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2008 Report: Net Metering in South Carolina

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2008 Report: Net Metering in South Carolina December 30, 2008 Senator Glenn F. McConnell Representative Robert W. Harrell Jr. President Pro Tempore Speaker of The House South Carolina Senate South Carolina House of Representatives 101 Gressette Bldg. 506 Blatt Bldg. Columbia, 29201 Columbia, 29201 Re: Net Metering Report as set forth by Joint Resolution in Act 404/H3395 of2008 Dear Sirs: Enclosed please find submitted for your review a copy of the Net Metering Report ("Report") in response to Act 404/H3395 enacted May 13, 2008. The Report, jointly prepared by the South Carolina Energy Office and the South Carolina Office of Regulatory Staff, recommends processes and procedures to investor-owned electric utilities and the South Carolina Public Service Authority for establishing net metering programs in South Carolina. In addition, the electric cooperatives and municipal-owned electric utilities were requested to provide recommendations as part of the report. The Report provides information on net metering and interconnection, describes the status of net metering and interconnection for utilities in South Carolina, and offers recommendations for action. The Report also considers net metering requirements of adjacent states, the federal Energy Policy Act and the need to facilitate consistency with green power electricity purchase programs operating in South Carolina. Please know we are available to discuss the Report or to answer any questions you may have. Respectfully submitted, cfl~~t 'rf--=f-~ C. Dukes Scott, Executive Director John Clark, Director South Carolina Office of Regulatory Staff South Carolina Energy Office 1401 Main Street, Suite 900 1201 Main Street, Suite 430 Columbia, SC 29201 Columbia, SC 29201 [email protected] [email protected] 803.737.0805 803.737.8030 Net Metering in South Carolina: Current Status and Recommendations Prepared in response to H. 3395 (2008) A Joint Resolution Requiring Recommendations for Establishing Net Metering Programs in South Carolina I SOUTH CAROLINA I’’ • •• —. r Office of Regulatory Staff South Carolina Energy Office January 1,2009 Table of Contents Tab 1 Executive Summary including Recommendations i 2 Abbreviations and Definitions iv 3 Introduction 1 4 Background and Current Relevant Programs 2 5 Details of Recommendations 26 APPENDICES Appendix A: Joint Resolution H.3395 Appendix B: The Electric Cooperatives of South Carolina Recommendations Appendix C: The South Carolina Association of Municipal Power Systems Recommendations Appendix D: Net Metering Report Advisory Group Appendix E: South Carolina Electric Utilities Covered Under PURPA Appendix F: South Carolina Retail Electric Service Providers Appendix G: Duke Energy Carolinas - Net Metering Billing Examples Appendix H: Progress Energy Carolinas - Net Metering Billing Examples Executive Summary This report has been prepared in response to H.3395 Joint Resolution approved May 13, 2008 (See Appendix A), requiring the South Carolina Office of Regulatory Staff and South Carolina Energy Office to provide a report to the General Assembly recommending processes and procedures for establishing net metering programs at all distribution electric utilities in South Carolina. While not the subject of this report, the electric cooperatives and municipal-owned electric utilities were requested to provide recommendations as part of the report (See Appendices B and C). The report provides background on net metering and interconnection in general, describes the status of net metering and interconnection for utilities in South Carolina, and offers recommendations for action. The staffs of the Office of Regulatory Staff and the Energy Office were assisted by representatives of the utilities, by a group of distributed energy installers, generators, legislators, and community representatives who volunteered considerable time to supply information, review drafts and offer comments. In addition many of these advisors met with representatives of Office of Regulatory Staff and the Energy Office on October 28, 2008 and November 14, 2008. We are very grateful to the individuals listed in Appendix D for their assistance in developing this report. Some proponents of renewable energy have expressed concern that current utility policies for net metering are difficult to interpret, uneven across utilities and discouraging to consumers hoping for some offset for expensive equipment purchases. While net metering in South Carolina is in its infancy, and while the number of affected consumers is small - a total of twelve net metering customers as of August 2008 - there is potential to make adjustments to maximize the use of renewable energy in South Carolina. After careful consideration of current policies and practices