Transcript Document 7334264

NET METERING in ILLINOIS
Catie Heindel
Energy Law
Spring 2008
April 30, 2008
Net Metering – A Summary


What is net metering and how does it work?
Why is net metering important?


What are the applicable laws regarding net
metering?



What are the benefits and costs of net metering for
utilities and consumers?
Federal
Illinois
How does the IL plan measure up to other
states?
What is Net Metering?

Net metering is a electricity policy for
consumers who own renewable energy
systems, such as wind or solar power, or
use vehicle-to-grid systems.
How does Net Metering work?


The renewable energy system (ex. solar panel or wind turbine)
generates direct current (DC), the same kind of electricity you
get from a battery.
An inverter changes the electricity to alternating current (AC).
This is the type of electricity that comes into your home from the utility
grid. The inverter is connected to the main circuit-breaker panel in your
home.
How does Net Metering work?

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When you use electricity, you use the power generated by the solar
panels first.
If you need more, you use power coming from the utility. The inverter
is responsible for this.
If you are generating more power than you need, power flows back to
the utility grid, spinning the existing electricity meter backwards.
Solar electric systems

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Solar electric systems generally consist of solar panels installed on a
building’s roof to capture energy produced by the sun.
The size and complexity of solar electric systems vary - most
residential systems have a capacity between 1 and 5 kW.
These systems deliver an average of 1,200 to 1,300 kW hours of
electricity for every kW of capacity.
A 2 kW solar power system would cover an average of onethird of a typical household’s electricity use.
Rooftop Wind Tower
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Wind systems typically consist of
individual turbines and vary
widely in size and height.
While they have the
potential to deliver up to
2,000 kW hours
of electricity for every kW
of capacity, how the
system is placed is
important to estimating
how much electricity will
be generated.
Vehicle-to-Grid Systems
Alternatives to Net Metering –
Off the Grid
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Commonly, wind speeds are
low in the summer when the
sun shines brightest and
longest.
The wind is strong in the
winter when less sunlight is
available.
Because the peak operating
times for wind and solar
systems occur at different
times of the day and year,
hybrid systems are more
likely to produce power
when you need it.
What happens with
excess electricity?

When the consumer produces any excess
electricity beyond what is needed to meet their
own electricity needs at that moment, the utility
purchases that excess electricity at the wholesale
or “avoided cost” price.

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Generally, the avoided cost price is generally much
lower than the retail price.
Additionally, net metering allows the consumer to
use any excess electricity to offset electricity
used at other times during the billing period.
Net Metering – A Summary


What is net metering and how does it work?
Why is net metering important?


What are the applicable laws regarding net
metering?



What are the benefits and costs of net metering for
utilities and consumers?
Federal
Illinois
How does the IL plan measure up to other
states?
Why is net metering important?

As increasing numbers of
primarily residential consumers
install renewable energy
systems in their homes,
there needs to be a simple,
standardized protocol for
connecting their systems into
the electric grid that ensures
safety and power quality.
Renewable Energy Use in US
The Role of Renewable Energy Consumption in the
Nation’s Energy Supply, 2004
Non-Hydro Renewables make
significant gains
billion kilowatthours
400
356
286
300
Geothermal
Solar
Wind
200
100
169
Biomass
97
MSW and
Landfill Gas
0
2006
Annual Energy Outlook 2008
2010
2020
2030
Renewable Portfolio Standards
Renewable Portfolio Standards and State Mandates by State, 2005
But, there are safety issues…

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Workers repairing downed power
lines must be protected from
"downstream" sources, in addition
to being disconnected from the main
"upstream" distribution grid.
Additionally, the phase of the outgoing power
must be synchronized with the grid, and a
mechanism must be included to disconnect the
feed in the event of grid failure.
Inverters can help…

Sources that produce direct current
must be coupled with an electrical
inverter to convert the output to
alternating current, for use with
conventional appliances.

