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Monday, September 8, 2008

Testimony in WPS Rate Case, asking for a docket to set uniform buy-back rates across utilities

Michael Vickerman submitted the following testimony (a question and answer format) in the WPS rate case (Docket No. 6690-UR-119) on behalf of RENEW Wisconsin:

Q. What is the purpose of your testimony?
A. . . . The purpose of my testimony is to show that differences in utility buyback rates for solar electricity are beginning to skew the Wisconsin marketplace, resulting in a concentration of installation activity in those territories that offer the most attractive rates. This asymmetry is a reason for convening a proceeding to set Advanced Renewable Tariffs for distributed renewable generation sources that are technology-specific and are uniform across service boundaries. . . .

Q. Which utilities offer a special solar electric buyback rate to customers?
A. We Energies (WE) instituted in January 2006 a 22.5 cent/per kWh buyback rate for solar electric installations. The next utility to offer a solar electric buyback rate was Madison Gas & Electric (MGE). Its 25 cent/kWh rate took effect January 2008. Both rates are fixed over a 10-year term. They are available to all residential, commercial and industrial customers of WE and MGE until a certain capacity threshold is reached. WE’s experimental solar tariff was initially capped at 500 kW. In 2007 WE raised the cap to 1 MW. MGE initially set a ceiling of 150 kW for its solar electric buyback rate, but has since raised it to 300 kW.

Wisconsin Power & Light has proposed a 25 cent/kWh rate as part of its pending rate case. If approved by the Public Serviced Commission, it would take effect January 2009.

In addition to its 22.5 cent/kWh solar rate, WE provides a significant up-front incentive to nonprofit customers that seek to install solar electric systems. Unlike the solar rates offered by WE and MGE, which are adjuncts of their voluntary renewable energy purchase programs, WE’s nonprofit incentive program is supported by all of its customers.

Q. Are the higher buyback rates for solar beginning to influence the marketplace?
A. We’re starting to see signs that they are. Focus on Energy keeps track of the flow of solar electric incentive checks by utility territory. From May through July 2008, Focus incentives supported the installation of 253.8 kW of customer-sited solar generating capacity. Of that total 116.2 kW were installed in WE territory, constituting about 46% of the statewide total. Slightly more than 24 kW of solar were installed in MGE territory during the same time. Taken together, about 55% of Focus on Energy-supported solar electric capacity was interconnected to WE’s and MGE’s distribution systems during that period. For comparison purposes, WE and MGE make up less than half of the state’s electricity sales.

I expect the solar buyback rates offered by WE and MGE will attract an even larger share of total installation volume as the year wears on. Bear in mind that MGE’s solar buyback rate has existed for less than nine months, and we are likely to see a surge of installations in the second half of 2009. Focus on Energy’s August results should be available before the technical hearings begin.

Q. During the same three-month period, how many kW of Focus on Energy-supported solar electric capacity were completed and interconnected to WPS?
A. According to Focus on Energy records, 13 kW of solar electric capacity were added to WPS’s system between May 1st and July 31st, 2008. That number is about 5% of the total solar electric capacity supported by Focus on Energy during that time. For comparison purposes, WPS accounts for about 15% of the state’s electricity sales.
Full testimony here.

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