Utility rates for small RE producers

[Chiron]

I live near the Minnesota/South Dakota border and am planning a 10kW wind turbine. After deciding to site it at my girlfriend's place in SD and finding out the disparity in the rates paid for small generators between the 2 States I started bitching very loudly to the SD PUC.

The rates paid in MN are a bit over 5 times the rates paid by the same utility in SD.

So far I've gotten myself invited to a regional Utility/Legislative and DOE conference and asked to represent the consumer and small wind producer. Politics, I feel so dirty now.....

What I've discovered is that the utilities and the consumers, utilities just pass the costs along, are subsidising wind power in MN. Large commercial turbines/farms get $0.05 per kW/Hr and the small producers (under 40kW installed capacity) get the same rate they pay for electricity, $0.065894 per kW/Hr. Wholesale rates for electricity average about $0.035 per kW/Hr so the utility pays a premium price for RE and the consumer gets soaked for the extra cost.

A 10kW turbine here considering the wind regime and average availabily of the area would produce about $275/month in electricity, both paying my electric bills and paying off the cost (assuming $1000/kW) of the turbine in about 7 1/2 years, longer if interest on the capitol is taken into account, shorter if the offset of the utility payments is taken into account. I have not taken Property tax deferment and "green tags" into account at this point since they would vary a lot depending on the site and the income of the owner(s).

South Dakota has the opposite situation. The electric rate charged by the same utility just a few miles away charges a bit more for electricity, part of this is to offset the cost of RE in MN! They can't pass it along to the MN consumer by State law/policy but they can include it in the cost of production when setting rates in other States they service. Basicaly consumers in one State are subsidising RE development in another State. This is one of my main issues with RE development as it stands.

A small producer in SD is defined as one that has a capacity under 150kW from any source. Including everything from a PTO generator run from a tractor to PV arrays. For the residential/farm/small business consumer the electric rates are about $0.07 kW/Hr.

The utility will pay $0.02 per kW/Hr up to the amount the site consumes and $0.012 per kW/Hr for any "overproduction". The generator has to be on a seperate meter so the net effect is that the small producer pays $0.05 per kW/Hr for thier own electricity and then has to sell any extra production at just over 1/3 of the wholesale rate. Under this rate scheme a 10kW turbine would never pay for itself even if it were built with a 5% loan. (good luck getting that rate from the bank)

For wind/Solar they do not want the generator output "diverted" for your own use, such as heating or lights or it puts you in a different class "grid stand by" which charges a higher rate for electricity used and does not allow feeding ANY electricity back into the grid.

The exception to this is a totaly isolated system, for instance a wind generator being used for supplimental heating, EV charging, or irrigation pumping.

Both States require that the generator/inverter shut down if grid power is lost, UL listing on the grid tie equipment, (nothing mentioned about certifications on the generator itself unless it's directly grid tied). SD utilities can require a very expensive "study" to make sure your not going to overload the local power infrastructure where MN assumes that 40kW can be handled by a standard 200A service.

What I plan on suggesting is a fair policy that would encourage small wind development.

By the utilities own statements about 1/2 of the cost of electricity in rural areas is the cost of the electricity itself. The other half being line/infrastructure maintainance, capitol investments to upgrade and install new equipment/lines, administrative costs, etc...

I'd suggest that the power generated by RE be paid at 1/2 retail rate, or the same they'd have to pay any other supplier for the same energy up to twice the usage for the month. Produce twice what you use and there's a 0 balance on the electric bill.

Any overproduction would be paid at 1/3 of the retail rate and the restrictions on using the power yourself on dedicated systems removed and provisions for high load usage devices like water heaters, air conditioners and home heating on a "home production first" basis. At 2 1/3 cents per kW/Hr electricity is cheaper than propane for heating at current prices and paying 1/3 for AC and hot water would also be a big bonus for the homeowner, not to mention reducing loads on the distribution lines for the utility.

The other part of my proposal is changing the definition of a "small producer" when using RE generation. Currently SD has a set limit (150kW) of what qualifies as a small producer.

What I am suggesting is that the definition of a small producer be changed for electricity generated by RE.

For wind: taking into consideration the wind profile, (percent availability) and average monthly usage over the previous year, or expected usage compared to similar sites for new construction, the maximum size of the wind turbine be set so that on average it would produce 6 to 8 times the monthly average electric usage every month.

For my place that would be an upper limit of 27kW installed capacity, almost 3 times what I was planning anyway and gives room to "grow". Should also rebut objections by power companies about "overloading the lines" with large wind turbines.

If someone can manage to afford that much solar more power to them. Not much for hydro here unless you want to build a really big dam and have a lot of land.

I've got until September to come up with a refined proposal so any feedback is apreciated, just keep it clean

[nanotech]

As a resident of Minnesota myself, this is very interesting to me.

I just got finished with a 12 hour shift, so my brain is kind of fried right now.  I'll re-read your post when my mind is clearer and see if I can add anything befeficial (not likely) later......

[DanB]

INteresting stuff.

