Needles, CA: Needles City Council and Needles Public Utility Authority approved recommendations to include small commercial customer generators’ use of Needles Public Utility Authority electric grid.
Members of the Needles City Council and Needles Public Utility Authority approved recommendation to include small commercial customer generators’ use of the Needles Public Utility Authority electric grid; measure, credit or charge customer accordingly.
Credits shall be based on Needles Public Utility Authority’s avoided power purchase costs only, to be set at average cost of thermal and hydroelectric power purchased from Western Area Power Administration, and retail charges shall be made for use of the grid during times when energy is not being generated.
The vote to approve happened during the Needles City Council and Needles Public Utility Authority Meeting held on Tuesday, December 8th, 2015 inside the Needles City Council Chambers in Needles, California.
** Information regarding Agenda Item #6 from the City of Needles: **
– Setting “fair share” electric rates for net metered solar customers (“Customer-Generators”):
A customer’s electric bill is based on the electric company’s cost of providing electric service. This includes the cost of the fuels used to generate electricity and the cost to transport and deliver the electricity to the customer. Costs also include the maintenance of the grid, as well as utility programs for low-income assistance, energy efficiency, environmental improvements, and other public benefits.
In general, every electric customer has an electric meter that records the amount of power delivered by its electric company. As electricity is used, the meter spins forward, much like a car’s odometer records miles traveled. In the case of an electric meter, the meter records energy use in kilowatt-hours (kWh).
Net-metered customers generally are credited for the electricity they sell to the grid, with their electric meter running backwards to provide a credit against the electricity that these customers must buy from their electric company at night or during other periods when their electricity use exceeds their system’s output. Customers are only billed for their “net” energy use.
That means that when rooftop solar or other Distributive Generation (“DG”) customers generate electricity, they avoid paying for the utility’s power, which is fair because they did not use it. But, they also avoid paying for all of the fixed costs of the grid that delivers power when they need it and takes the power they sell back to the utility. As a result, these grid costs are shifted to those customers without rooftop solar or other DG systems through higher utility bills.
Because of the way that net metering policies originally were designed, net-metered customers often are credited for the power they sell to electric companies, usually at the full retail electricity rate, even though it would cost less for the companies to produce the electricity themselves or to buy the power on the wholesale market from other electricity providers.
Many energy experts agree that net-metered customers should be compensated at the wholesale price for the electricity they produce, similar to other electricity providers. This reflects the fact that electric companies buying this power still must incur the costs of delivering the power to their customers, including the costs of maintaining the poles, wires, meters, and other infrastructure required to deliver a reliable supply of electricity.
As the use of rooftop solar and other DG systems increases, so too does the two-way flow of power on the electric distribution system. To ensure the safe and reliable delivery of electricity, an electric company’s distribution system must be able to safely manage/control the flow of two-way power. At the same time, electric companies face integration challenges associated with the variable, fluctuating levels of power created by wind and solar DG systems.
Electric companies must invest in their distribution systems to avoid overloading circuits, Causing voltage regulation or power quality problems, or jeopardizing the safety of the public or utility employees. However, if net-metered customers do not contribute to the fixed costs of maintaining the grid and keeping it operating reliably, a company’s remaining customers will face higher rates to pay for these costs.
Attribution: Straight Talk About Net Metering — Edison Electric Institute.
Challenge: To create a pricing model that ensures that everyone who uses the electric grid helps pay to maintain it and to keep it operating reliably at all times.
Current payment policy per Photovoltaic Interconnection Agreement for Net Energy Metering From Residential Solar Electric Generation Facilities of 10 Kilowatts or Less (July 17, 2007):
– 2. Ρayment For Net Εnergy:
2.1 Needles Public Utility Authority will determine for each billing period the energy generated and the energy used. In any billing period where the energy used exceeds the energy generated on the Customer-Generator’s premises, the Customer-Generator will be billed for the net energy used. In the event energy generated by the facility exceeds the energy used on the Customer-Generator’s premises during any billing period, the amount of the net excess energy will be credited against the Customer-Generator’s energy usage in the next billing period. Accounts shall zero out at the end of the 12 month period following the date of final interconnection of the Customer-Generator’s eligible Solar Photovoltaic system. Needles Public Utility Authority does not pay for electricity produced in excess of Customer’s demand.
2.2 Customer-Generator shall pay any amount owing for electric service provided by Needles Public Utility Authority in accordance with applicable rate schedules.
The problem with the current payment policy is that the net metering customer is credited by Needles Public Utility Authority for the full retail rate for the electric generated by the net metering (See 2.1 Above): In the event energy generated by the facility exceeds the energy used on the Customer-Generator’s premises during any billing period, the amount of the net excess energy will be credited against the Customer-Generator’s energy usage in the next billing period.
