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BC Hydro Net Metering: Cross-subsidization and virtual net metering on the agenda

Bill Andrews, BCSEA's Lawyer in BCUC proceedings
Friday, February 19, 2021

BC Hydro held an online “educational workshop” of net metering enthusiasts on February 16 based on a Net Metering Evaluation Report that BC Hydro filed with the BCUC in October 2020. The evaluation report was filed as a requirement of the BCUC’s June 2020 decision on the BC Hydro net metering program. See: BCSEA GETS A WIN ON NET METERING, June 26, 2020. In the June 2020 decision, the BCUC approved net metering rate changes addressing the payment for annual net excess generation. But the BCUC did not make decisions regarding the (alleged) cost shifting (aka cross-subsidization) associated with the Generation Credit, beyond telling BC Hydro to report on it. This is what BC Hydro is now moving to address.

Highlights from a regulatory perspective:

  • The key take-away is that BC Hydro will have a series of engagement opportunities with the net metering community in the Spring and Summer of 2021. BC Hydro’s two priorities are to make administrative improvements to the net metering program, and to explore options and make proposals for BCUC approval to address what BC Hydro sees as the cross-subsidization associated with the Generation Credit. BC Hydro will also explore “virtual net metering” and other enhancements, apparently on the basis that the changes to address the Generation Credit will make the net metering rate “economically viable” (as BC Hydro sees it) before any deliberate expansion of net metering.
  • BC Hydro’s decision to develop a rate design proposal to reduce the cost-shifting associated with the Generation Credit is notable because BC Hydro’s main alternative would have been to delay addressing the issue on either or both of two grounds: (a) that the cross-subsidization dollar amounts are as yet too small to warrant the regulatory cost and the customer clamour, and (b) that the future role of net metering as a resource for meeting planning objectives is being examined in BC Hydro’s 2021 Integrated Resource Plan (IRP) that is now under development and due to be filed with the BCUC in December 2021.
  • BC Hydro’s presenters did encourage participants to provide input to the 2021 IRP (aka Clean Power 2040). The 2021 IRP is the ‘place’ where the idea of boosting net metering to meet planning objectives is relevant. In contrast, a future rate design application regarding the Generation Credit will not be fertile ground for arguments about the planning value of net metering, as illustrated by the BCUC’s June 2020 decision on the price paid for annual net excess generation.

Information from the Workshop:

  • BC Hydro presented the results of a September 2020 online survey of 809 net metering customers, current applicants for net metering, contractor/installers and other stakeholders. The results generally indicated lukewarm approval of the net metering program, and the BC Hydro staff emphasized ‘room for improvement’ and ‘we want to learn more from you.’ They lauded net metering customers as energy pioneers, noting that as many as half the net metering customers who responded to the survey had an electric vehicle. The number of BC Hydro net metering customers has risen from 640 in March 2016 to 3,300 in February 2021. The total nameplate rating of net metering customers’ generation units went from 3.8 MW to 26 MW over the same period.
  • 98.6% of the net metering generation is solar photovoltaic (“PV”). Other types are hydropower (mostly run of river without reservoir storage), wind power, combinations of wind/solar and hydro/solar, and biogas.
  • 88.5% of net metering participants are Residential customers. Others are General Service customers.
  • Among net metering customers, 45% are on Vancouver Island, 30% in the Lower Mainland 19% in the Southern Interior, and 6% in the Northern BC region.
  • Residential net metering participants have electricity purchases from BC Hydro that are approximately 50% higher than the average for Residential Customers. In other words, residential net metering participants are – on average – relatively large consumers of grid electricity in addition to using their own generation. (Perhaps this isn’t surprising, since most residential PV is on the roof of a single family dwelling, which tend to have above average electricity consumption.)
  • The evaluation report concluded that on a revenue-to-cost basis (aka “fully allocated cost of service study”) in BC Hydro’s Fiscal Year 2019, net metering accounts were cross-subsidized by non-participating accounts in the amount of $2.9 million for the year. BC Hydro’s breakdown of the cross-subsidy on a per account basis for F2019 is: Residential Solar PV $612, Residential Hydropower $17,355, Medium General Service Solar PV $3,940, and Large General Service Solar PV $66,577. (It should be noted that this estimate of cross-subsidy includes the impact of both the Generation Credit, which is what BC Hydro is moving toward addressing, and the payment for annual net excess generation, which the BCUC has already resolved (in the June 2020 decision).
  • The evaluation report also said that in F2019 the net metering customers received a Generation Credit worth on average 10.71 ȼ per kWh for the additional power they provided to BC Hydro, but BC Hydro received only 3.9 ȼ per kWh (heavy load hours) or 1.5 ȼ per kWh (light load hours) when it notionally sold the excess power in the export market. BC Hydro’s premise here is that it has surplus energy and capacity, so the additional net power it receives from net metering customers is just adding to the surplus.
  • Comments and questions from workshop participants in the chat box were mostly at odds with BC Hydro’s approach. To simplify, many of the comments reflected a view of net metering as helping to revolutionize the grid with locally provided power. BC Hydro’s presenters gave responses in the style of the regulatory arena. The gulf was quite evident.

