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Idaho Power gets approval to shrink payments to customers who generate their own power

Medium-zoom shot of solar panels installed on a metal roof.
Toby Talbot
AP Images

On the heels of the first general rate increase in over a decade, Idaho Power is also slicing how much it pays its roughly two percent of customers who generate their own power, primarily through solar.

The Idaho Public Utilities Commission approved both proposals in the final days of 2023, to take effect Jan. 1, 2024. The utility said what it was paying for energy users sent back to the grid was based on more than 20-year old policies and needed to be updated.

The Sierra Club was a vocal opponent of the proposed change, noting no comments in favor of the change were delivered during public hearings. The PUC’s final report shows just over half the more than 700 public comments received came from self-identified on-site power generating customers. Nearly half the total comments indicated a desire to keep the compensation structure the same. Not every comment received specifically referenced the proposed change in compensation.

“It's going to disincentivize people adopting rooftop solar, which obviously reduces the amount of green energy on the grid,” the environmental advocacy group spokesman Noah Rott told Boise State Public Radio.

He said that outcome runs against federal, state and Idaho Power’s own goals of increasing renewable energy use.

The change in rates will include residential customers who began on-site power generation after Dec. 20, 2019, and industrial on-site generating accounts after Dec. 1, 2020. Customers generating before those dates - about 5,600 "legacy" users according to the utility - are grandfathered into the old compensation structure.

Idaho Power said it has about 11,900 ‘non-legacy’ on-site generating customers. The majority of on-site generating customers are residential but those totals include commercial and irrigation accounts.

The PUC approved the utility to introduce on-peak and off-peak rates for power generation, instead of a blanket rate for however much energy a customer might return to the grid each month. The average compensation of the newly approved rates is 6.2 cents per kilowatt hour; about one-third of the previous rate.

Summer afternoon and evening on-peak rates are 3.5 times as high as off-peak rates, but there are fewer hours when those rates would apply. Many are when on-site generating users are sending less power back to the grid because they need the extra juice at their own residence.

Previous rates were still tied in many ways to the early days of rooftop solar, and paying a market or near-market rate for power coming back to the grid didn’t reflect the difference in operating costs between smaller individual users and Idaho Power, the utility said.

Oregon’s Public Utilities Commission rejected a similar proposal from Idaho Power on Dec. 18.

Going forward In Idaho, compensation rates will be reviewed each spring. Factors include operational savings from the energy users send back to the grid, and the amount of energy production a utility needs to be able to reserve for times when "variable energy resources" like solar or wind can’t meet demand.

Prices determined by the PUC for Idaho Power also relied on a 2020 “Variable Energy Resource” study which agency staff recommended be updated as soon as possible. Public Utilities Commission spokesman Adam Rush said that work would be completed later this year and could factor into future compensation rate adjustments.

Idaho Power didn’t get exactly the changes it asked for - the PUC determined rates should be slightly higher than the original request, and the decision protected credits customers might have with the utility. Limits on user-generated watts were also left out of the PUC’s final order - for now.

“Idaho Power is supportive of customer-generation and views the outcome in this case as taking a step towards modernizing an outdated compensation structure for on-site generation that will ensure prices for excess energy are fair and equitable for all customers,” spokesman Jordan Rodriguez wrote by email.

But the approval despite a general lack of community support stings for the Sierra Club’s Rott. He said the decision, and the PUC’s other recent approval of increased base rates and standard service fees (the fixed monthly charge will double from $5 to $10 this year and increase to $15 in 2025) will hurt low and middle-income customers the most.

“Hopefully in the future we can kind of convince regulators and Idaho Power to reverse course and do the right thing and help promote these different climate solutions that are really popular and affordable for people,” he said.

Troy Oppie is a reporter and local host of 'All Things Considered' for Boise State Public Radio News.

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