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RCA to adopt net metering regulations New regulations provide incentive for investment in renewable electric generation, allowing consumers to put power into utilities Kristen Nelson Petroleum News
Renewable power generation may be coming to your neighborhood. And it may be built by your neighbor, thanks to proposed regulations that would require Alaska’s largest utilities to allow hookups by such privately built generation to their power grids.
The Regulatory Commission of Alaska voted 4 to 1 on Oct. 14 to adopt regulations establishing net metering requirements for the state’s largest electric utilities.
The vote ends a tussle between Alaska’s electric utilities and proponents of net metering, who believe net metering will increase renewable energy development in the state, while utilities believe net metering will be a burden on other consumers.
Net metering allows a customer of an economically regulated utility to interconnect eligible onsite generation facilities with the electric utility’s distribution system, the commission said in an Oct. 16 press release.
In 2008 RCA rejected net metering standards proposed by the Bush administration and began work on regulations targeted to Alaska, including workshops with participation by utilities and proponents of net metering.
The regulations commissioners approved are the result of work done since the Environmental Policy Act of 2005 created guidelines for net metering which state regulators were required to consider, but not to accept.
Alaska regulations The new Alaska regulations apply to economically regulated electric utilities with total retail sales of 5 million kilowatt hours or more, which limits the RCA regulations to the state’s largest electric utilities: Bethel Utilities Corp., TDX North Slope Generating, Alaska Power Co., Alaska Electric Light & Power, Homer Electric Association, Matanuska Electric Association, Municipal Light & Power, Chugach Electric Association and Golden Valley Electric Association, which sell from 39.1 million kilowatt hours (Bethel), to 1.349 billion kilowatt hours (Golden Valley Electric).
The affected utilities would be required to interconnect with eligible customer generation systems up to a systemwide total capacity of 1.5 percent of average retail demand. Eligible customer generation systems are limited to a total onsite capacity of 25 kilowatts.
Net metering customers would be billed for net consumption and receive bill credits when the customer’s generation exceeds usage.
Technologies eligible for net metering generation are limited to solar photovoltaic, solar thermal, wind, biomass, hydroelectric, geothermal, hydrokinetic, ocean thermal, landfill gas and biogas energy. The commission may approve other sources that generally have similar environmental impact.
For and against Summaries of comments on the proposed regulations by RCA staff highlighted some of the disputed issues between net metering proponents and the state’s electric utilities.
Municipal Light & Power — one of two electric utilities serving the Anchorage area — told the commission it believed net metering would cause more harm than good while the Alaska Power Association, which represents major consumer-owned power utilities in the state, including ML&P, said that although the proposed regulations did not reflect its preferred position, they were a reasonable compromise between two extremes.
The Alaska Center for the Environment said net metering would reduce utility bills for participating consumers, while the APA said public benefits of net metering would be privately subsidized by non-net metering consumers rather than through typical public means such as grants, tax incentives or similar methods.
ML&P said net metering would cause generation to be built that is not cost effective, burdening ratepayers as a group with higher costs, and requiring ratepayers who do not own net metered generation to subsidize the small minority of ratepayers who will install net metered generation.
Golden Valley Electric Association concurred, telling the commission that net metering is in conflict with the cost-causer cost-payer principle, requiring nongenerating members to subsidize members installing small renewable generation and forcing the utility electrical system to act as a battery for renewable generating facilities.
What about smaller utilities? In response to comments that the 5 million-kilowatt-hour limit would prevent smaller utilities from utilizing net metering, RCA staff said if a utility is too small to be covered by the RCA regulations it can enact its own net metering regulations.
“The regulations require certain larger utilities to enact net metering rules. Smaller utilities, or utilities that are outside of our authority to economically regulate, are exempted from the requirement and instead allowed to choose independently whether net metering makes sense for their system.”
RCA staff said the limitations on net metering were imposed to protect the integrity of the systems:
“The Railbelt electric system, the largest interconnected ‘grid’ in Alaska is very small in comparison to the nationwide grid in the Lower 48 states and lacks a robust transmission and distribution network.”
TDX Sand Point Generating is a case in point, the staff said, with retail sales for their last fiscal year 4.254 million kilowatt-hours, an average retail demand of 485 kilowatts per day.
With the proposed 1.5 percent of average retail demand limit, TDX Sand Point could have up to 7.3 kilowatts of installed on-site consumer renewable generation, less than half of the proposed 25 kilowatt per installation limit proposed in the regulations.
Smaller utilities also have different operating parameters, staff said, and interconnecting small non-firm generation may create operational problems, with scenarios varying from utility to utility.
But, RCA staff said, nothing in the regulations prevents a rural community from implementing net metering.
Limit at 1.5 percent There were a number of objections to a limitation in the regulations of 1.5 percent — that is, a utility may refuse to interconnect for new net metering if that connection would cause net metering to exceed 1.5 percent of the utility’s average demand.
APA, Chugach Electric Association and ML&P all pointed out that 1.5 percent was the agreement reached at the commission’s technical conference.
RCA staff said the proposed regulations allow a utility to approach the commission regarding increasing the cap to allow additional net metering beyond the 1.5 percent of average retail demand.
“Staff believes it is the intent of the commission to allow a controlled trial of net metering that will limit the potential rate increase for consumers who do not choose to net meter. This cap is an essential part of limiting that financial risk.”
Utilities are required to publish annually the result of the 1.5 percent of average retail demand calculation and the total nameplate capacity of interconnected net metering consumers, which will allow the commission to monitor how quickly interconnection is occurring and revisit net metering regulations as required, RCA staff said.
Commercial generation not included There were objections to the limit of 25 kilowatts on consumer generation and the staff said that limit was chosen so that smaller consumer generators would have the opportunity to participate.
“With a larger generator capacity and a limited system capacity for net metering, the smaller systems could be squeezed out,” RCA staff said.
Larger corporate consumers did not participate in the process, staff said, indicating a lack of serious interest at this time.
There were a large number of comments arguing that excess generation should be valued at the full retail rate rather than the discounted avoided-cost rate.
RCA staff said the language was based on “the compromise reached by the net metering advocates and the utilities at the technical conference. To alter this section at this juncture would undermine the fragile agreement that was reached by the participants. The net metering rules contained herein are designed to limit the potential negative financial effects of net metering” on those consumers who do not participate in net metering.
“Staff concurs that this mutes the benefits of net metering for those who participate in the program. Both sides on this issue have strongly argued their positions but neither side has any real experience with net metering in Alaska. Staff believes that going forward with the substance of the proposed regulation is the best way to build experience in net metering. The rules can be revisited in the future as needed and with actual data.”
There were a number of objections to language in the proposed regulations allowing utilities to petition the commission for special rates for net-metered consumers “if the utility can demonstrate an adverse material rate impact on utility consumers that do not participate in the net metering program.”
RCA staff said utilities always have the right to petition the commission for changes in the rates they charge, and it “believes the proposed language offers a protection to net metering consumers by requiring the utility to demonstrate that the effect of net metering is both ‘adverse’ and ‘material’ to consumers that do not participate in net metering.”
The commission will release an order adopting net metering regulations, which become official once reviewed by the attorney general and the lieutenant governor.
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