Inverters now include all the
necessary protective relays and
circuit breakers needed to
synchronize safely and reliably with
the utility grid, and to preventing
“islanding” by automatically shutting
down when an utility grid suffers and
outage.
Net Metering – A Summary


What is net metering and how does it work?
Why is net metering important?


What are the applicable laws regarding net
metering?



What are the benefits and costs of net metering for
utilities and consumers?
Federal
Illinois
How does the IL plan measure up to other
states?
Why is net metering important?


Net metering can provide a simple, inexpensive
and easily administered incentive mechanism
for encouraging the use of renewable energy
systems, which provide important local,
national and global benefits.
Provides several benefits that offset costs to
both consumers and utilities that provide the
programs.
Incentives?

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Net Metering is generally a
consumer-based renewable
energy incentive.
STRUCTURE: The structure of a net metering program is an
important in assessing the economic incentive for residential
customers, rural electric cooperatives and private investors to
generate their own electricity by using renewable resources.
CONSISTENCY: In the past, over-burdened energy agencies
were not providing incentives on a consistent basis.
 It was difficult for individuals to negotiate with large
institutions to recover their net metering credits and/or
rebates for using renewable energy.
 Effectively placed the burden of pioneering renewable
energy upon fragmented consumers.
If structured correctly
and consistent….

Net metering programs could be used
as incentive mechanisms for:
Significant reduction in global greenhouse
gas emissions due to use of renewable
energy sources.
 Other benefits: Stimulating the economy,
reducing dependence on foreign oil and
reducing billions of dollars of health care
costs associated with air pollution.

Incentives for Residential Customers
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Many residential customers are not at
home using electric during the day when
their systems are producing power.
Net metering allows them to receive full
value for the electricity they produce
without installing expensive battery
storage systems.
Utilities: Benefits and Costs

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Benefit: Simplified programs provide the
avoidance of complicated administrative and
accounting procedures for metering and
purchasing the small amounts of excess
electricity produced by these small scale
renewable facilities.
 Can help a utility to comply with Renewable
Portfolio Standards
Cost: Obviously - the customer buys less
electricity from the utility, meaning less revenue
for the utility.
Less Revenue for Utility

Amounts to less revenue because customer is
using their own generated electricity to offset
electricity they would have purchased at the
retail price.

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But, the company is able to purchase their excess
electricity at a wholesale price.
Not so much loss - revenue loss is somewhat
equal to having the customer reduce electricity
use by investing in energy efficiency levels, such
as installing compact florescent lights and
efficient appliances.
Consumer: Benefits

Consumers benefit by getting greater value for
some of the electricity they generate and by
being able to interconnect using widely accepted
technical standards.

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In some cases, the benefits may be offset by initial
installation fees of net metering equipment.
Electricity bill savings depends on a variety of
factors, particularly the difference between the
avoided costs and retail prices.
Avoided Cost


FERC defines avoided costs as “the incremental
costs to an electric utility of electric energy or
capacity or both which, but for the purchase
from the qualifying facility or facilities, such
utility would generate itself or purchase from
another source.”
Better wording - The utility’s “avoided cost” is
the cost the utility would have paid to purchase
the electricity from another source if the
customer hadn’t provided it.
How much money can
customers really save?
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Annual savings estimates depend upon the
amount of electricity that the customer uses and
the amount of electricity that the customer
generates.
Most net metering customers will receive energy
credits for the excess electricity their system
generates.
All such customers must pay certain fixed costs
to connect to the electric grid and, of course,
must also pay their public utility for any
electricity they use and can’t offset.
Example #1
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HYPO: A residential solar panel system in the
Commonwealth Edison service territory can offset
an estimated 32% of annual consumption.
PV System Size = 2 kW (DC),
or 1.54 kW (AC)
Estimated Annual
Consumption = 7,600 kWh
Estimated Annual Production
= 2,458 kWh AC
Estimated Total Charges
Offset by PV Installation =
$248
Example #2
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HYPO: A small business wind turbine system in
the AmerenIP service territory can offset an
estimated 55% of annual consumption.
Wind System Size = 10 kW
Estimated Annual Production =
23,652 kWh
Estimated Annual Consumption =
43,076 kWh
Estimated Total Charges Offset by
Wind Turbine Installation =
$2,950
Is the price right?
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Electricity cannot be stored efficiently. If not consumed
instantly, it is grounded and lost.
 The utility may be making money, but most home
systems can’t store enough extra electricity to utilize it
efficiently.
Yet, some argue that the avoided costs charged don’t
always reflect the actual value of the electricity either.
 Ex. A distributor generator exchanging power to the
utility after midnight, when the power has its least
value and may not be capable of resale and thus
valueless, does not have the same market value as a
distribution generator taking power from a utility at
noon.
Net Metering – A Summary