The customer-generator should only be credited for the Needles Public Utility Authority’s avoided power purchase costs not the full retail price which is based on all of the costs involved in generating, transporting, and delivering power.
Amend the existing Interconnect Agreement dated Saturday, July 7th, 2007 to include small commercial customer-generators and include the following language in Section 2. Ρayment For Net Εnergy. For eligible residential and small commercial customer-generators, the net energy metering calculation shall be made by measuring the difference between the electricity supplied by the eligible customer-generator and the electricity generated by the eligible customer-generator and fed back to the electric grid over a 12 month period.
** The following rule shall apply to the annualized net metering calculation: **
1. The eligible customer —generator account shall, at the end of the 12-month period following the date of final interconnection of the customer-generator’s system with the Needles Public Utility Authority distribution system, and at each anniversary month thereafter, be evaluated and reconciled for electricity used or generated during the period.
2. Needles Public Utility Authority will determine if the customer-generator was a net consumer or a net producer of electricity during that period.
3. At the end of each 12-month period, where the electricity supplied by the Needles Public Utility Authority exceeds the electricity generated by the customer-generator during the same period, the customer-generator is a net electricity consumer and Needles Public Utility Authority shall be owed compensation for the customer-generator’s net kilowatt-hour consumption over that same period. The compensation owed for the customer-generator’s electricity generated shall be calculated as follows:
“The net balance of moneys owed to the Needles Public Utility Authority shall be paid in accordance with the normal billing cycle. If the customer-generator is a net producer over the normal billing cycle, any excess kilowatts-hours during the billing cycle shall be carried over to the following billing period as kilowatt-hour credits according to the procedures set forth in this section, and appear as a Credit on the customer-generator’s account. Note: The credit shall be based on Needles Public Utility Authority’s avoided power purchase costs only and is set at the annual average non-firm energy price Needles Public Utility Authority paid during the prior 12-month period This credit may be utilized in the following billing cycle if the customer is a net consumer during that cycle. If the customer is a net generator at the end of each 12-month period, then Number 3 shall apply (See Below Inside Agenda Item Packet).
4. At the end of each 12-month period, where the electricity generated by the customer-generator during that 12-month period exceeds the electricity supplied during that same period, the customer-generator is a net electricity producer and Needles Public Utility Authority shall retain any excess kilowatt-hours generated during the prior 12 month period. The customer-generator shall not be compensated by Needles Public Utility Authority for the excess kilowatt-hours generated.
As for fiscal impact, undetermined.
As for environmental impact, “N/A”; not applicable, not available, or no answer.
The recommended actions, to approve staff’s recommendation to include small commercial Customer-Generators as eligible participants and amend the existing Interconnect Agreement to credit Customer-Generator’s account based on Needles Public Utility Authority’s avoided power purchase costs only and is set at the average cost of thermal and hydro power purchased from Western Area Power Administration during the priors 2-month period (as identified in Western Area Power Administration ‘s monthly activity reports). Needles Public Utility Authority shall retain any excess kilowatt-hours generated during the prior 12-month period. The Customer-generator shall not be compensated by Needles Public Utility Authority for the excess kilowatt hours generated and Customer-Generator shall be charged the retail price of the Needles Public Utility Authority’s avoided costs of purchasing power for Customer-Generator’s utilization of the Needles Public Utility Authority grid. And, direct staff to develop methods to measure how much excess power the Customer-Generator puts up on the Needles Public Utility Authority grid during peak solar power generation hours and how much Needles Public Utility Authority power Customer-Generator uses from the Needles Public Utility Authority grid when the sun isn’t shining in order to charge for the Needles Public Utility Authority grid’s acting as Customer-Generator’s “battery back-up” power. This use of the Needles Public Utility Authority grid should not be free to Customer-Generators.
(Action Needed Agenda Item)
Members of the Needles Public Utility Authority voted 4 to 2 to approved the agenda item with City of Needles Vice Mayor Jeff Williams voting “Yes” and Needles City Council Member Shawn Gudmundson and Needles City Council Member Louise Evans voting “No” on this agenda item.
Members of the Needles City Council voted 3 to 2 to approved the agenda item with Needles City Council Member Shawn Gudmundson and Needles City Council Member Louise Evans voting “No” on this agenda item. City of Needles Vice Mayor Jeff Williams didn’t have to vote during the Needles City Council vote.
City of Needles Mayor Edward T. Paget recused himself due to a possible conflict of interest and City of Needles Vice Mayor Jeff Williams stepped up as City of Needles Mayor.
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For more information regarding the Needles City Council Meetings, please contact Dale Jones in the City Clerk’s Office at the City of Needles at: 1 (760) 326-2113 Ext. 345.