Providing coverage of Alaska and northern Canada's oil and gas industry
April 2019

Vol. 24, No.14 Week of April 07, 2019

Renewable energy projects not approved

RCA says that two programs proposed by Chugach Electric are inadequately defined and include some unacceptable uncertainties

Alan Bailey

Petroleum News

In a March 29 order the Regulatory Commission of Alaska rejected two applications by Chugach Electric Association to add renewable energy programs to the utility’s tariff. One initiative would involve the establishment of a “Green Energy Program,” in which the utility’s members would be invited to pay a premium to purchase renewable energy credits and fund renewable energy projects. The other initiative would invite members to subscribe to a portion of a utility scale community solar energy facility that Chugach Electric would build and operate: A subscription would entitle a member to obtain a portion of the solar power, as an alternative to the installation of home-based solar panels.

In both cases, the commission said that the proposals were insufficiently well defined to be approved and that some outcomes from the proposals were uncertain. However, the commission also said that Chugach Electric could, if it wished, implement the Green Energy Program outside the utility’s tariff, provided that members were informed that the program was not regulated and provided that the program maintained its own accounts, separate from the tariff accounts.

Green Energy Program

Under the Green Energy Program utility members could choose to “green” a percentage of their electricity usage by paying a premium on monthly energy bills. A proportion of the premium would be used to purchase renewable energy credits, while the remainder would fund grants for renewable energy projects. Chugach Electric would administer the grant program, with projects eligible for grant funding needing to connect to the utility’s electrical system.

The commission said that it is not clear why consumers should purchase renewable energy credits through the proposed program, rather than simply purchasing the credits themselves. The commission also expressed concern about the apparent lack of criteria for awarding grants, and the lack of a monitoring or auditing process for grant usage. Moreover, the proposed program does not constitute a utility service, the commission said.

Community solar

The commission said that the proposal for a community solar project lacks specific details that would be necessary to evaluate its viability. For example, at this stage Chugach Electric has not identified a site for the project, has not adequately explained the mechanics of how subscribers could enter and exit the program, and has not explained how rates for involvement in the project would be determined if there is less than full subscription to the solar farm’s capacity. And the commission said that it has concerns about potential rate discrimination resulting from a “first come, first served” approach to signing up subscribers. A more detailed and reasonable tariff filing is needed for the project, the commission said.

The commission also suggested that Chugach Electric might consider partnering with a third party for the community solar project. A third party could potentially use federal tax credits that are unavailable to Chugach Electric and could bear project risks, including the risk of insufficient subscription to the service.

“It is not our intent to discourage electric utilities from designing and implementing new and innovative service offerings,” the commission wrote.

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