Hundreds opposed changes to rooftop solar credits in Idaho. It was just approved anyway

Changes have arrived to rooftop solar in Idaho, whether its proponents like it or not.

Idaho Power, on the heels of gaining approval to raise its base electricity rates, got the green light from the Idaho Public Utilities Commission to overhaul its method of compensating households with rooftop solar panels for the excess energy they generate and send back to the grid.

The policy, called net metering, allowed customers to receive credits on their utility bills equivalent to retail electricity rates when they produced more energy than they needed. For every kilowatt hour of solar energy sent to the grid, the customer received a kilowatt-hour credit, helping offset the initial costs of installing a solar system and making it a more viable investment.

But the latest ruling, effective Monday, lowers that rate, known as the export credit rate, and replaces what is known as net monthly billing for real-time net billing, which Idaho Power says would better measure customers’ reliance on the grid.

Residential and small general-service on-site generation systems installed before Dec. 20, 2019, are grandfathered in and not affected by the changes. The legacy status was also granted to commercial, industrial and irrigation systems as of Dec. 1, 2020.

That means Idaho Power customers who were already generating solar energy by those dates will get to keep the higher rates for about 25 years, which is the standard lifespan of a solar power system.

While the adjustments most commonly apply to rooftop solar, they affect other methods of on-site energy generation like windmills, geothermal and small hydro projects, a spokesperson for the company previously told the Idaho Statesman.

The move comes despite some objections from homeowners with rooftop solar, environmental groups and businesses that sell and install solar equipment.

According to a final order posted Friday by the commission, the agency received 846 public comments on the case, with 49% opposing any change to the compensation structure and 46% opposing a switch from net monthly billing to real-time net billing, a core tenet of the application Idaho Power first filed in May.

“The commissioners are saying the voices and expertise of thousands of Idahoans and small businesses are not as important as the voice of the state’s largest monopoly utility,” said Alex McKinley, co-owner of Empowered Solar in Boise, in a Tuesday news release from the Sierra Club, a nationwide environmental organization.

McKinley, who has a master’s degree in renewable energy, previously told the Statesman that the changes to net metering could discourage customers from investing in solar, making them more reliant on other forms of energy.

The new, lower payment amounts

Retail rates for homeowners were previously between 8 cents to 10 cents per kilowatt hour, depending on the amount of energy used.

In the filing, Idaho Power looked to shift energy valuation to on-peak and off-peak times, with varying rates for each, but for an average annual rate of nearly 6 cents. It also proposed updating the rates each year.

On-peak would cover the summer months, from June 15 through Sept. 15, on Monday through Saturday from 3 to 11 p.m., excluding holidays, at a rate of 20.42 cents. The eight-hour window is when Idaho Power says it experiences its highest demand.

All other hours are defined as off-peak, at a rate of 4.91 cents.

The commission eventually approved an average annual rate of 6.2 cents instead, Idaho Power spokesperson Jordan Rodriguez told the Statesman, with on-peak times adjusted to June 1 through Sept. 30 at a rate of 17 cents and off-peak at a rate of 4.8 cents.

If the company’s proposal was approved as filed, the monthly bill for the average residential customer with rooftop solar would go up by about $12, he previously said. But because the rates the commission approved had been modified since the application, that amount has changed slightly. Rodriguez couldn’t immediately answer by how much the change would now cost the typical homeowner with rooftop solar.

The overall reduction in compensation stems from the rising popularity of solar systems. Idaho Power argued that previous pricing overcompensated customers with solar at the expense of those without. About 12,000 customers, or 2% of the company’s roughly 600,000 customer base, participate in on-site generation.

“We’re trying to achieve a fair and accurate valuation of customers’ exported energy,” Rodriguez previously said by phone.

Coming to that determination has been years in the making.

Brad Heusinkveld, an energy policy associate with the Idaho Conservation League, told the Statesman that the uncertainty around net metering rates has slowed investments from some of the biggest solar customers.

One change approved in the order stands to benefit those customers. The order raises an eligibility cap that prevented customers in the commercial, industrial or irrigation category from installing a solar array of more than 100 kilowatts. Now, those customers can generate up to 100% of their demand.

“ ... Think commercial generators, rooftop for big-box stores and big irrigators. What they want is certainty,” Heusinkveld said by phone. “They need to be sure that their investment will pay off.”

The league had filed a petition early to intervene in the case, indicating that it had a stake in the outcome. Micron, the city of Boise, the Idaho Irrigation Pumpers Association, Vote Solar, IdaHydro and Clean Energy Opportunities for Idaho also filed to intervene.

Better return for panels facing west

The restructuring to on-peak and off-peak times is slated to favor west-facing panels over south-facing panels, according to Lisa Young, director of the Idaho Chapter of the Sierra Club. That’s because the proposed export credit rate is more than two times higher during the summer in the later part of the day, as the sun sets in the west.

“It’s very clear now that the west side is going to be the best side to install,” Young previously told the Statesman by phone. “If your system is facing west, you’re going to be able to capture more and export more power during that time of day and get more money for it.”

What’s unclear is how many customers will be able to take full advantage of the on-peak rates.

The solar energy generated on hot summer nights may be more useful to those producing it, as people make dinner and run their air conditioning and farmers water their crops.

Young said Tuesday that she worries the lower rates and added complexity to the compensation structure will discourage Idahoans from investing in clean energy. She’s also concerned that the order gave Idaho Power a path to adjust the rates on an annual basis. She noted that, in prior cases, the company had valued customer-generated solar power as low as nearly 2 cents per kilowatt-hour.

“They have their sights set on a much lower rate,” Young said by phone.

The changes approved by the commission were based on a study it had asked Idaho Power to produce on the value of distributed energy resources such as rooftop solar power.

Various environmental organizations and solar companies argued upon its release that it undervalued customer-generated solar and sought to protect the company’s interests in owning and profiting from the renewable energy source. So they commissioned their own report, seeking to provide an independent analysis of Idaho Power’s study.

It was produced by Crossborder Energy, a Berkeley, California, consulting company for the energy industry. The report concluded that excess power from on-site generation was worth significantly more than Idaho Power had valued it at.

But the commission’s final order concluded that until state or federal legislation mandates a quantifiable environmental cost or addition to the company’s rates, it “did not believe it was appropriate to include any associated environmental benefits” in calculating the export credit rate.

Young hopes that may change in the future.

“We’re pretty disappointed with the outcome,” she said. “The commission essentially approved what Idaho Power had proposed, but with a few minor tweaks.”

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