Idaho Power plans to adjust payment to energy generators

Idaho Power is looking at changing its solar energy compensation rate, but current consumers won’t have to worry about that change for 25 years.

After Idaho Power, Idaho Conservation League and other stakeholders presented their thoughts and concerns to the Idaho Public Utilities Commission, the PUC granted “legacy treatment” to commercial, industrial and irrigation customers who have installed, or submitted an application to install, an on-site alternative energy generation system as of Dec. 1. Idaho Power will investigate, with the likelihood of changing, how it compensates these alternative energy consumers for the power produced on their properties.

This program is called net metering. Idaho Power customers pay an independent contractor to have solar panels or other systems installed on their homes or property and then receive credit from Idaho Power.

“The company believes there’s a cost shift happening, where customers with solar panels are essentially being subsidized by those who don’t,” said Jordan Rodriguez, corporate communications specialist for Idaho Power.

“Idaho Power very much supports clean energy,” Rodriguez said, such as with its 100% clean energy by 2045 goal. “We also support customer choice … These cases are (about) finding fairness in the pricing for customers.”

Rodriguez explained the program through the residential rate: when residential customers pay for power, the price they pay is per kilowatt/hour — about 10 cents per kilowatt hour.

When a net metering customer uses whatever energy they generate through their systems (which are connected to Idaho Power’s grid), if the customer produces extra energy, they’re compensated for it, and it shows up on their bill as credit. Many of these customers can pay most, if not all of, their energy use this way, Rodriguez said. In Idaho Power’s view, the value of that energy is 2-3 cents per kilowatt/hour.

When customers get that net metering credit, they’re getting the full retail rate of the energy (i.e. 10 cents per kilowatt/hour). The full retail rate accounts for all aspects that go into providing energy that have to be paid for by the customer — such as building plants, maining the grid and a customer service center. That 7-8 cents is not something the net metering is having to cover, Rodriguez said.

Essentially, those tariffs are old, and were acceptable when a very small percentage of Idaho Power’s customer base was using solar (and other) net metering. That percentage is much larger today, Idaho Power said in its case presented to the PUC, and it continues to grow.

The PUC took testimony from interested members of the public at a public hearing and received nearly 100 written comments on Idaho Power’s application, the PUC stated in a press release. “Public testimony reflected thoughtful consideration of the economic proposition,” the release stated. “Investments were analyzed and made on the understanding that they would be recovered over 25 years, the expected useful life of the asset. … The commission found that Schedule 84 customers made significant investments in on-site generation systems based on a reasonable reliance on program stability.”

While legacy treatment has been granted to current commercial, industrial and irrigation customers (Schedule 84 customers) using an alternative energy generation system — such as solar panels — the future of compensation is uncertain for customers considering adding a system to their property.

As Idaho Power looks into how to appropriately compensate for energy produced on individual properties, stakeholders like the Idaho Sierra Club and Idaho Conservation League will be doing their own investigations into compensation for solar and other energy sources.

Idaho Conservation League supports Idaho Power’s conducting of the public study, said Ben Otto, energy associate. And while Idaho Conservation League is sure Idaho Power will propose to reduce the compensation it pays solar owners for their extra energy, and will likely increase the fixed part of a solar-owners monthly energy bills, “Our concern is in the interim,” Otto said. “That amount of uncertainty makes it nearly impossible to make a rational financial decision about investing in a new system.”

The concern for Idaho Conservation League and similar stakeholders is, because of the uncertainty, Idaho Power consumers will choose not to invest in solar or other alternative energy generating practices for almost a year, at least, while the study and case are presented to the PUC. That could harm local solar and similar businesses.

“We think a better practice is you have a current program, then you develop a new program, then you make a change,” Otto said. “So there’s no delay in the deal people are signing up for.”

Otto gave a recent instance, approved by the state of Utah for Rocky Mountain Power, which requested a reduced value of net metering compensation.

“When (net metering) goes away, people get very upset,” Otto said. “It means job losses.

Local economic benefits accrue here,” such as through local solar installers, customer sales tax paid toward Idaho. “Other things happen in the community.”

Idaho Conservation League also believes the energy created by solar and other sources is actually worth at least, if not more than, what Idaho Power currently estimates it is, Otto said; part of that is that generated energy stays local, instead of having it created and transported to customers.

“We’re trying to build up our facts in our analysis to support that,” Otto said.

These cases (for all types of Idaho Power customers) still have open proceedings, Rodriguez explained, while certain aspects (like the legacy treatment) have been ruled upon. It’s uncertain when Idaho Power will have answers to what the new compensation structures will look like. Full details of the case are available at puc.idaho.gov/case/Details/6523.