What is net metering and how does it work?
Why is net metering important?


What are the applicable laws regarding net
metering?



What are the benefits and costs of net metering for
utilities and consumers?
Federal
Illinois
How does the IL plan measure up to other
states?
Federal Requirements for
Net Metering

Under Section 1251 of the Energy Policy Act
of 2005, all public electric utilities are now
required to offer net metering on request to
their customers.

(11) NET METERING. Each electric utility
shall make available upon request net
metering service to any electric consumer
that the electric utility serves.
DSIRE: www.dsireusa.org
April 2008
Net Metering
100
50
VT: 250
100 *
*
*
25/100
1,000
1,000
*
*
*
*
20
40
25/2,000
*
25
*
500
2,000
25/2,000 co-ops, munis:
100
10/25
varies 80,000
*
*
30
*
40 10
no limit
*
*
15
25
20/100
100 * 25/300
50
*
10/100
25/100
100
*
100
NY:
PA:
NJ:
DE:
MD:
DC:
VA:
NH: 100
MA: 60*
RI: 1,000/1,650*
CT: 2,000*
10/25/125/400
50/3,000/5,000*
2,000*
25/500/2,000*
2,000*
100
10/500*
FL: 2,000*
(KIUC: 50)
State-wide net metering for all utility types
*
State-wide net metering for certain utility types only (e.g., investor-owned utilities)
Net metering offered voluntarily by one or more individual utilities
Net metering is
available in
42 states + D.C.
(Note: Numbers indicate individual system size limit in kilowatts. Some states’ limits vary by customer type and/or technology)
Net Metering for Wind
22 states have net metering for all rural electric consumers
25
25
15/150
10/50
100
100
40
25
60
20
25/100
25
500
30
25
25/125
30
40
No
10 Limit
2,000
25
100
varies
2,000
25
10/500
1,000
200
20/100
10
100
10
25/
100
Size limits
for each state
noted in kW
10/
100
50
25/
100
10
50
Settlement of Net Excess Energy:
None
Revised: 6Mar06
Source: www.dsireusa.org
Monthly
Individual Utilities
Annual
Investor-Owned Utilities Only, Not Rural Cooperatives
Varies by utility
Investor-Owned Utilities and Rural Cooperatives
Net Metering – A Summary




What is net metering and how does it work?
Why is net metering important?
What are the benefits and costs of net metering
for utilities and consumers?
What are the applicable laws regarding net
metering?



Federal
Illinois
How does the IL plan measure up to other
states?
Applicable Illinois laws and
incentives for net metering
How it began: 2000 ComEd Wind &
Photovoltaic Generation pricing experiment
 Illinois Renewable Portfolio Standard (RPS)
 Proposed Rule - SB 680/HB 1386
 The NEW Net Metering Rule
(83 IL Admin Code, Part 465)

