NET METERING in ILLINOIS

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NET METERING in ILLINOIS
Catie HeindelEnergy Law Spring 2008 April 30,
2008
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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?

3
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.

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How does Net Metering work?

• The renewable energy system (ex. solar panel or
  wind turbine) generates direct current (DC), the
  same kind of electricity youget 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.

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How does Net Metering work?

• 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.

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Solar electric systems

• Solar electric systems generally consist of solar
  panels installed on a buildings 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 one-third of a typical households electricity
  use.

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Rooftop Wind Tower

• 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.

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Vehicle-to-Grid Systems
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Alternatives to Net Metering Off the Grid

• 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.

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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.
• 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.

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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?

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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.

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Renewable Energy Use in US
The Role of Renewable Energy Consumption in the
Nations Energy Supply, 2004
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Non-Hydro Renewables make significant gains
billion kilowatthours
356
286
Geothermal
Solar
Wind
169
Biomass
97
MSW and Landfill Gas
Annual Energy Outlook 2008
15
Renewable Portfolio Standards
Renewable Portfolio Standards and State Mandates
by State, 2005
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But, there are safety issues

• 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.

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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.

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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?

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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.

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Incentives?

• 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.

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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.

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Incentives for Residential Customers

• 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.

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Utilities Benefits and Costs

• 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.

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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.
• 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.

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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.
• 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.

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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 utilitys avoided cost is
  the cost the utility would have paid to purchase
  the electricity from another source if the
  customer hadnt provided it.

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How much money can customers really save?

• 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 cant offset.

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Example 1

• 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

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Example 2

• 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

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Is the price right?

• Electricity cannot be stored efficiently. If not
  consumed instantly, it is grounded and lost.
• The utility may be making money, but most home
  systems cant store enough extra electricity to
  utilize it efficiently.
• Yet, some argue that the avoided costs charged
  dont 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.

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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?

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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.

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Net Metering
DSIRE www.dsireusa.org

April 2008
NH 100 MA 60 RI 1,000/1,650 CT 2,000
100
VT 250
100


100
50

40
25/2,000

20

25/100
30

NY 10/25/125/400 PA 50/3,000/5,000 NJ
2,000 DE 25/500/2,000 MD 2,000 DC
100 VA 10/500

25
no limit

500

1,000


2,000
25
40
10


25/2,000
1,000
100
co-ops, munis 10/25
15

20/100


80,000
100
25/300
varies

10/100

50
25/100
FL 2,000
100
(KIUC 50)
Net metering is available in 42 states D.C.
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
(Note Numbers indicate individual system size
limit in kilowatts. Some states limits vary by
customer type and/or technology)
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Net Metering for Wind22 states have net metering
for all rural electric consumers
25
25
15/150
100
100
10/50
40
60
25
20
25/100
25/125
25
30
25
100
500
varies
No Limit
30
10
2,000
40
25
25
2,000
10/500
1,000
200
20/100
100
25/ 100
10
10
Size limits for each statenoted in kW
10/ 100
50
25/ 100
10
50
Revised 6Mar06 Source www.dsireusa.org
None Individual Utilities Investor-Owned
Utilities Only, Not Rural Cooperatives Investor-O
wned Utilities and Rural Cooperatives
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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?

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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)

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Early Net Metering in Illinois

• ComEds Wind Photovoltaic
• Generation Pricing Experiment

• 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.

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Illinois Renewable Portfolio Standard (RPS)

• 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.

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Public Act 095-0481

• In August 2007, Illinois enacted legislation
  creating the Illinois Power Agency.
• 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.

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NEW Net Metering Rule 83 IL Admin Code, Part 465

• Effective April 1, 2008, eligible residential and
  non-residential 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 customers 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.

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Still no rule - IL Commerce Commission Approves
Emergency Rule

• 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.

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Effect of the Net Metering Rule

• 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.

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Residential Customers

• For residential customers, net metering is
  typically accomplished through use of a single,
  bi-directional meter.

• If a customers 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

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Non Residential Customers

• 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.

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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 customers
  electricity provider during a billing period.
• Credits in excess of a customers monthly usage
  will be carried over to future billing periods.

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Earning energy credits through net metering

• 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
  utilitys 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 customers discretion.

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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.

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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?

49
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).

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AlsoModel Net Metering Rules

• Interstate Renewable Energy Council has developed
  model net metering rules.
• These have been used in both New Jersey and
  Colorado.
• 2 requirements
• Rated capacity of generator does not exceed 2MW
• Rated capacity of generator does not exceed the
  customers service entrance capacity.
• Service Entrance Capacity The rating in amps of
  the service entrance equipment.
• Pretty similar to IL, no?

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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.

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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.

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Feed-In Tariff

• Regional or national electric utilities are
  obligated to buy renewable electricity at above
  market rates set by the government
• Germany and Spain have adopted a price schedule,
  or Feed-in 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.