Utah businesses are increasingly turning to renewable energy to power their operations, but if you’re a big energy user that wants to get most or all of your power from clean energy, you likely don’t have enough space at your facility for the solar, wind or geothermal needed. The solution is to allow businesses to purchase renewable energy from off-site projects. Just think about how much pollution we prevent if massive energy users, like data centers, are powered by clean 100% renewable energy! This is a game changer, and at long last it looks like these types of projects are finally able to move forward thanks to a recent clean energy victory. Here's the story:
Utah Clean Energy has been plugging away through a variety of legislative and utility avenues to make it possible for businesses to get their power from off-site renewable energy. We cleared a big hurdle when we helped pass legislation allowing renewable energy developers to sell electricity directly to large energy users and deliver it using Rocky Mountain Power’s transmission and distribution systems. Unfortunately, no businesses were able to overcome the complexity (and resulting expense) of Rocky Mountain Power’s rate structure for these types of contracts.
Utah Clean Energy and other stakeholders worked for months to iron out these issues through a utility proceeding before the Utah Public Service Commission. Our testimony in this docket made the case for fair, simple, and reasonable costs for renewable energy purchases. In a huge clean energy win, the Utah Public Service Commission's final ruling addressed all of the concerns raised in our and other parties' testimony - making renewable energy contracts more cost-effective for large energy users, and renewable energy developers. Long story short - more renewable energy choices in Utah. In fact, we anticipate large energy users will be able to leverage this win to get 100% of their electricity from clean, renewable energy.
The result is a new tariff, Schedule 34, which allows large energy customers to pay a surcharge to purchase off-site renewable energy through a contract with the utility. The customer purchasing energy must have an annual electric peak load of at least 5 MW (although the customer may aggregate multiple meters to reach this minimum load), and may purchase enough renewable energy to equal their projected annual load. Any energy output that exceeds the customer’s actual annual usage will be compensated at avoided cost pricing.
The price for energy purchased through this tariff is defined in in Utah Code Annotated § 54-17-806. Briefly, here’s how it works:
The customer pays monthly administrative fee of $110 per generation source, $150 for the first delivery point, and $50 for each additional delivery point.
Rep. Jeremy Peterson has introduced legislation, HB 23, to phase out the solar portion of Utah’s Renewable Energy Tax Credit for homeowners. The tax credit helps Utah families and businesses install solar, geothermal and wind energy systems, helping homeowners and businesses become more energy self-reliant, while creating new jobs, and cutting pollution.
Representative Peterson’s bill specifically targets solar energy systems installed on residential buildings (single family homes, apartments, and condos). Utah Clean Energy opposed the initial version of HB 23, which proposed a rapid phase out of the tax credit by creating a declining annual cap on the funding available for the credit. However, Utah Clean Energy, the solar industry, and others reached a compromise with legislators that provides for a more gradual phase out of the tax credit. Moreover, the bill clarifies that the phase out applies only to residential PV systems, not solar thermal or passive solar systems.
Currently, the solar tax credit pays up to $2,000 or 25% (whichever is less) of the cost to install a solar energy system on a home. This compromise struck on HB 23 would phase down the amount of the tax credit as follows:
HB 23 also:
Utah’s solar tax credit has helped the solar market grow, resulting in a significant increase in the number of homes using the tax credit to help install solar. The state estimates that there will be $20 million in tax credits issued in 2016. The credit has come under scrutiny from lawmakers as solar PV has grown in Utah because of its potential impact on the state’s Education Fund.
However, the tax credit has been a major source of economic gain for Utah in recent years. The results of an economic analysis conducted by Utah Clean Energy show that for an incentive of $20 million in 2016, Utah will leverage a total economic impact of $313 million. In other words, the economic benefits of the current tax credit are 15 times the amount the state invests!
It’s clear that Utah’s current solar tax credit creates significant economic development benefits for Utah that far outweigh the costs to the state.
The solar tax credit has been good for Utah, and we want to see it continue to spur long-term growth for Utah’s solar market. We must consider the best path forward to ensure business-friendly market stability for the solar industry, and we should seize opportunities to bolster the resiliency benefits of solar energy by encouraging investment in storage technologies. We will keep you posted as this issue unfolds during the 2017 Legislative Session!
