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Idaho decides rooftop solar customers should be put in different rate classes

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Idaho decides rooftop solar customers should be put in different rate classes

Idaho regulators decided rooftop solar customers use electricity in different amounts and times than other customers so they should have different rate schedules. The decision could lead to higher bills for these customers.

However, the Idaho Public Utilities Commission first ordered IDACORP Inc. subsidiary Idaho Power Co., the largest investor-owned utility operating in the state, to do a comprehensive study of the costs and benefits of customer generation before any rates are changed. Until now, the utility's net-metered rooftop solar customers had been included in the same customer class as those who receive standard service.

The PUC decided to put net-metered residential and small commercial customers that have up to 25 kW of generation in two new classes. For the most part, net-metered customers have photovoltaic solar panels on their properties, but a few could have wind turbines, fuel cells, small-scale hydro or hybrid systems.

"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," the commission said in a news release.

Idaho Power's net-metering tariff allows customers to install small-scale renewable generation projects on their properties and connect to Idaho Power's electrical grid. When customers generate more electricity than they consume, they earn a credit per kilowatt-hour that carries forward to the next month.

The study will be used to determine what compensation net-metered customers should receive in the future. In issuing this order, the PUC acknowledged the debate that has raged for years across the electric industry about whether compensating customer generators by issuing them a rate credit to reduce their retail bills for each kilowatt-hour they put on the grid results in an unfair shift of costs to other customers who do not have rooftop solar or other distributed generating systems.

Other states such as Arizona, California, Colorado, Nevada and Utah have been dealing with net metering in various ways and now Idaho has decided it too must address this issue. Though Idaho Power had just 1,500 net metering customers as of June 2017 out of 535,000 customers overall, the utility contends the increasing affordability of on-site generation will increase the number of customers who install solar panels or other distributed systems and will exacerbate the shifting of costs from net-metered customers to other customers. Utilities have long argued the value of retail rate credits of net metering exceed the benefit of the power the utilities receive.

Further, Idaho Power and other utilities argue that when customers generate their own power, they do not pay their fair share of the cost of maintaining the utility's system which they use to supplement their own generation and send their excess power back to the utility. Solar associations, environmental groups and other distributed generation supporters counter that utilities do not count the environmental benefits and the costs they avoid by not having to build more resources to meet what would otherwise be larger loads if customers did not have their own generation.

The Idaho PUC first appeared to acknowledge Idaho Power' argument. "The ability these customers have to 'net out' or net to zero their electricity use causes them to underpay their share of the company's fixed costs to serve customers, and this inequity will only increase as more customers choose on-site generation," the PUC said in its order.

However, the commission then said, "All parties, to varying degrees, admit that on-site generation customers both cause costs and create potential benefits to the company's system(s). Again, 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."

Specifically, the order closes Idaho Power's existing net-metering tariff to new customers and creates two new tariffs for on-site generation, one for residential customers and one for small general service customers. Idaho Power was directed to initiate a new docket to comprehensively study the costs of benefits of on-site generation on its system, as well as a new rate design. The deadline given for completion is prior to the company's next general rate case. (Idaho PUC Case No. IPC-E-17-13)