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One of the most significant clean energy trends is the growth of "distributed energy resources," typically in the form of rooftop solar. Over the last few years, hundreds of Idahoans have invested in solar power systems to meet their own energy needs. This growing trend of independent, clean energy stresses electric utilities’ business models. Now, the Idaho Public Utilities Commission has responded to Idaho Power’s concerns, as well as to ICL’s advocacy for a clean energy future, and created a pathway for a new rooftop solar policy.
The Rooftop Controversy
Utilities across America have been seeking ways to address the growth of distributed solar power. One major tactic is to propose electric rate changes that make recouping a solar system investment through reduced electric bills very difficult. Idaho Power attempted this in 2013, but the Idaho PUC rebuffed this proposal.
In the fall of 2017, Idaho Power took another tack, asking the Idaho PUC to create new classes for customers with rooftop solar systems. Idaho Power argued that rooftop solar customers cause two issues:
- To the extent that solar customers do not purchase utility-supplied energy, they do not pay for the utilities’ fixed costs of service.
- When solar customers push extra solar power onto the grid, they are overpaid by the utility.
Independent clean energy, we demonstrated, benefits all Idahoans by reducing reliance on fossil fuels, keeping energy dollars in Idaho, and increasing security by generating power closer to home. ICL’s position is that, by first understanding the range of costs and benefits, stakeholders could then identify effective policy options.
A New Pathway for Distributed Solar Energy
The Idaho PUC has created a pathway toward a distributed solar policy for Idaho by recognizing that distributed solar customers are unique in their ability to deliver extra clean energy onto the grid.
To recognize this distinction, the PUC will allow Idaho Power to segregate distributed energy system customers into unique rate classes. Then, Idaho Power and stakeholders must conduct a "thorough, data-driven evaluation" of the costs and benefits of distributed solar systems before considering any potential rate changes.
ICL argued against segregating customers but in favor of conducting a formal, rigorous evaluation of distributed solar. Reading the PUC’s reasoning, we are encouraged that this decision is a reasonable compromise of the issues.
Recall, Idaho Power argued that distributed solar customers cause two problems – they use less utility-supplied power so avoid paying fixed costs and they are overpaid for excess energy. The PUC focuses on the second, the value of the excess energy. Importantly, the PUC states, "We agree and acknowledge that the cost 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." In plain language, the PUC recognized that distributed solar customers may provide more benefits than costs.
ICL is encouraged because the PUC focused on the appropriate issue by separating solar customers based on their unique ability to produce extra clean energy, not on their reduced use of utility-supplied power. As part of this proceeding, ICL testified about the form and substance of industry-leading approaches to the issue. The PUC recognized this testimony when it stated that distributed solar customers can "create potential benefits to the Company’s system." Focusing on potential benefits is the correct starting point to develop a new distributed solar policy for Idaho Power.
ICL will engage with Idaho Power, PUC staff and other stakeholders to negotiate the scope and timeline of the distributed solar power valuation process. We are prepared to establish that supporting independent clean energy is good policy for Idaho because it respects individual rights, encourages investment in local energy options, and protects our air by reducing reliance on fossil fuels. In the meantime, current solar customers will maintain the same electric rates and potential solar customers will know that Idaho is on a path to a more stable and fair distributed solar energy policy.
For anyone wanting a deep dive, here is a good start.