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Fortis’ net metering program: transition to sustainable energy – or just too expensive?

Tom Hackney
Tuesday, June 28, 2016

Some net metering customers in south-central BC suffered a rude shock this April, when Fortis applied to the Utilities Commission to slash the rates it pays its net metering customers for annual net electricity they supply to the grid.

Fortis wants to change the rules to reflect what it calls the original purpose of the net metering program: i.e., to enable customers to offset their own consumption with their own renewable generation, rather than to provide a revenue generating opportunity for program participants.

But Fortis’ net metering customers are fighting back. In addition to the BC Sustainable Energy Association, Sierra Club BC and the other regular interveners, half a dozen of Fortis’ net metering customers and a solar PV installation company have registered to take part in the Utilities Commission’s review of the application. Seven others have registered as observers or filed letters of comment. This is a big turnout for a regulatory proceeding.

Money seems to be the main point of contention, but to understand how much, the net metering rules need some explaining.

spvinstall_2.jpgNet metering customers have their own small clean energy generating systems, such as photovoltaic (PV) panels. When it’s light outside (or the wind is blowing, or the stream flowing), the electricity generated goes first to meet the customer’s own electricity needs. If and when the customer generates more electricity than he or she uses, that extra goes into the Fortis grid.

The net metering customer saves money in three ways:

  • By meeting some of their own electricity needs the customer avoids paying Fortis’ hefty rates for that electricity. For residential customers, the rate is 9.8 cents per kilowatt hour (kWh) for Tier 1 and 15.2 cents/kWh for Tier 2. (Fortis’ rates are higher than BC Hydro’s.)
  • Second, if over the course a billing period the net metering customer delivers more power to Fortis than the customer receives from Fortis, then Fortis credits this on the next bill at the same rate that Fortis charges that customer (complicated for residential customers by their two-tiered “conservation” rate).
  • Third, if at the end of a full year Fortis still owes the customer a credit, then Fortis will actually write the customer a cheque, again using the same rate at which Fortis supplies that customer.

Here’s the big issue. For the annual cash settlements, Fortis wants to pay its net metering customers no more than the rate it pays to acquire power from other sources, and Fortis says the 4.5 cents/kWh it pays BC Hydro fairly represents that rate. This is less than half of what it pays its commercial net metering customers and less than one third of the Tier 2 rate for residential net metering customers.

solarpanelhouse_0.jpgRight now, only a handful of Fortis’ net metering customers have a generator big enough (and consumption low enough) to provide an annual surplus of power to Fortis or earn a cash payment.
But that could change.

For example, an electrical contractor told the Commission he installed a 24 kW PV system for a net metering customer. He explained that,

This was a major long term investment for the family ($70,000). As the family will grow and the children move out, the system will be larger than needed for the house, so the residence will be a net producer, allowing the client to recover some of the money he invested in the system.

The BCSEA-Sierra Club intervention team will address this issue and others.

BCSEA and SCBC have strongly supported Fortis’ and BC Hydro’s net metering programs in various proceedings before the Commission. We argue that there are important social benefits of encouraging small-scale distributed renewable energy generation in BC. Enabling customers to contribute to meeting their own electricity needs is part of the transition to sustainable energy.

 

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