For instance, the Public Service Commission of Utah, in its Report and Order dated Augin Docket No.13-035-184, rejected a $4.65 net metering facilities charge for residential customers proposed by Rocky Mountain Power as part of its rate case, citing the need for more information regarding program costs and benefits. Other states besides Arizona are currently dealing with the issues of net metering and the resulting cost shift. It remains to be seen whether the Commission will tackle these proposals separately or require that they be addressed within a full general rate case. Chief among their arguments is that the utilities are ignoring the long-term benefits distributed-solar generation provide to non-DG system customers and to the utility. Groups representing the larger solar-leasing companies object to these proposals. Other utilities such as APS are currently seeking to raise the per-kW charge through its LFCR to better alleviate the cost shift. Since major rate design changes are done in full general rate cases, some utilities have proposed to change their net metering tariffs so that excess energy is credited at a lower rate, such as the avoided cost rate or the cost of energy from a utility scale solar facility, in order to partially address the cost-shift problem more timely. The Commission found that that “the proliferation of DG installations results in a cost shift from APS’s DG customers to APS’s non DG residential customers absent significant changes to APS’s rate design.” Decision No. The Arizona Corporation Commission, which is Arizona’s state public utility commission, recently acknowledged the cost shift problem when it approved a $0.70 per kW charge by Arizona Public Service Company to DG system customers through APS’s lost-fixed cost recovery adjustor mechanism (LFCR). As a result, net metering is allowing more fixed costs to be shifted to customers without DG systems, who are bearing the brunt of paying for the fixed costs of providing electric service to DG system customers. In Arizona, several of the larger electric utilities have a partial decoupling adjustor mechanism that allows them to recover some of the lost fixed costs associated with DG system installations. Because net metering allows a customer to largely avoid paying energy charges they otherwise would pay, the utilities argue that this results in lost fixed cost revenues that can then not be recovered, absent some mechanism to address the loss. This charge, however, includes a significant portion of the fixed costs of the transmission and distribution facilities necessary for a customer to turn the lights on whenever that customer has a demand for electricity. Consequently, customers avoid paying the “energy charge” or the per-kilowatt-hour rate for electric service. That is, if one pays a set price per kilowatt hour for electricity from the utility, that customer will receive a credit equal to the same rate for (1) any energy the customer uses from the DG system and (2) any excess energy that flows back on the utility’s distribution grid. This credit is typically the equivalent of the full retail rate for electricity. Arizona, Nevada, Utah, Colorado and California are among the states grappling with the idea of how to properly incent distributed generation (DG) and whether net metering needs to be part of that formula.Īt its core, net metering essentially provides a credit to owners of distributed generation (particularly photovoltaic rooftop solar facilities) for the energy that is produced from their systems. The debate over net metering is a hot topic before many state legislatures and public utility commissions. USEPA Releases Updated Environmental Justice Related Legal Guidance.Environmental Justice Grants Available for Qualifying Air-Related Projects.EPA Announces $42 Million PFAS Aid to Arizona. EPA Proposes Limits on PFAS in Drinking Water.It provides timely updates on a broad range of federal, state and local environmental topics - including proposed legislation and government rulemakings - that impact regulated industries throughout the southwest and the nation as a whole. This blog is a resource for the regulated community to stay current on new developments impacting the environmental, natural resources and energy sectors. Welcome to the S&W Environmental, Natural Resources, Oil and Gas Law Blog.
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