Rooftop solar panels signal a new interest in power generation -- one that can trim and even significantly reduce the electric bill for a residence or business.
But the laws dealing with how a homeowner’s surplus electrical power is “sold” back to the utility could be changing as the Legislature is in session. NorthWestern Energy, which serves Helena and about two-thirds of Montana, has nearly all of the state’s net-metering customers.
Rather than see changes made before the session ends in April, NorthWestern Energy is supporting Senate Joint Resolution 12 that requests an interim study of net-metering costs and benefits.
Several bills in this legislative session have failed to win support. A Nov. 10, 2014 guest column in the Bozeman Daily Chronicle by Rep. Art Wittich, R-Bozeman, and Sen. Mike Phillips, D-Bozeman, argued that business owners and residents should have more opportunity to produce their own energy and get credit for it from their utility company.
The size of these electrical systems is limited and while large enough for a home, aren’t necessarily sufficient for larger businesses, they wrote.
They also took issue with how credits are applied to meters and said a farmer with multiple meters can’t apply the credit that might be received to other meters on the same property.
They also sought to expand who could benefit through allowing credits to flow back into multiple energy meters.
Net metering, said Dale Horton, the energy program manager at the National Center for Appropriate Technology in Butte, isn’t new and essentially allows surplus electricity that’s produced by consumers to be passed back through the meter to the utility provider.
In return for this electrical production, the consumer receives a utility credit for it.
In Montana, state law allows consumers to “bank” their power production credit for a year, a NorthWestern Energy spokesman said.
To get into the residential solar power production business, a homeowner should expect to pay between $6,000 and $7,000 for a one-kilowatt system, Horton said.
However, most homes will be on systems producing between two and four kilowatts, he said and added that a new, moderately sized home could require between six and eight kilowatts -- which might well exceed the home’s available rooftop space.
Net metering hasn’t been a well thought-out system, Horton said.
“It was a simple solution early on that would allow folks, homeowners primarily, to generate their own electricity,” he explained.
Net metering gets more controversial as the scale of residential power production increases, he said and noted now consideration is being made for a broader discussion.
The Senate joint resolution calls for an interim committee to assess the benefits and costs of net-metering systems to public utilities and rural electric cooperatives while also examining the costs and benefits to customers who do not use net-metering systems. Study results are to be reported to the next Legislature.
Ed Gulick, a Billings architect and chairman of the Northern Plains Resource Council's clean energy task force, is, like NorthWestern Energy, looking forward to the possibility of an interim study.
"We do think there needs to be some sort of study," he said and explained it should be helpful for getting some clarity.
Of concern for him is that it's a fair process where the voices of electrical suppliers and distributors and NorthWestern Energy are heard.
In a customer’s electric bill for NorthWestern Energy are the costs for the power and the cost to transmit that power to the customer. There’s also a slight service charge.
An illustrative monthly bill places the supply cost of electricity, including its fixed costs and expenses, at nearly $50 while the delivery cost is almost $26. The service charge is almost $5.
A part of that bill is also the Universal Systems Benefit charge, which is mandated by state law, that helps provide low-income energy assistance, energy assistance programs, such as home audits, and grants for renewable energy projects.
A $40,000 renewable energy grant through NorthWestern Energy helped Capital High School recently install solar panels.
NorthWestern Energy supports customers installing electrical generation equipment, said John Hines, vice president of supply for NorthWestern Energy.
However, the company and Gulick said they want rules that are appropriate and fair.
But in crafting new regulation, Hines said there are unaddressed issues that NorthWestern Energy sees.
Net metering sounds like a simple concept, yet there are nuances and caveats to it, Hines said.
Systems need to be correctly installed, otherwise there is strong potential for linemen to be injured when working even though NorthWestern Energy has de-energized a line, Hines said.
NorthWestern Energy also doesn’t believe its other customers should contribute to the cost-savings that a net-metering customer may realize, he added.
Other states, Gulick said, have examined net metering and found aggregate benefits. While he said there are costs to a utility from net metering, it also offers benefits.
NorthWestern Energy is currently required to buy the net metering-generated power whether the electricity is needed or not, Hines said.
He places typical peak hours for electrical demand between 6-8 a.m. and in the evening from 4-8.
An illustration of the evening peak demand in January shows there is almost no solar production in late afternoon and none after that through the night during the evening peak demand hours.
Wind-produced electricity and that from solar panels are intermittent in their ability to generate electricity, Hines said.
But net metering can help offset the costs to a utility on late afternoons during hot summer weather, Gulick said.
Because NorthWestern Energy is required to provide electricity, it must have generation available to compensate when the wind stops blowing or clouds cover the sun. Construction of a facility to handle this need is a cost for the company and its customers.
Another issue Hines sees to be resolved is that households with electrical power generation capacity are connected to NorthWestern Energy’s wires and utility poles.
A net-metering customer with a zero cost for electricity pays only the service charge on a monthly bill and nothing toward the cost of wires and poles that are used to ship surplus electricity back to NorthWestern Energy, Hines said.
This cost also need to be addressed, he said and explained that if a net-metering customer isn’t paying this, other utility customers must pay it.
“We need to make sure the actual cost we pay those customers recognizes the value to the system,” Hines said of what is credited to net-metering customers.
The rate that NorthWestern pays shouldn’t be artificially high and should reflect the electricity’s true value, a company spokesman said and explained that electricity delivered during low-demand times is far less valuable than electricity required to serve customers during periods of high demand.
If there needs to be a change in what net-metering customers are paid for their surplus electricity, Gulick said, "We want to make sure that the benefits as well as the costs are appropriate, examined and everyone is getting a fair shake in this."
NorthWestern Energy has about 355,000 electrical customers in Montana, of which about 1,300 are net-metering customers, Hines said.
Of the total net-metering customers, about 1,200 have rooftop solar units.
Renewable energy, that produced by wind and the company’s dams, amounts to move than half of the electricity in NorthWestern Energy’s Montana portfolio, he added.
“That’s something we’re pretty proud of right now.”
But now NorthWestern Energy is looking to be more selective in how it best meets the needs of customers and addresses cost effectiveness and rate stability, he said.
A utility pays more for net metering electricity than it pays for power it generates or would purchase for its customers, Horton said.
The possibility of an interim legislative study offers what Hines sees as a “global fix” before more people invest in and install solar generation facilities.
An interim study could also address Gulick's belief that people would like to not have decisions made in distant corporate boardrooms about the power that they use.
“So long as you are relying on the grid, you have a responsibility to pay your fair share,” Hines said.