Pricing to Meet Net Meter Rules - American Public Power Association

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LAKELAND ELECTRIC
Pricing to Meet Net Meter Rules
APPA 2009 Business & Finance Conference
Sept 14, 2009
Jeff Sprague
Manager Pricing & Rates
Disclaimer
The thoughts expressed herein are
those of the presenter only, intended
to spark technical discussions among
fellow rates professional and industry
managers, and should not be taken
as disclosing any pending or future
decision by the City of Lakeland.
2
Florida Net Meter Rule
• (2)(c) “Net metering” means a metering and
billing methodology whereby customer-owned
renewable generation is allowed to offset the
customer's electricity consumption on-site.
• (8)(h) …customer shall continue to pay the
applicable customer charge and applicable
demand charge.
Rule 25-6.065, FL Administrative Code
3
From the utility perspective, lost
revenues, cross-customer
subsidies, grid-integration issues
and other precedent-setting
disruptions have been discussed,
but the practical implication have
been less than revolutionary.
Mike Taylor, Solar Electric Power Association, “When
Net Metering Goes Mainstream”, ELP July-August 2009
4
Utilities might begin to experience
business model disruptions
similar to those that occurred with
cell phones.
Mike Taylor, Solar Electric Power Association, “When
Net Metering Goes Mainstream”, ELP July-August 2009
5
Renewable Generation
•
•
•
•
•
•
Biomass
Wind
Solar photovoltaic
Solar thermal
Geothermal
Landfill & waste methane
6
Solar PV
•
•
•
•
•
•
Incentives to install
Generation capacity
System capacity needs
Net meter and feed in tariffs
Excess energy
Production and Distribution systems cost
recovery
7
Solar PV Incentives
•
•
•
•
•
Hobbyist & retired engineer
Federal tax credit of 30%
Florida rebate (so long as it is appropriated)
Utility rebate – none
Price – net meter, feed-in tariff
8
Solar PV Capacity
• Lakeland typical Residential customer is
electric heat/heat pump, AC and Hot
Water
• 1,220 KWH/MO requires ~9.4 KW-DC
• Assume 4 KW is practical system size
9
System Capacity Needs
• Lakeland is Winter peaking @ 8 am
• Solar day 7 am to 5 pm; 70% of capacity
by 10 am
• Average Residential customer 4 KW
• How much does Solar PV contribute to
system peak requirements?
• 8,000 KW of Interruptible Commercial load
10
4
600,000
3
400,000
2
200,000
1
0
0
KWH
800,000
Mon.Oct.22, 2007
Tue.Nov.27, 2007
Tue.Dec.18, 2007
Thu.Jan.3, 2008
Thu.Feb.28, 2008
Sun.Mar.16, 2008
Thu.Apr.3, 2008
Sat.May31, 2008
Fri.Jun.6, 2008
Mon.Jul.21, 2008
Wed.Aug.27, 2008
Thu.Sep.11, 2008
11
4 KWDC PV
Solar PV KWH
COL/LE System Profile FY08
Solar PV Billing
• Net Metering in Lakeland
– Credit for excess energy
– 2 customers with capacity to be net provider
– Renewable Energy Credits belong to _______
• Feed in Tariff
– Similar to Power Purchase Agreement with
Sun Edison for 24 MW over 10 years
• $280.99 to $95.43 per MWH >>$149.33 average
12
Solar PV Excess Energy
• “Purchase” of excess energy at average
pricing
• Time of Use pricing and Peak Critical
Period pricing
• Bank energy and Form 1099 to IRS?