Utah Clean Energy helped establish the Utah state renewable energy tax credit over 10 years ago, and we have successfully supported its continuation and expansion over the years. It’s a proven and effective tool to increase the affordability of rooftop solar for Utah families and businesses, contributing to significant growth in the amount of rooftop solar installed every year since 2002. Thanks to this tax credit, Utah’s economy continues to benefit from our growing solar industry, which now directly employs over 4,000 workers throughout the state.
The debate over rooftop solar in Utah rages on. Because Rocky Mountain Power is a monopoly, it has to request permission from the Utah Public Service Commission (or PSC) if it wants to change its prices (aka electricity rates). Utah Clean Energy wants your electricity rates to reflect good policy—that is, we want to see price signals (for all you economics geeks out there) that encourage smart energy behaviors, like energy efficiency, electric plug-in vehicles, and rooftop solar.
Since the close of the 2016 Legislative Session, and with it, the passage of SB 115 (“STEP”), we’ve received many questions from installers, businesses, and homeowners about the status of solar in Utah – the net metering program in particular. We hope this will help.
First and foremost, solar is alive and well in Utah. Rocky Mountain Power’s enormous STEP bill passed, but without the damaging net metering provisions that would have allowed the utility to impose a net metering fee outside of a normal rate case. What this means is that we were able to maintain the status quo for solar in Utah. The Utility may, and likely will, propose a fee for net metering customers in the near future, but that fee will have to be evaluated by the Utah Public Service Commission thoroughly and in a comprehensive manner in a general rate case. Utah Clean Energy will work with all of you to ensure that any changes to net metering are fair for rooftop solar.
Utility Solar Incentive
While STEP does not impact Utah’s net metering program, it does end Rocky Mountain Power’s Utah Solar Incentive Program a year early in order to pay for utility investments in electric vehicle charging infrastructure, battery storage pilot projects, and “clean coal” technology (among other things). This does not affect State or Federal tax incentives for rooftop solar installations, but the Rocky Mountain Power lottery will no longer be available after the end of this year.
Utah State Tax Incentive for Solar
Finally, Representative Jeremy Peterson introduced a bill to phase out Utah’s State tax incentive for solar installations. After discussing it with industry representatives, he agreed to hold the bill for additional study over the summer. We look forward to working with you to make sure Representative Peterson understands the tremendous benefits this tax credit provides to the State.
To sum up:
|•||Utah’s net metering program did not change as a result of the 2016 legislative session.|
|•||Rocky Mountain Power’s proposed net metering fees will be evaluated in the utility’s next general rate case.|
|•||Rocky Mountain Power’s Utah Solar Incentive Program will end this year.|
|•||Federal and State tax incentives are still available for solar installations.|
|•||The Utah State tax incentive will be evaluated over the Legislative Interim Session (May-November).|
A huge thanks to all of the members of the Clean Energy Business Coalition who got involved during the 2016 Legislative Session in support of clean energy. Please stay tuned for opportunities to get involved during the Interim session and in the regulatory arena.
Municipal utilites differ from Rocky Mountain Power in that they are not required to offer net metering and do not need to seek Commission approval to make changes to their net metering programs. Several municipal utilities in Utah are making changes (or considering changes) to their net metering programs. When considering rooftop solar, consult your municipal utility for information about their net metering policies. For more information about municipal net metering programs email Utah Clean Energy's Solar Program Coordinator Kate Bowman.
The analysis of Rocky Mountain Power's net metering program began with a series of working groups to delve into the challenges, solutions and opportunities that come with integrating rooftop solar into our energy system. It’s technical, it’s complex, and oh so important for the future of solar energy in Utah! We had four working group meetings to discuss issues related to net metering. For the energy nerds reading this, here is an update on the more technical aspects of the working groups.
First Working Group - Who Can Talk Utility Distribution for 7 Hours?
We can! The first working group kicked off by focusing on challenges and opportunities related to solar and the utility’s distribution system (how electricity gets from the transmission system to your house). Essentially, we discussed how rooftop solar is different from other sources of power, how the utility gets power from source to customer, and what impacts increased rooftop solar will have on this process. For our contribution, Utah Clean Energy brought in two technical experts to give presentations on lessons learned by areas like Hawaii and California, who are seizing their rooftop solar potential while successfully managing its impacts on utility transmission and distribution. Our expert from Clean Power Research showed how rooftop solar can actually help a utility avoid transmission and distribution costs as it provides energy on-site. It may not sound like a page-turner to you, but it was a thought-provoking presentation that outlined a win-win pathway for increased solar in Utah.
