09-03-2014, 05:10 PM
HEICO "Hot Topics" Corp. Comm. on this issue:
"Those “solar charges” you’re hearing about
Rooftop PV – and our estimated pricing under a possible new rate structure – is getting a lot of attention in the media following last week’s filings with the Public Utilities Commission. Our goals of lowering customer bills by 20 percent by 2030 and achieving more than 65 percent in renewable energy are also hot topics.
So we wanted to provide you with some information, in case you’re asked about these filings by family, friends, neighbors and customers.
First, it’s worth noting the overall principles that guided our recommendations for updating the distributed generation (DG) policies:
· Policies should lead to a sustainable set of customer options for DG
· We must be proactive in responding to our customers’ desires for DG
· All initiatives must ensure safety and reliability for all customers
· Rates governing DG must fairly reflect the value of the power provided from and to the grid, and must fairly allocate costs of the grid to all customers
Now, an important clarification about those “solar charges.” The numbers that are widely cited by the media were included in our plan for illustration purposes only. As you read the information below, please remember that these are strictly hypothetical numbers based on high level estimates. We’ll review those estimates in much more detail in upcoming regulatory proceedings. Ultimately, the PUC will decide on the rate structure.
We say we want to lower costs, yet we propose increasing the minimum charge for everyone. Why?
· The proposed solar rate restructuring is about how we make the program fair for all customers. Right now, the costs for maintaining and upgrading the grid are largely being shifted from customers with PV to customers who don't have PV.
· Our companies won't collect any more money in total through these proposals. The total costs would simply be allocated more fairly among all customers rather than having the non-PV customers pay more than their fair share of the costs.
· Our plan calls for a higher minimum charge for all residential customers (for illustration purposes, we estimated $55 for Hawaiian Electric, $61 for Hawai#699;i Electric Light, $50 for Maui Electric). But at the same time, as more fixed costs are captured in the minimum charge, we’d lower the per kilowatt-hour rate for everyone.
o We estimate that most non-PV customers already pay more than the minimum charge so that change won’t impact them.
o We’ll look at more detailed customer data and fine-tune our recommendation on the amounts in upcoming PUC proceedings.
· For new PV customers, we’re also suggesting an additional grid services charge. In our example for O‘ahu, that charge was estimated at roughly $16. So, using the sample numbers in the filing, they’d pay about $71 ($55 minimum + $16 grid services charge). The grid services charge would help pay for the cost of having additional generation available for PV customers when their systems aren’t producing. We’d still credit PV customers for their excess energy, but at fair “market rates.” Right now, we’re crediting PV customers at the full retail value (about 34 cents per kWh on O‘ahu), even though we pay much less to buy power from independent power producers.
· Residents with existing PV would pay the higher minimum charge like everyone else, but they’d also be “grandfathered” under their existing programs. This means they wouldn’t pay the additional grid services charge and would still be credited for the excess energy they produce at the higher “retail rate” they’ve been getting. They could be transitioned to a new PV rate structure in the future. Again, this will all be decided in a PUC proceeding.
For seniors and others on a fixed or low income, we’re looking to implement programs like “Lifeline rates” that could help customers who might have a hard time adjusting to a higher minimum charge.
How soon will this new pricing structure take place?
It’s not expected to be anytime soon. Ultimately, the PUC will decide how much and in what way these changes will be implemented. Many, including the media, are quick to zero in on the figures, and that’s understandable. But remember that these are strictly estimates – hypothetical numbers. We have not formally proposed charges in these amounts. We’re outlining one possibility for how to address a fundamental fairness issue. Any new minimum charge will ultimately be decided by the PUC in a future regulatory proceeding.
Aren’t NEM customers already paying their fair share, in addition to having to pay for their PV systems?
All the changes we’re considering in the rate structure are about fairness. Right now, most PV customers – roughly one in 10 of all customers – generally pay relatively little for their electric service. Most are not paying their share of costs for maintaining and upgrading the grid, even though they use the system daily to send power to the grid and to receive power, such as at night or when the sun isn’t shining. Instead those costs are shifted to everyone else – that is, the 90 percent of customers who don’t have PV. Last year, that subsidy amounted to $38 million – and it’s growing every year. We’re seeking a rate structure that’s fair for all customers.
How are PV customers shifting costs to non-PV customers?
Under the current PV program, known as “net energy metering,” we credit PV customers the full retail price for the excess power they generate – about 34 cents per kilowatt-hour on O‘ahu. But it would actually cost less for us to produce the electricity ourselves or buy the power from other independent producers, including other large renewable energy projects, at wholesale prices. That’s because the retail price is more than double the wholesale price. We’re buying more expensive electricity from rooftop PV, which is a great deal for PV customers. But we can buy less expensive electricity from other sources, which benefits all customers. So in fairness to all customers, we suggest that future PV customers get paid for their power at rates comparable to those of other power producers. This is what’s in place on Kaua‘i.
Why will customers have to wait until 2030 to see lower bills?
They won’t. In most cases, customers will see lower bills over time, sooner than 2030. In some years, bills may fluctuate as investments are made to develop the infrastructure and technology needed to transform our islands’ energy systems. That doesn’t mean customers won’t begin seeing some savings and benefits sooner than that. Our smart grid, voluntary pricing programs like demand response, options like community solar, and other offerings can begin to benefit customers before 2030.
So what happens next? Is our plan a done deal?
