Are rate changes needed for customers who generate their own power?

Published: Saturday, Jan. 18 2014 3:00 p.m. MST

Mike Rossetti installed his own solar arrays in December 2009 to help offset the cost of his electricity bill at his home in Draper.

Matt Gade, Deseret News

SALT LAKE CITY — For Draper resident Mike Rossetti, staying cool during a long, hot Utah summer was an increasingly expensive proposition.

So a little more than three years ago, with some prompting from his wife, Rossetti decided to do something about it.

After extensive research and with the help of a licensed electrician — “just to please the city bureaucrats,” he said — Rossetti installed a 5 kilowatt photovoltaic solar panel array on his home.

In all, Rossetti estimates he spent $28,000 on the project, but he received a 30 percent tax break as an incentive.

Conservation was part of his initial motivation for making such a significant investment, he said, but there were other considerations as well.

“We wanted to reduce our (electricity) bills,” Rossetti explained.

His monthly cost for air conditioning in the warm weather months has gone from the $250 to $300 range to about $120.

Thus far, it has been a worthwhile investment, Rossetti said.

Meanwhile, the state’s largest electric utility has said that the approximately 2,200 customers like Rossetti who are residential energy producers are being subsidized unfairly by customers who do not produce power.

Earlier this month, Rocky Mountain Power announced a rate increase request of $76.3 million, or 4 percent, from the Utah Public Service Commission. If approved, the typical residential customer would pay an additional $3.73 per month for electricity.

The request also included a $4.25 monthly fee for “net-metering” customers. Net metering, also known as customer-generated power, measures the difference between the electricity a customer uses from the existing power generation system and any excess energy produced that goes back on the system. Typically, the energy is generated with solar panels or wind turbines.

Rocky Mountain Power claims that under current state regulations, the company is required to credit customers for excess generation at the full retail rate even though the customer electric generation does not include the capital investment of infrastructure, voltage lines or the utility's overall power generation.

The utility estimates its per kilowatt cost of electricity is slightly less than 11.2 cents, while the cost to net-metering customers was just under 2.6 cents per kilowatt. Still, the utility is forced to credit the customer the much higher amount for excess energy, Rocky Mountain Power President and CEO Rich Walje said.

While the company embraces evolving customer expectations for choice, Walje said the issue needs to be addressed before it becomes a real burden for other Utah customers who choose not to participate in net metering.

The proposed $4.25 monthly fee would help offset some of the fixed costs to supply electric service to net-metering customers and receive the extra power they produce, he said.

Other reasons for the rate increase request include higher costs to maintain reliable electric service, such as the new Lake Side 2 natural gas power plant, new high-voltage transmission lines and equipment upgrades to comply with environmental regulations, Walje said.

The company hopes to start a dialogue about updating residential electricity rates to include the impacts of customer-generated power so residential customers are treated more fairly, Rocky Mountain Power spokesman Paul Murphy said.

“It’s not (their) fault,” Murphy said. “It’s just the way the system was designed (more than) 100 years ago.”

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