Second Working Group (May 12)
The topics of the second workgroup were (1) cost-benefit analyses and (2) how NEM is evaluated and valued through existing utility planning analyses, including IRP and Cost of Service studies. Dr. Thomas Vitolo with Synapse provided an overview of cost and benefit categories that can be considered in a net metering cost-benefit analysis. Jason Keyes with IREC outlined the key differences between a cost-benefit analysis and a cost of service study and highlighted best practices for both. A cost of service study is designed to determine the cost of providing electricity service to a particular class of customers to help determine prices for each type of customer based on how they use energy. A cost-benefit analysis takes a broader look at the costs and benefits of net metering, including benefits like avoiding delivery line losses, providing grid support, and avoiding or deferring transmission and distribution investments.
Third Working Group (June 25)
This working group focused on existing cost tests, which are used to evaluate energy efficiency programs and whether (and how) these tests could be used to evaluate net metering. The DSM (or "Demand Side Management"—a fancy way of saying energy efficiency) tests tell us whether a given energy efficiency initiative - like incentives for more efficient lightbulbs - is a good deal from the perspective of the utility and its customers. These tests can tell us whether a program is a good investment, but when the time comes to recover the costs from customers, regulators must do so by establishing prices in a process called “ratemaking.” More of an art than a science, ratemaking requires utilities and regulators to balance many different, sometimes competing goals (for example, providing low-cost, reliable service; mitigating long-term risk; and ensuring access to electricity to low-income Utahns).
Fourth Working Group (July 8)
You may not scrutinize your electricity bill, but if you did you would discover that there are many different components to it: energy charges, customer charges, minimum bills, seasonal and time of use pricing, and for commercial customers, a demand charge or a facilities charge. Simple, right? When electricity bills are structured well, they incent good behaviors (like conservation) and discourage electricity usage that is wasteful or costly. When the cost-benefit analysis is completed, the findings of the analysis will need to be converted into electricity prices (“rates”). A good electricity rate will provide adequate compensation for solar energy, protect low-income customers, reward smart energy choices, and also be simple and understandable to the average human. There are many ways to design rates for net metering customers, and it's important that we get it right.
The team here couldn’t be more excited, inspired and revved-up by a recent announcement from Salt Lake City Mayor Jackie Biskupski and City Council on a Joint Resolution to transition the community to 100 percent renewable electricity sources by 2032 and an 80 percent reduction in carbon emissions by 2040. What a great day to live in Salt Lake City!
“This is the most ambitious step ever taken by Salt Lake City to address the threat of climate change,” said Mayor Biskupski. “This commitment places the City among leading communities worldwide that acknowledge our responsibility to rapidly reduce emissions and forge a new path forward that protects our economies, societies and overall human well-being.”
This goal is the latest in a long line of Salt Lake Cities’ ambitious energy efficiency and clean energy efforts. Salt Lake City had previously committed to 100 percent renewable electricity sources for its government operations, along with major carbon reductions for City operations. And, through Salt Lake City’s Project Skyline initiative, the City is working with building owners, utility partners, and others to make the largest buildings across the city more energy efficient.
This resolution expands the scope of these efforts to include all electricity and emissions on a community-wide scale. “I commend Mayor Biskupski and the City Council for leading the way in seizing Utah’s clean energy and economic potential,” said Utah Clean Energy Executive Director, Sarah Wright. “We have everything to gain through this Resolution – from new jobs, economic growth, better air and a stable climate; this is a win-win for the residents and businesses of Salt Lake City as well as the rest of Utah.”
The Joint Resolution cites the scientific consensus that climate change is occurring and being driven by the burning of fossil fuels. The Resolution also acknowledged local impacts such as changes in water systems and extreme weather events that are affecting Salt Lake City now and will be exacerbated in the future.
“We can tackle this challenge and deliver clean energy solutions that will simultaneously improve air quality, protect public health and deliver local jobs. Leading on climate change today is an obligation we all share with each other and to future generations,” stated Mayor Biskupski.
More details on this commitment by Salt Lake City-- which is being called “Climate Positive SLC”-- including a complete copy of the Joint Resolution, are available here: www.slcgreen.com/climatepositive
The State of Utah has joined the ranks of only seven other states to incorporate the “Energy Rating Index” into the energy conservation code for new homes. This is one of the successful outcomes from Utah Clean Energy’s work during 2016 Legislative Session. The new Energy Rating Index method, which becomes part of Utah’s residential energy code on July 1, 2016, utilizes the HERS Index, as a method for builders to show compliance with the updated energy code. The ERI is important because it helps homebuyers compare the energy costs of new homes on the market today! Think of it like comparing the miles-per-gallon rating when shopping for a new car.
