"Feed-in tarrif changes planned for Oregon solar industry"
By Lee van der Voo
Sustainable Business Oregon
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Two changes are planned in Oregon’s pilot solar incentive program — the feed-in tariff — as the Oregon Public Utility Commission continues to tinker with the formula to balance the needs of utility customers with those of a fledgling renewable energy industry.
The changes include:
- A decrease in the rates paid to owners of new solar systems for the solar power they generate, and
- The conversion of the program’s first-come, first-serve enrollment strategy into a lottery.
Both changes indicate efforts by the PUC to gather more information about consumer demand for distributed solar systems and to mitigate the pilot's impacts on utility rates.
The changes are being relatively well received by the industry.
"As far as residential and small commercial goes, we support doing a lottery as opposed to first-come, first-serve, because by doing a lottery we'll be able to get a sense of the demand for the feed-in tariff, which is really important," said Claire Carlson, executive director of the nonprofit Solar Oregon.
Until now, the pilot has shown only that demand for solar systems exists, without gauging how much demand there is.
Kirk Cameron also expressed support for the lottery, but because the current system rewards solar installers who can afford to hire staff just to jockey computers at application time, trying to get in before the limited available tariffs are spoken for.
He said also understands the need to decrease the rate paid to solar-system owners.
"I think it's a program that needed correction because it came out way to rich. They're just doing what they needed to do, which is give the ratepayers as much bang for their buck," he said.
Cameron installs systems for commercial clients and hopes the feed-in tariff, or FIT, can find its price point and ultimately be turned over to utilities to manage. He says its much easier to explain to clients, as opposed to the alternate array of Business Energy Tax Credits, Energy Trust incentives and federal grants.
"For a business customer, it's really easy to understand," Cameron said.
The PUC has run the feed-in-tariff program since it was approved by the legislature in July 2009. The pilot began in 2010 and continues through 2014 with eight enrollment periods. Intended to spur solar development by fostering payments for solar power from participating utilities, the program has yet to pinpoint rates that will promote steady development of distributed solar rather than an onslaught of applications.
The program’s first enrollment window in July 2010, when rates were set between 55 and 65 cents per kilowatt-hour for small- and medium-sized systems, proved so popular its capacity was subscribed in just 15 minutes.
And efforts to revise the rates downward have yet to slow traffic. Rates were reduced by 10 percent in October 2010, again filling up in under an hour. In March, rates were revised downward by another 20 percent, landing between 39.6 and 46.8 cents per kWh for the enrollment period that opened in April, with similar results.
"What that's a sign of is that we could lower the rate, still incentivize solar development in Oregon and lower the rate impacts," said Maury Galbraith, manager of the electric rates and planning section at Oregon’s Public Utility Commission.
The impact of the feed-in-tariff program on overall power rates at participating utilities — Portland General Electric, Pacific Power and Idaho Power — is at issue. Peak annual rate impacts reportedly ranged from .45 and 1.33 percent of customer-required revenue at three participating utilities, according to a biannual report by the PUC to the legislature in January. Those impacts are substantially higher than the .25 percent cap set by the legislature when creating the program.
Dave Sullivan, a retired professor from the College of Business at Oregon State University, has repeatedlyadvocated PUC scrap the program, saying it violates the commission’s fiduciary duty to ratepayers.
A report by PUC staff suggested revisions in March, urging the commission shrink capacity in the program in April and lower rates 30 percent, noting bid-awarded rates for large solar installations — installations larger than 100 KW — were landing between 35 and 39 cents per kWh. The report's authors also noted state tax credits and incentives from Energy Trust of Oregon appeared to provide the same return on investment as a rate of about 32 cents per kWh.
The PUC declined to revise rates further, or to reduce the program capacity in Pacific Power or PGE’s service territory, however, heeding remarks from industry supporters that such drastic changes just two weeks prior to the program's next enrollment window would severely disrupt it. The PUC did, however, postpone a final enrollment window for customers of Idaho Power to October and ruled that projects larger than 50 KW would be subject to bid-awarded rates. The rule takes effect in the October enrollment period and shifts half of set-rate projects in a medium-sized category, defined as larger than 10 KW but smaller than 100 KW, to a process normally reserved for large projects.
Another 10 percent reduction is likely to take effect in October, along with new rules for a lottery on applications.
Those interested can track the status of the new rules on the PUC website using the docket number UM1505.