish a process where cost of service can be explored in a collaborative, transparent manner.”
But the PUC, a three-person, semi-judicial panel that oversees investor-owned utilities in Idaho, doesn’t need to establish a new rate class to begin that collaborative process, said Ben Otto, an attorney with the Idaho Conservation League. Other states did the cost-benefit study before setting up a new class.
“Idaho Power’s solution doesn’t address the problem,” he said.
And the PUC’s own staff disputed the company’s assertions that home-solar customers could significantly affect other customers’ rates.
Idaho Power “did not file a cost-of-service study demonstrating any meaningful differences in net metering customers compared to standard residential customers,” PUC Technical Analysis Group Program Manager Stacey Donohue testified.
Regulation and innovation
Some opponents say Idaho Power simply wants to slow the growth of solar that competes with its own coal, gas and hydropower generators. The company tried a similar action in 2012, but the PUC then kept the current rate structure for home-solar customers.
Nevada Energy convinced the Nevada Public Utilities Commission in 2017 to drastically reduce its payments to net metering customers, prompting that state’s three largest providers of rooftop panels to leave the Nevada market entirely
Experts say Nevada acted too fast. “Net metering — contra the Nevada decision — frequently benefits all ratepayers when all costs and benefits are accounted for, “ said Devashree Saha and Mark Muro of the Washington, D.C.-based Brookings Institute.
This dispute sets the stage for the many changes customers will see as new technology comes online. Increasingly, customers will be able to buy and install “smart home” technology that will give them more control over their own costs, and opportunities to export power into the system or store it in their own batteries or even water heaters. Added to time-of-day pricing, these innovations can give all customers more options, whether they’re as sophisticated as the net metering customers or simply want to lift the light switch and let Idaho Power do the bulk of the work.
Zack Waterman of the Sierra Club in Idaho said Idaho Power’s proposed rate class could stifle this innovation if it limits what these customers can do, inside their homes and off the grid.
“Whatever the customer does behind the meter, whether it’s energy efficiency or demand response, should be their business,” Waterman said. “Idaho Power should only charge for the amount of power exported if it can prove there is a cost shift from net metering customers to its other customers.”
Ultimately, both sides say they want the same thing — a cost-benefit study of net metering customers that’s fair to all.
“If you get the regulatory price right, we’re good with it,” said Idaho Power’s Richins.
CORRECTION: This article originally misspelled the name of Adam Richins.