What this means for Utah is that Utah homebuilders can use the Energy Rating Index as a tool to show that they have complied with new building energy code. They can get the rating by having a certified Home Energy Rater assess the energy efficiency of a home, assigning it a relative energy performance score. The lower the number, the more energy efficient the home.
According to the U.S. Department of Energy:
Builders that want to comply with the new energy code via the ERI method must achieve a score between 65 and 69, depending on where in Utah the home is built. Get a deep dive into the scoring here.
On February 9, 2016, a 5-4 majority of the Supreme Court unexpectedly issued a "stay" blocking the Clean Power Plan. The Supreme Court’s order for Stay provides no explanation for this decision.
When EPA formally published the Clean Power Plan in October 2015, 27 states, several coal companies and numerous business groups filed suit in the D.C. Circuit Court of Appeals asking to stay the rule. In late January the D.C. Circuit Court of Appeals denied the stay motions. The parties then went on to the Supreme Court and in a surprise ruling late on February 9 the Court ruled in the favor of granting the stay.
The stay on the Clean Power Plan will remain in place until the D.C. Circuit resolves the merits and makes a decision. The decision from the D.C. Circuit is expected to come as early as late summer or early fall. The losing side will then have the opportunity to appeal and seek review by the Supreme Court.
As a result of the Stay the Utah Division of Air Quality has suspended their stakeholder process that began in January to help the state develop a compliance plan until a decision is made on the future of the Clean Power Plan.
For additional information from the EPA Click Here
The energy decisions made today will have lasting consequences to Utah’s air, economy, health and environment. In fact, over the next 20 years, over $200 billion will be invested on energy resources in the West. Will Utah invest in non-polluting clean energies, or will we sink that money back into resources that pollute our air and water and deplete our natural resources? These decisions are made in a regulatory docket called Integrated Resource Planning (IRP), and will impact all Utahns long into the future.
The IRP is an ongoing, ever evolving document that serves as a roadmap for a Utility to decide what combination of energy resources, and how much of each (energy efficiency, coal, renewables, natural gas etc.) it will utilize to meet its customers energy needs. On April 4, 2017, PacifiCorp released their current plan. The release of this 2017 IRP is the culmination of months of working groups and analysis where Utah Clean Energy worked to accelerate the cost-effective transition to more energy efficiency and renewable energy into Utah’s energy mix.
The good news is that this IRP appears to show that RMP is starting to transition away from coal and planning on more renewables. There are, however, issues with PacifiCorp’s planning methods, which we need to dig into. Looking ahead, we have some work to do to figure out if PacifiCorp’s plan is good for a clean energy future and fair to ratepayers over the long term. In other words, it needs a closer look.
This IRP also looks to energy efficiency to meet 89% of the utility’s energy growth going forward, which is positive. However, given that the rate of electricity demand is slowing down in Utah, this actually means the utility plans to pursue less energy efficiency. In fact, the IRP proposes a 32% cut in the amount of electricity savings that Rocky Mountain Power achieves in 2018 and a 27% cut over the next 20 years. We need to make sure the utility is taking advantage of all cost-effective energy efficiency possible, and not ease up just because demand for electricity is decreasing.
The final preferred portfolio of resources includes 1100 MW of wind (over the 428 included in the draft preferred portfolio previewed to stakeholders a month ago). This increase is likely due to the late addition of a new transmission line into the mix. This last-minute change to the results looks promising for wind, but transmission lines are expensive and controversial; we will need to look at how PacifiCorp came to the conclusions it did to ensure they are forward-looking and risk-conscious.
Below are details on the IRP and background:
For 2017 IRP Presentations click here: http://www.pacificorp.com/es/irp/pip.html
For 2017 IRP Support Studies click here: http://www.pacificorp.com/es/irp/irpsupport.html
For 2017 DSM Potential Study click here: http://www.pacificorp.com/es/dsm.html
For UCE comments on 2017 IRP click here: http://www.pacificorp.com/es/irp/irpcomments.html
The 2017 IRP picks up every two years. Take a look back at where things left off from the last finalized IRP: