The Idaho Public Utility Commission ruled in favor of Idaho Power Wednesday, creating a new class for customers who generate their own electricity and ordering the utility to study those customers' costs and benefits.
The PUC is a three-person, semi-judicial panel that oversees investor-owned utilities in Idaho. It ruled that differences in the electricity usage between these and more traditional customers is enough to warrant separating them out, even before the costs and benefits have been determined.
"We agree, and acknowledge that the costs of serving on-site generation customers, when the true value of their interconnection is realized, may be less than the cost of serving standard service customers,” the commission said in its long-awaited order.
The bulk of the self-generation customers install solar power at their homes and businesses. They had argued that Idaho Power should not abandon its current approach until the cost-benefit study is done.
Pointing to the controversy the issue has prompted in other states, the commission said it hoped a collaborative study by the utility and these customers and other parties would find a creative solution.
"The commission’s order is not intended to be punitive or discriminatory," it said in its order. "Rather, the creation of separate classifications for net-metering customers without changing rates is intended to facilitate analysis and promote creativity in developing solutions for this 'unique, important class of customer.' "
Under the order, the 2,000 customers — a relatively small part of the utility's 535,000 — will be required to transition into the new customer class over time. They will need new "smart inverters," higher-tech versions of the systems they use to convert direct power generated by their solar panels to alternating current, which is compatible with the grid.
Currently, if you install solar panels on your house, Idaho Power will credit 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. Thus, the term "net metering" — you are charged based on your net energy use.
The company claimed the current rate structure could shift costs to other customers and raise their rates if solar became far cheaper than standard customers pay. The commission agreed there was inequality between the customers despite the lack of a study.
"This inequity will only increase as more customers choose on-site generation,” it said.
“While the number of on-site generation customers on the company’s system is a relatively small percentage of the company’s total customers, based on the relatively high rate at which customers are installing systems in Idaho and elsewhere, we believe current and prospective on-site generators will be better positioned to analyze the costs and benefits of buying, installing, and maintaining an on-site generation system as a result of this order."
Dozens of solar customers and renewable energy advocates attended public hearings on this issue in Boise and Pocatello. There, they countered 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.
But the commission accepted Idaho Power's argument that the process of both using power and sending it to the grid may mask the net-metering customers' effects on load, the fixed cost of the transmission grid, and other services the utility provides. The commissioners still ordered Idaho Power to do a comprehensive analysis of how it recovers those fixed costs from all customers, not just the new class.
Wendy Wilson, executive director of the Snake River Alliance, said the order shows that solar is here to stay.
Her group sponsors the popular "Solarize the Valley" program to help homeowners get rooftop solar systems at reasonable prices. It has aided 109 homeowners so far. Over the near term, she doesn't expect prices to change.
"The ruling seemed unbiased against solar," she said. "Idaho Power got what they wanted, which was a new class, and we got what we wanted, which was a study of the costs and benefits."
Idaho Power will begin carrying out the order right away, said company spokeswoman Stephanie McCurdy.
"We are committed to creating an offering for customer on-site generation that will be fair and equitable to everyone involved," she said. "We look forward continuing collaborative work with stakeholders — including our customers, the commission and solar installers — to reach a successful outcome on next steps."