in South Carolina and neighboring southeastern states, as well as comments provided by a dedicated group of volunteer advisors, the Office of Regulatory Staff and the Energy Office have developed recommendations that çjy apply to the investor-owned utilities (IOUs) and Santee Cooper’s retail operations. However, the remaining utilities which were required to consider net metering in accordance with EPAct 2005 should use the recommendations as a resource as they continue to develop their net metering programs. The recommendations are intended to enhance existing net metering programs and interconnection standards. See Part II of this report for detailed recommendations. Below is a brief synopsis ofthose recommendations: Recommendations — Net Metering Structure: The intent of the recommendations is to help establish net metering programs that are more “user friendly.” To simplify the net metering process, the first step must be to separate net metering programs from purchase power programs. Currently, these two programs are closely intertwined, leading to much confusion. The diagrams below illustrate the current structure of net metering programs in SC and the structure of net metering programs recommended herein. Current Structure Recommended Structure terin}asePower ha:ePowerD This approach will greatly simplify the process by reducing the multiple options currently offered by the utilities as net metering and by focusing on establishing a “pure” net metering program. A renewable energy generator (REG) will only be allowed to “bank” its excess generation that will then be applied as a credit to a consumer’s monthly bill to offset usage. Recommendations - Net Metering: 1. Standardize net meteringprogram structure across utilities. 2. For residential customers, modify the lOUflat rate option to reflect 1:1 standard retail ratesfor excess energy credits. 3. Acknowledge that recommendation number 2 may create cross-subsidization and impact a utility s’ cost of service, allow utilities to recover these costs, subject to measurement and verfication ofthese costs. 4. Eliminate stand-by chargesfor residential customers. 5. Allow renewable energy generator to retain ownership ofRenewable Energy Credits (RECs). II 6. Require annual reporting to SC Office ofRegulato?y Staffand SC Energy Office of the number of net metering customers by renewable energy generator type, in order to allowfor continuing assessment ofnet meteringprograms. 7. Formally revisit the net metering process within 4 years. Recommendations - Interconnection Standards 1. Standardize interconnection standards across utilities. 2. Adopt FERC 3-Tier Interconnection Standards as revised by North Carolina Utilities Commission. In the interest of safety, SC Interconnection Standards should give utilities the discretion to determine whether to require an external disconnect switch. 3. Require annual reporting to SC Office ofRegulatoiy Staff and SC Energy Office of the number of requests and successful interconnections by renewable energy generator type, in order to allowfor continuing assessment ofSC Interconnection Standards. 4. Formally revisit the SC Interconnection Standards within 4 years. 111 Abbreviations DOE U.S. Department of Energy EPAct Energy Policy Act of 2005 IOU Investor-Owned Utility kW Kilowatt kWh Kilowatt Hour MW Megawatt NCUC North Carolina Utilities Commission NEG Net Excess Generation ORS South Carolina Office of Regulatory Staff PSC Public Service Commission of South Carolina PURPA Public Utility Regulatory Policies Act PV Photovoltaic QF Qualifying Facility (as defined by PURPA) REC Renewable Energy Credit REG Renewable Energy Generator SCE&G South Carolina Electric & Gas Company SEARUC Southeastern Association of Regulatory Utility Commissioners SRR Standard Residential Rate TRA Tennessee Regulatory Authority TVA Tennessee Valley Authority TOU Time-of-Use TOUD Time—of-Use Demand iv Definitions Avoided Cost: The cost a utility would have incurred if it had constructed a generating facility itself to supply power or obtained the power from another source. Bi-directional meter: A meter that runs and records electricity in both directions. Biomass energy/Bioenergy: Bioenergy is renewable energy made from any organic material from plants or animals. Sources of bioenergy are called “biomass,” and include agricultural and forestry residues, municipal solid wastes, industrial wastes, and terrestrial and aquatic crops grown solely for energy purposes. Biomass resources are used to generate electricity and power, and to produce liquid transportation fuels, such as ethanol and biodiesel. Cross-Subsidization: Cross subsidization is where a select customer or group of customers is allowed to pay less than a utility’s cost of providing electric service, which results in the other customers in the same category
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