Make or break moment: Setting a fair price is critical for Idaho’s solar future
Idaho Power’s solar study, currently being considered by the Public Utilities Commission, aims to revamp its current net-metering and customer solar policies, which pay homeowners for unused power returned to the grid. These policies have the potential to make or break Idaho’s solar future, and a fair price is critical to consumers.
If accepted by the Public Utilities Commission, Idaho Power’s study suggests reducing solar rates from 8-9 cents per kWh to 3-4 cents. This change could hurt solar users and cripple a growing industry.
There are costs and benefits to distributed solar generation. Idaho Power is obligated to connect customers and its services are needed for solar generation. The costs of those services are real, but hard to quantify and predict. Idaho Power implies the price should be compared to the 2.2 cents per kWh it pays to Jackpot Solar near Twin Falls.
Although the price of distributed generation is linked to wholesale prices, the fact that rooftop solar is owned, used, and sold back to the grid by customers challenges a simple one-to-one comparison. Avoided costs of generation and transmission and the benefits of renewables must be considered. There is no direct market for these benefits, so it is up to careful consideration by the Public Utilities Commission to decide their value.
The Idaho Conservation League and others commissioned a review of distributed generation in Idaho. The review used forward looking methods to arrive at a credit value of 14 cents per kWh, with 4 cents of additional external benefits. Our aim is not to gouge Idaho Power (after all, we’re consumers too), but rather to ensure fair prices that consider long-term benefits. Debate and review are key to a healthy regulatory environment. We hope the Public Utilities Commission considers this professional and well-founded outside perspective.
Idaho Power’s push towards a credit-based system is part of a national trend among utilities. Basic electricity regulation assumes a grid where utilities produce, transmit, and sell power to customers. Rooftop solar and other distributed resources disrupt this model by shifting generation and ownership to end-users, impacting what utilities can charge customers. Utilities can adapt to these new technologies, or continue to try to own and sell all energy on the grid. There’s no doubt solar power is coming to Idaho; the question is who should own the resource.
States across the country are wrestling with how to value distributed generation in a regulatory system developed without customer generation in mind. Some states embraced rooftop generation, some adopted programs like Idaho Power’s, and some rejected similar proposals. Where solar export rates were reduced, home solar and installation slowed.
Idaho Power ‘s public motivation to reform net metering is to limit cost shifting among customer classes, but given Idaho’s slow pace of solar development those costs are likely very small. Residential generators represent 2% of customers. States with higher solar use provide good evidence that cost-shifting becomes significant around 10-20% installation. These dynamics are hard to measure and predict, but Idaho Power’s concerns are likely premature.
Moreover, electricity prices often carry some degree of subsidy or cost shifting. Because utilities are monopolies, prices are influenced, but not entirely decided, by market dynamics. Rate design is difficult work with input from utilities, analysts, and regulators who may consider economic benefits by different customer classes.
The energy industry is changing fast. The Idaho Conservation League will continue to advocate for policies and rates that are affordable, equitable, and consider long term impacts of energy on the climate and environment.