Early Net Metering in Illinois
ComEd’s Wind & Photovoltaic
Generation Pricing Experiment
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
In April 2000, ComEd, the investor-owned utility serving the city of
Chicago and surrounding areas, offered net metering on a limited
basis for wind and photovoltaic systems of up to 40 kW in size.
Pricing Experiment:
 Monthly - ComEd paid customers its avoided costs for any excess
power put back into the grid each month; OR
 Annually - Paid each customer for the total kilowatts put back into
the grid – but limited this to be no more than the amount of power
the customer received from the utility.
 Customers were paid at a rate representing the difference
between the average avoided cost paid to the customer and
the average retail rate paid by the customer during the year.
Illinois Renewable Portfolio
Standard (RPS)
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June, 2001 - Renewable Portfolio Requirements:
 2% of retail load to be renewable in 2007
 Increase 1% each year reaching 8% in 2013.
 75% of the renewable energy used to meet the
RPS must come from wind power.
July, 2005 - the ICC adopted a resolution creating
a voluntary renewable portfolio goal of 8% by
2013, and an energy efficiency portfolio goal that
utilities should reduce load growth by of 25%
during 2015-2017.
Public Act 095-0481

In August 2007, Illinois enacted legislation
creating the Illinois Power Agency.
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The purpose of this agency is to develop electricity
procurement plans for state utilities supplying over
100,000 Illinois customers to ensure “adequate,
reliable, affordable, efficient, and environmentally
sustainable electric service at the lowest total cost.”
The Agency is charged with competitively procuring
energy supply according to the plans and with
meeting a renewable portfolio standard of 25% by
2025.
NEW Net Metering Rule
83 IL Admin Code, Part 465
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Effective April 1, 2008, eligible residential and nonresidential electric customers of Illinois are able to make
utilities and alternative retail electric suppliers (ARES) offer
net metering for the purpose of off-setting the customer’s
own electric demand.
Residential and non-residential customers who own or
operate a renewable fuel-powered generator of 2,000 kW
capacity or less, located on the customers’ premises and is
used to offset some or all of their electric usage.
Eligible renewable fuels are solar, wind, dedicated crops
grown for electricity production, anaerobic digestion of
livestock or food processing waste, fuel cells or
microturbines powered by renewable fuels and
hydroelectricity.
Still no rule - IL Commerce Commission
Approves “Emergency Rule”

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
On March 19, 2008, the Illinois Commerce Commission
tentatively finalized its net metering order (Case 07-0483),
and forwarded its proposal to the Joint Legislative
Committee on Administrative Rules for final comment and
approval.
This net metering rule is intended to meet the requirements
of legislation enacted in S.B. 0680, which requires all
electricity providers, except munis and cooperatives, to offer
net metering to all customers by April 1, 2008.
The ICC expects to have the permanent net metering rule in
place by the revised deadline of April 29, 2008, if not
sooner.
Effect of the
Net Metering Rule

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Commonwealth Edison, the Ameren Illinois Utilities, and
MidAmerican Energy Company must now offer customers credits
on their electric bills for electricity generated by renewable energy
systems.
Cap: Each utility must provide net metering and dual metering
until the load of its net-metering customers and dual-metering
customers equals 1% of the total peak demand supplied by the
utility during the previous year.
All three utilities have an open enrollment program until May 1,
2008, after which applications will be accepted.
The number of new eligible customers with generators that have
a nameplate rating of 40 kW or less is limited to 200 total new
billing accounts for Ameren Companies, ComEd and MidAmerican
for the period of April 1, 2008, through March 31, 2009. They
will be accepted on a first-come, first-serve basis.
Residential Customers

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For residential customers, net metering is
typically accomplished through use of a single,
bi-directional meter.
If a customer’s current meter cannot
record the electricity generated on site,
they can obtain a dual-channel meter
from their electricity provider, as long as
their system only provides 40 kilowatts
(kW) in capacity and is intended
primarily to offset the customer's own
electrical requirements.
Customers with a larger system are
required to purchase the dual-channel
meter on their own
Non Residential Customers
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For nonresidential customers, net metering
is typically accomplished through the use of
a dual meter.
Dual metering is required for nonresidential
customers with systems greater than 40 kW
but not greater than 2 MW.
The utility must provide the necessary
metering equipment for systems up to 40
kW in capacity.
Customers with systems greater than 40 kW
but less than 2 MW must pay for the costs
of installing necessary metering equipment.
Net metering and dual metering are not
available to systems greater than 2 MW.
IL Customer Compensation

What Compensation Do Customers
using Renewable Fuels to Generate
Electricity Receive?