• Lakeland cashes out when account closes
but Form 1099 (none yet)
13
Solar PV and Cost Recovery
• Proper cost allocation for the Production,
Transmission, and Distribution systems
– Rate study allocation to entire class
– Net meter billing contributes nothing
• Recovery of capacity costs
– PV Standby Service
– Access charge for consumption regardless of
generation source
14
Solar PV Alternate Rate Design
• PV Standby Service
– Demand meter
– Non-demand meter
• Access charge (identical to retail access)
– Total consumption covers delivery cost
– Charge for utility purchased energy only
– Uses same metering required for Renewable
Energy Credits
15
Residential Demand Rate Design
• $13.54
• $0.00277
• $0.05261
per KW Cost of Service
per KWH Cost of Service
per KWH average of 3 tiers
• $7.00
• $0.02019
• $5.94
per KW for Commercial
per KWH for Commercial
per KW Commercial Standby @ Dist.
• 4 KW average Residential demand
16
Residential Demand Rate Design
• $13.54
• $0.00277
• $0.05261
per KW Cost of Service
per KWH Cost of Service
per KWH average of 3 tiers
• $7.00
• $0.02019
• $5.94
per KW for Commercial
per KWH for Commercial
per KW Commercial Standby @ Dist.
• 4 KW average Residential demand
17
Residential Demand Rate Design
• $13.54
• $0.00277
• $0.05261
per KW Cost of Service
per KWH Cost of Service
per KWH average of 3 tiers
• $7.00
• $0.02019
• $5.94
per KW for Commercial
per KWH for Commercial
per KW Commercial Standby @ Dist.
• 4 KW average Residential demand
18
Access Charge (Unbundled Price)
• $13.54
• $0.00277
• $0.05261
per KW Cost of Service
per KWH Cost of Service
per KWH average of 3 tiers
• $7.00
• $0.02019
• $5.94
per KW for Commercial
per KWH for Commercial
per KW Commercial Standby @ Dist.
• 4 KW average Residential demand
19
Access Charge (Unbundled Price)
• $0.04984
• $0.00277
• $0.05261
per KWH Access Charge
per KWH Energy Charge(COS)
per KWH average of 3 tiers
• $0.03242
• $0.02019
• $0.05261
per KWH Access Charge
per KWH Energy Charge (GSD)
20
Unbundled Revenue and Cost to Serve PV
$0.10736
Energy
$0.00277
Access
$0.04984
Fuel Chg
$0.05475
$128.83
$3.32
$59.81
$65.70
Net Meter 500
KWH of PV Gen
$75.15
$1.94
$34.89
$38.33
Consumption Bill
& PV Credit
$100.07
$1.94
$59.81
$24.92
$38.33
rate
1200 KWH
21
Unbundled Revenue and Cost to Serve PV
$0.10736
Energy
$0.02019
Access
$0.03242
Fuel Chg
$0.05475
$128.83
$24.23
$38.90
$65.70
Net Meter 500
KWH of PV Gen
$75.15
$14.13
$22.69
$38.33
Consumption Bill
& PV Credit
$91.36
$14.13
$38.90
$16.21
$38.33
rate
1200 KWH
22
Unbundled Revenue and Cost to Serve PV
$0.10736
Energy
$0.02019
Access
$0.03242
Fuel Chg
$0.05475
1200 KWH
$128.83
$24.23
$38.90
$65.70
Net Meter 1400
KWH of PV Gen
-$21.47
-$4.04
-$6.48
-$10.95
Consumption Bill
& PV Credit
$23.92
-$4.04
$38.90
$45.39
-$10.95
rate
23
Cash Value of Renewable Energy Credits
Renew. Energy Credit per KWH
$0.05000
Monthly REC value retail
$25.00 for 500 KWH
minus LE admin. cost @
($0.00104) per KWH
-$0.52
minus REC registration @
$0.00000 per KWH
$0.00
Net REC value to customer
$24.48
24
Summary
• 40,890,430 KWH lost
• 2.4%
• Directly increases energy cost to others
– 24 MW of PV $1.06 per MWH increase
– SHW @ 1.1% $0.47 per MWH increase
– Customer owned ??
• Mitigate with rate design change that
continues to meet net meter rules.
25
Philosophy
What are you going to do now?
How do I know? I’m making
it up as we go along.
Indiana Jones, Raiders of the Lost Ark
26
Questions?
27
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