No. The PUC just opened a new proceeding focused on distributed generation – to consider technical, operational and economic challenges related to distributed generation like rooftop PV. We believe this plan provides a solid basis for a meaningful discussion. We know there will be a lot of opinions on these issues, which are also being debated across the country"
"Those “solar charges” you’re hearing about
Rooftop PV – and our estimated pricing under a possible new rate structure – is getting a lot of attention in the media following last week’s filings with the Public Utilities Commission. Our goals of lowering customer bills by 20 percent by 2030 and achieving more than 65 percent in renewable energy are also hot topics.
So we wanted to provide you with some information, in case you’re asked about these filings by family, friends, neighbors and customers.
First, it’s worth noting the overall principles that guided our recommendations for updating the distributed generation (DG) policies:
· Policies should lead to a sustainable set of customer options for DG
· We must be proactive in responding to our customers’ desires for DG
· All initiatives must ensure safety and reliability for all customers
· Rates governing DG must fairly reflect the value of the power provided from and to the grid, and must fairly allocate costs of the grid to all customers
Now, an important clarification about those “solar charges.” The numbers that are widely cited by the media were included in our plan for illustration purposes only. As you read the information below, please remember that these are strictly hypothetical numbers based on high level estimates. We’ll review those estimates in much more detail in upcoming regulatory proceedings. Ultimately, the PUC will decide on the rate structure.
We say we want to lower costs, yet we propose increasing the minimum charge for everyone. Why?
· The proposed solar rate restructuring is about how we make the program fair for all customers. Right now, the costs for maintaining and upgrading the grid are largely being shifted from customers with PV to customers who don't have PV.
· Our companies won't collect any more money in total through these proposals. The total costs would simply be allocated more fairly among all customers rather than having the non-PV customers pay more than their fair share of the costs.
· Our plan calls for a higher minimum charge for all residential customers (for illustration purposes, we estimated $55 for Hawaiian Electric, $61 for Hawai#699;i Electric Light, $50 for Maui Electric). But at the same time, as more fixed costs are captured in the minimum charge, we’d lower the per kilowatt-hour rate for everyone.
o We estimate that most non-PV customers already pay more than the minimum charge so that change won’t impact them.
o We’ll look at more detailed customer data and fine-tune our recommendation on the amounts in upcoming PUC proceedings.
· For new PV customers, we’re also suggesting an additional grid services charge. In our example for O‘ahu, that charge was estimated at roughly $16. So, using the sample numbers in the filing, they’d pay about $71 ($55 minimum + $16 grid services charge). The grid services charge would help pay for the cost of having additional generation available for PV customers when their systems aren’t producing. We’d still credit PV customers for their excess energy, but at fair “market rates.” Right now, we’re crediting PV customers at the full retail value (about 34 cents per kWh on O‘ahu), even though we pay much less to buy power from independent power producers.
· Residents with existing PV would pay the higher minimum charge like everyone else, but they’d also be “grandfathered” under their existing programs. This means they wouldn’t pay the additional grid services charge and would still be credited for the excess energy they produce at the higher “retail rate” they’ve been getting. They could be transitioned to a new PV rate structure in the future. Again, this will all be decided in a PUC proceeding.
For seniors and others on a fixed or low income, we’re looking to implement programs like “Lifeline rates” that could help customers who might have a hard time adjusting to a higher minimum charge.
How soon will this new pricing structure take place?
It’s not expected to be anytime soon. Ultimately, the PUC will decide how much and in what way these changes will be implemented. Many, including the media, are quick to zero in on the figures, and that’s understandable. But remember that these are strictly estimates – hypothetical numbers. We have not formally proposed charges in these amounts. We’re outlining one possibility for how to address a fundamental fairness issue. Any new minimum charge will ultimately be decided by the PUC in a future regulatory proceeding.
Aren’t NEM customers already paying their fair share, in addition to having to pay for their PV systems?
All the changes we’re considering in the rate structure are about fairness. Right now, most PV customers – roughly one in 10 of all customers – generally pay relatively little for their electric service. Most are not paying their share of costs for maintaining and upgrading the grid, even though they use the system daily to send power to the grid and to receive power, such as at night or when the sun isn’t shining. Instead those costs are shifted to everyone else – that is, the 90 percent of customers who don’t have PV. Last year, that subsidy amounted to $38 million – and it’s growing every year. We’re seeking a rate structure that’s fair for all customers.
How are PV customers shifting costs to non-PV customers?
Under the current PV program, known as “net energy metering,” we credit PV customers the full retail price for the excess power they generate – about 34 cents per kilowatt-hour on O‘ahu. But it would actually cost less for us to produce the electricity ourselves or buy the power from other independent producers, including other large renewable energy projects, at wholesale prices. That’s because the retail price is more than double the wholesale price. We’re buying more expensive electricity from rooftop PV, which is a great deal for PV customers. But we can buy less expensive electricity from other sources, which benefits all customers. So in fairness to all customers, we suggest that future PV customers get paid for their power at rates comparable to those of other power producers. This is what’s in place on Kaua‘i.
Why will customers have to wait until 2030 to see lower bills?
They won’t. In most cases, customers will see lower bills over time, sooner than 2030. In some years, bills may fluctuate as investments are made to develop the infrastructure and technology needed to transform our islands’ energy systems. That doesn’t mean customers won’t begin seeing some savings and benefits sooner than that. Our smart grid, voluntary pricing programs like demand response, options like community solar, and other offerings can begin to benefit customers before 2030.
So what happens next? Is our plan a done deal?
No. The PUC just opened a new proceeding focused on distributed generation – to consider technical, operational and economic challenges related to distributed generation like rooftop PV. We believe this plan provides a solid basis for a meaningful discussion. We know there will be a lot of opinions on these issues, which are also being debated across the country"