Rocky Mountain Power requests lowered export credit prices for solar customers
Three years after essentially replacing Utah’s net metering program with export credits, Rocky Mountain Power is asking the Utah Public Service Commission (PSC) to approve a reduction in those credits.
In 2017, Rocky Mountain Power and Utah solar advocates agreed on a settlement that would allow the utility to pay $0.092/kWh to solar customers for energy exported back to the grid, down from the $0.10/kWh they were previously paid under net metering (a one-to-one exchange).
“The company’s main objective is to implement a sustainable program for customers who choose to generate some of their own power,” said David Eskelsen, company spokesman with Rocky Mountain Power and PacifiCorp. “Our proposal fairly balances the interests of both customer generators and other customers who have not made that choice.”
“The company’s proposal will better provide customers more accurate price signals to inform their decision on whether to invest in private generation facilities,” Eskelsen explained. “In addition, the proposed export credit rate minimizes impacts to other customers by compensating customer generators for the actual market value of their exported energy.”
The new proposal by Rocky Mountain Power would request a variable credit that would range from $0.013 to $0.026/kWh (averaging at $0.015) and can be applied differentially based on time of day and season. The company is arguing that the price is in line with the actual cost of a solar user utilizing the grid, minus hard costs carried by Rocky Mountain Power.
Josh Smith, research manager for the Center for Growth and Opportunity at Utah State University, studies trends in the utility industry. He said that with the growth in rooftop solar, electric utilities are facing a challenge to the way they work.
“As distributed generation options like rooftop solar become more common, it creates a struggle to adapt policies to allow for them. The grid is changing to only one-way flows to multi-directional flows of electricity,” Smith said. “So the question is: what is rooftop solar worth? There’s a developed market in electricity, but there isn’t one for rooftop solar generation. Add to that problem the question of how to pay for the electricity grid, and the debates get thorny fast. Rooftop solar owners should be compensated for what they generate, but they still need to pay for their use of the electrical grid. If they don’t pay for their share of the grid as a service, then those costs fall to other consumers.”
Eskelsen said the electric company and other stakeholders had reached a compromise back in 2017 that aimed to recover fixed distribution and retail costs associated with serving residential net metering customers.
The Utah Public Service Commission had previously established a docket to determine whether the costs of the residential net metering program will exceed the benefits; or whether the benefits of the net metering program will exceed the costs. In addition, the PSC wanted to determine a reasonable charge, credit, or ratemaking structure, including new or existing tariffs, in light of those costs and benefits, Eskelsen said. The stakeholders in the case eventually agreed to the Net Energy Metering Stipulation, which was approved in 2017.
Rocky Mountain Power believes residential solar customers will continue to benefit, even with the new change.
“Residential customers who have not chosen to generate some of their own power will benefit because the intra-class subsidy that currently flows from their rates to net metering customers will be corrected,” he explained. “It is also important to note that this subsidy exists only within the residential customer class. Rocky Mountain Power’s revenues and profits are not affected either by the existing subsidy, or by the proposed change.”
Meanwhile, Smith said solar advocates and utilities will continue to have competing points of view on net metering until rate schedules are changed to better reflect actual electricity costs at any given time of day.
“If rates were set according to the electricity market’s prices at any specific time, then we’d likely see different installation patterns among consumers that would better keep the lights on for us all. Rocky Mountain Power’s suggestion to move to a payment that is higher when electricity is produced ‘on-peak’ and lower when electricity is produced ‘off-peak’ gets at that,” he said. “But it’s only a rough approximation. To unlock the potential of distributed energy technologies, we should reform regulations to reflect real-time prices.”
Hearings for the proposed rule changes requested to the Public Service Commission of Utah by Rocky Mountain Power are taking place now.
