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BCSEA Intervenes in Net Metering Proceeding

Bill Andrews, Barrister & Solicitor
Tuesday, June 4, 2019

BCSEA intervenes in Net Metering Proceeding:

BCSEA’s board of directors in May approved intervening in a BC Utilities Commission proceeding on BC Hydro’s most recent application to amend its net metering rules. BCSEA has intervened in all of the commission's proceedings regarding net metering by BC Hydro or FortisBC in the past few years.

BCSEA's objectives in the proceeding are:

increasing the number of customers participating in net metering,
recognition that net metering participants are responsible for their own costs and benefits and don't require cross-subsidization from other ratepayers, and 
fairness for early-adopters who installed generators larger than their annual load before that practice was barred in 2018.

Hydro proposes half a dozen changes to the net metering tariff. One widely welcomed change would allow program participants to set their own “anniversary date” in order to maximize their bill savings. For example, the 98% of net metering customer who have solar PV generation could set March as their anniversary date. They would then accumulate credits for power to the grid during the sunny summer months and use those credits to reduce their electricity bills during the dark and stormy winter months.

Another change, this one controversial, concerns participation by customers whose generators provide more power to BC Hydro in a year than the customer’s annual load.

But first, some background on how net metering works and its history: The customer’s generator provides power toward meeting the customer’s load on a minute by minute basis. If the customer’s load is fully met then excess power is sent to the grid. If the customer’s generator isn’t enough to completely meet the customer’s load then power moves from the grid to the customer’s premises to fully meet the customer’s load. The customer’s meter keeps track of the inflows and outflows of power. At the end of a billing period (e.g., two months), the outflows are subtracted from the inflows. If there has been a net inflow then the customer is billed for that amount of electricity (in kWh). If there has been a net outflow (from the customer to BC Hydro) then the customer gets a credit (in kWh) that is applied to the next bill. If the next billing period also has a net outflow to BC Hydro then the credits (in kWh) will build up. Most customers use up all their credits by the end of 12 months. However, some net metering customers (roughly 20%) have kWh credits left after 12 months. Currently, BC Hydro pays the customer 9.99 cents/kWh for any credits remaining after 12 months. These customers are said to have “annual net excess generation (NEG).” Most of the customers with annual NEG have a relatively small amount of annual NEG and they get payments of less than $1,000. However, some net metering customers provide larger amounts of annual NEG and receive larger payments (5 customers received from $28,000 to $74,000 each in Fiscal 2018).

In March 2017, the Utilities Commission addressed the question of whether net metering should be limited to customers offsetting their own load or should be a way for customers to generate revenue by selling annual NEG to the utility (and if so at what price). This decision had to do with the net metering program run by FortisBC (the electricity utility in south-central BC). While BCSEA supported the idea that FortisBC's net metering program should welcome annual net surplus power to the grid, the Commission ruled otherwise. It concluded that the purpose of the FortisBC net metering program is to allow participants to offset their load, but not to deliberately sell power to the utility at a price higher than the financial value of the power to the utility. The Commission, therefore, determined that for the utility to pay more per kWh for annual NEG than the utility’s cost of wholesale power would be an impermissible cross-subsidy by non-net metering customers.

Back to BC Hydro, by 2018 BC Hydro came to see payments of 9.9 cents/kWh for increasing amounts of annual NEG as too pricey. Hydro has a surplus of power that it sells on the market at prices in the 2-4 cents/kWh range. In April 2018, BC Hydro applied to the Utilities Commission for approval to ban new entrants to the net metering program (not existing participants) who planned to have generators large enough to produce annual NEG for sale to BC Hydro. In June 2018, the commission approved the ban on new “oversized” generation on an interim basis and required BC Hydro to apply for approval of a permanent ruling and whatever other changes to the net metering rules BC Hydro wanted to bring forward. That brings us to the current application by BC Hydro.  

If the commission does decide to endorse the ‘no new over-sized generation’ rule for BC Hydro, an important issue for BCSEA will be fair “grandparenting” treatment for existing net metering customers who already produce annual net excess generation. Some of them will have financed their generating systems expecting revenue from sales of annual NEG to BC Hydro at 9.99 cents/kWh.

The scope of the net metering proceeding is limited. The broader subject of how net metering and other aspects of small scale, distributed generation could fit into BC’s overall energy landscape is being addressed now in “Phase Two” of the government’s “Comprehensive Review of BC Hydro.” BCSEA has advocated for public input into that planning process.

Links:

BCUC Proceeding re BC Hydro Net Metering

BCUC Decision and Order No. G-63-17 re FortisBC Net Metering

Graphic Caption: BC Hydro Net Metering Program Growth, 2004 to 2019