Oregon PUC Adopts Final Rules for Pilot FIT (a.k.a Super Net Metering)

On May 28, 2010, the Oregon Public Utilities Commission issued a final, much awaited rule for an Oregon pilot solar Volumetric Incentive Rate (VIR).  While the legislature intended this to work like a Feed-in Tariff, it actually ended up looking more like a form of super net metering.

The Commission accepted the Staff’s recommendation that they frame the pilot transactions as “net metering” for projects of 100 kW or less. Under this approach, consumers who installed PV systems would be credited for electricity generated up to the amount of electricity consumed at the premises. The monthly credit could be set equal to the VIR established by the Commission. In essence, the consumer would receive a state-mandated subsidy for every kWh the consumer generates to off-set load. Staff acknowledged the risk that consumers will consume more energy to increase the size of the VIR subsidy. A participant that generates energy in excess of the load may either donate that excess energy to charity, or sell it to the utility at market-based rates.  Other parties in the discussion considered the net metering approach, “cumbersome, loaded with perverse incentives, and unnecessary.”

The Commission also accepted the staff proposal for systems between 100-500 kW establishing a competitive bidding program. Under this mechanism, the transactions between the consumers and the electric companies would be within the FERC’s jurisdiction. Consumers would obtain market-based rate authority from the FERC and sell power to the utilities at a VIR determined by the bidding.

Several parties proposed a variety of mechanisms that rely, at least in part, on the Commission’s authority under the Public Utility Regulatory Policy Act (PURPA). These proposals varied from the net metering approach and generally view the VIR as consisting of two parts: (1) an avoided cost component; and (2) an additional component based on a designated attribute or incentive associated with the electricity produced by the SPV system. The electric companies would also be required to purchase Renewable Energy Credits (RECs) associated with the electricity at VIRs established by the Commission. ELAW and OREP support this mechanism because it resembles a traditional feed-in-tariff.  These proposals did not get accepted.  Instead, the PUC established the following region and system-specific table of rates:

Rate Class Counties Electric Companies Small-Scale Systems (10kW) Medium-Scale Systems (>10kW and 100kW)
1 Benton, Clackamas, Clatsop, Columbia, Lane, Lincoln, Linn, Marion, Multnomah, Polk, Tillamook, Washington, and Yamhill Pacific Power and PGE 0.65/kWh 0.55/kWh
2 Coos, Douglas, and Hood River Pacific Power and PGE 0.60/kWh 0.55/kWh
3 Gilliam, Jackson, Josephine, Klamath, Morrow, Sherman, Umatilla, Wallowa, and Wasco Pacific Power 0.60/kWh 0.55/kWh
4 Baker, Crook, Deschutes, Jefferson, Lake, Malheur, and Harney Pacific Power and Idaho Power 0.55/kWh 0.55/kWh

Because these rates apply to systems participating in the pilot programs under the net metering option, the VIRs shown above are not the rates that the consumers will actually be paid for generation. The VIR under a net-metering arrangement is the applicable VIR minus the consumer’s retail rate in effect at the time the generation is netted.

The Commission also accepted staff’s proposal for the competitive bidding program specifications in that 1) Electric companies should develop and file for Commission approval a draft RFP for large-scale systems;  2) Bid scoring and evaluation are based primarily on price without adjustment for non-price factors; 3) Bidding should be capped at the VIR for small commercial systems; 4) Bids are selected from lowest VIR to highest, until the capacity target is achieved; and 5)No single developer, financer, retail electric consumer may exceed its capacity limit under the pilot program.

Capacity is divided up so that 6.25 MW are available each year for 4 years (total program cap of 25 MW).  Of the 25 MW, 12 MW is for residential systems, 8 MW is for small commercial, and 5 MW is for larger commercial. Affected utilities (Portland General Electric Company, PacifiCorp and Idaho Power) are required to have these programs in effect by July 1, 2010. 

Background: Oregon HB 3039 (2009) required the commission adopt rules for essentially a pilot Feed-in Tariff. The bill stipulated that the cumulative nameplate capacity of the qualifying systems enrolled in the program may not exceed 25 megawatts (MW). The pilot program closes at the earlier of either 25 MW having been permanently installed, or on March 31, 2015. The goal of the pilot is that 75 percent of the capacity should be allocated to “residential qualifying systems and small commercial qualifying systems.” The legislature defined a residential system as one with a nameplate capacity of 10 kilowatts (kW) or less, and a small commercial system as one with a nameplate capacity greater than 10 kW and less than or equal to 100 kW. Qualifying systems are capped at 500 kW.

Source: Oregon PUC Final Rules for Docket UM 1452




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