Looking forward, the evaluation report gave some options for changing the net metering rate to address what BC Hydro says is cross-subsidization associated with the Generation Credit. These include:

  • moving to marginal pricing for all electricity delivered from the customer Generating Facilities to BC Hydro’s system (likely meaning a market price instead of a Generation Credit equivalent to the retail price),
  • an updated standard charge for interconnecting new applicants,
  • fixed charges, and
  • demand charges for service.

Clearly, none of these options would be broadly welcomed by the net metering community.

The silver lining (or quid pro quo?) of BC Hydro’s intention to make the net metering “economically viable” is its plan to explore options to expand program participation through virtual net metering. Many advocates have called for BC Hydro to adopt virtual net metering. Virtual net metering could let apartment dwellers or people with shaded roofs participate in net metering projects on someone else’s property. Nelson Hydro’s community solar garden is an example.

BC Hydro said in the workshop that any proposed changes will be assessed in either BC Hydro’s next Rate Design Application review and/or in a separate future Net Metering filing.

BC Hydro sources:

For a nostalgic stroll through BCSEA’s past articles on Net Metering, see:

BCSEA GETS A WIN ON NET METERING, June 26, 2020

BCSEA SUPPORTS NET METERING, March 13, 2020

LOW-CARBON ELECTRIFICATION AND BC HYDRO'S ROLE IN IMPLEMENTING THE CLEANBC CLIMATE ACTION PLAN, October 15, 2019

NET METERING UPDATE, August 14, 2019

BCSEA INTERVENES IN NET METERING PROCEEDING, June 4, 2019

TELL BC HYDRO WHAT YOU THINK ABOUT NET METERING CHANGES - DEADLINE APRIL 2, 2019

SOLAR ON A STRATA – OVER THREE YEARS, June 2018

UTILITY NOT ALLOWED TO KICK OUT NET METERING CUSTOMERS, January 16, 2017

DON’T THROW THE BABY OUT WITH THE BATHWATER: BCSEA PUSHES BETTER NET METERING RULES, October 4, 2016

SOLAR ON A STRATA - IT'S JUST ROUTINE!, September 23, 2016

BCUC FORTIS NET METERING UPDATE: PROFIT'S NOT THE PRIORITY, August 4, 2016

A FIELD GUIDE TO COMMUNITY SOLAR IN BC, August 4, 2016

FORTIS’ NET METERING PROGRAM: TRANSITION TO SUSTAINABLE ENERGY – OR JUST TOO EXPENSIVE?, June 28, 2016

COMMUNITY SOLAR PROJECT SHOWCASE AND TOUR, March 30, 2016

GOLD BRIDGE COMMUNITY COMPLEX SOLAR INSTALLATION, January 4, 2016

SOLAR ON A STRATA - THREE MONTHS IN, September 30, 2015

HOW TO CUT YOUR ELECTRICITY BILLS IN HALF - A KASLO STORY, March 7, 2015

SOLAR ON A STRATA - OUR VOTE, February 27, 2015

SOLAR ON A STRATA - JAN 29 2015 UPDATE

SOLAR ON A STRATA? December 9, 2014