The Net Metering Rule requires
utilities and alternate retail electric
suppliers to provide financial
credits for renewable fuel-generated
electricity that offset the amounts
that otherwise would have been
supplied by customer’s electricity
provider during a billing period.
Credits in excess of a customer’s
monthly usage will be carried over
to future billing periods.
Earning energy credits
through net metering

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Eligible generators of 40 kW or less: Customers will
receive a one-to-one retail rate credit for their
excess generation.
Eligible generators between 40 kW and 2 MW:
Customers will receive credits equal to the utility’s
avoided cost for their excess generation.
Customers with service under time-of-use rates will
receive net metering credits at time-of-use rates.
Credits will be carried over month to month, with the
annual period running from May to April, or November
to October, at the customer’s discretion.
ComEd Wind and Photovoltaic
Generation Program


The Wind and Photovoltaic Generation Pricing
Program provides financial incentives to participants
who have installed photovoltaic or wind turbine
systems on their premises that are under 40 kW in
capacity.
These include the purchase of any excess electricity
your system may produce, and an annual payment
based partly upon the amount of electricity you
receive from and provide to ComEd during the year.
Net Metering – A Summary




What is net metering and how does it work?
Why is net metering important?
What are the benefits and costs of net metering
for utilities and consumers?
What are the applicable laws regarding net
metering?



Federal
Illinois
How does the IL plan measure up to other
states?
“Best” Net Metering Policies

New Jersey and Colorado are
widely considered to have the best
net-metering policies in the United
States. Both:



Have no limit on enrollment (less than
2MW each);
roll over month to month; and
pay annually for excess generation at
avoided-cost rate (NJ) or incremental
cost (CO).
Also…Model Net Metering Rules

Interstate Renewable Energy Council has developed
model net metering rules.

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2 requirements –
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These have been used in both New Jersey and Colorado.
Rated capacity of generator does not exceed 2MW
Rated capacity of generator does not exceed the
customer’s service entrance capacity.
 Service Entrance Capacity: The rating in amps of the
service entrance equipment.
Pretty similar to IL, no?
Other Methods of Net Metering


Time of use (TOU) net metering employs a specialized
reversible smart meter that is programmed to determine
electricity usage any time during the day and allows
utility rates and charges to be assess based on when the
electricity was used.
Using Market rate net metering systems the user's
energy is priced dynamically according to some function
of wholesale electric prices.
 The users' meters are programmed remotely to
calculate the value and are read remotely.
 Net metering applies such variable pricing to excess
power produced by qualifying systems.
Market Rate in CA


Market rate metering systems were implemented
in California in 2006 and are applicable to
qualifying photovoltaic and wind systems.
Under California law the payback for surplus
electricity sent to the grid must be equal to the
price charged at that time.


It can never be negative, meaning you cannot make
money from selling the electricity back.
If you generate more electricity than you use then
over a period of a month you will be billed a zero
amount. In effect you give away your extra
energy if you do not use it.
Feed-In Tariff

Regional or national electric utilities are obligated to buy
renewable electricity at above market rates set by the
government

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
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Germany and Spain have adopted a price schedule, or Feedin Tariff (FIT); CA too.
The actual electricity being generated is counted on a
separate meter, not just the surplus they feed back to
the grid.
In Germany, for the solar power generated, a feed-in
tariff of more than 3 times the retail rate per kWh for
residential customers is being paid in order to boost
solar power.
Wind energy, in contrast, only receives around a third
of the retail rate because the German system pays
what each source costs.