Id personally be fine if the utility had to pay at least retail to the small producer.  I feel like utility power in this country is fairly subsidized, and I dont see a problem with prices increasing, and some costs of RE (which is needing a bit of subsidy in my opinion) passed on to consumers.

Surprisingly... Colorado seems to be working in that direction with 'ammendment 37' which passed last Nov.  It demands that utilities achieve certain goals regarding renewable energy by certain times.  In order to achieve these goals - theyll likely have to offer some pretty good incentives to folks which is cool!

Like Gasoline...  were used to 'cheap' power around here.  In the long run though - it's not cheap at all, I expect very few folks see the 'real' cost - some of which is down the road for future generations to deal with.

[ghurd]

Hey, you found someone who knew what the heck you were talking about!

That would not happen here. Ohio.

G-

[Old F]

Have you tryed this one ?

http://www.greenenergyohio.org/page.cfm?pageId=3

Old F

[nothing to lose]

That's great!

Leave it to me to toss a wrench in the monkey works

"I'd suggest that the power generated by RE be paid at 1/2 retail rate, or the same they'd have to pay any other supplier for the same energy up to twice the usage for the month. Produce twice what you use and there's a 0 balance on the electric bill."

 That might be an improvement, but I don't like it. First, nothing should be based on what I use. First use is gonna most often be ME! Why should I have to make twice the power to have a zero bill?

"By the utilities own statements about 1/2 of the cost of electricity in rural areas is the cost of the electricity itself. The other half being line/infrastructure maintainance, capitol investments to upgrade and install new equipment/lines, administrative costs, etc..."

None of that effects me if I am the one producing the power! So if we equal out on anything used, they pay wholesale for what extra they get, then they still come out ahead.

"The utility will pay $0.02 per kW/Hr up to the amount the site consumes and $0.012 per kW/Hr for any "overproduction". The generator has to be on a seperate meter so the net effect is that the small producer pays $0.05 per kW/Hr for thier own electricity and then has to sell any extra production at just over 1/3 of the wholesale rate."

That in itself is nothing but an outright ripoff! Personnally I would not be so stupid as to even bother with the grid under those terms, I would make all I need for myself and dump any extra I made. Use the grid as needed if needed, but the generatores would certainly be offline powering my own circuits not grid connected!!

I would try to find away to suggest that the home producers be paid retail equaL to the amount they use first, and then at least the wholesale costs paid elsewhere above that usage amount. If I could produce 1KW steady and I use 500watts an hour steady, I get ripped off still feeding the excess to the grid at that 1/2 price. They get free power, I get nothing.

 I might as well supply my own and dump the second half and forget the grid!

Producers get first use! Lets say I could feed 1kwhr into the grid with my 110 equipment, but I need to run a well or other 220 device ocasionally. Why should the producer pay extra for that? I would be feeding more power to the grid than being used, they are just converting it to the 220 for me. No extra equiment or problems on their end. Simple example, over speeding an AC 110V (motor or several) will back feed the grid fine, does not power a 220V well though. In such a case the 1/2 price still rips me off since they get more power than I am using. Certainally the motor is just an example of the 110 production, not a sugestion it should be done.

If power is produced locally, it takes a tremendous burden off the grid to pipe in that power! Let's say for example a comunity uses average of 10kw per hour, 3 people are producing 2kw per hour in the comunity, now that's 6kw per hour that the grid is not piping in from 1,000 miles away. We just reduced the grids requirement on not only the wholesale electricity but also the costs of equipment to move it! Now they only pipe in 4KW instead of 10Kw! Getting into fairly large scale of lots of smaller producers in an area is going to save the grid a ton of money!

There is no cost to the grid to supply my home 1kw if I am producing 1 kw, it is just a loop out and back basically. BUT if my equipment is required to shut down when the grid goes down, that puts me at the mercy of the grid to even be able to use my own power! Taking that into acount, and if I were not getting back penny for penny up to the amount I was using, I would not connect to the grid to feed them my excess as the grid then puts ME at risk. Of course it must shutdown for saftey, the point is I loose my own power because the grid fails! At 1/2 price I would not connect unless I was making at least 3 times my own use.

[nothing to lose]

Part 2

"If power is produced locally, it takes a tremendous burden off the grid to pipe in that power! Let's say for example a comunity uses average of 10kw per hour, 3 people are producing 2kw per hour in the comunity, now that's 6kw per hour that the grid is not piping in from 1,000 miles away. We just reduced the grids requirement on not only the wholesale electricity but also the costs of equipment to move it! Now they only pipe in 4KW instead of 10Kw! Getting into fairly large scale of lots of smaller producers in an area is going to save the grid a ton of money!"

More on that point.

If say 50 comunties got on board and were feeding the grid half the power they used, the grid would start seeing a drop in wholesale costs also eventaully!

Figure off the wall, 150kw per hour for 50 commities, ok they supplie about 75kw per hour colectively, now the grid is only buying 75kw from the power station producing it!

Less is produced, because less is bought. Less equipment needed online, less reason for expansion, less costs! Less equipment needed to move less power, less costs. Wholesale prices should drop, retail prices can drop, RE prices drop along with the rest of the prices. Even if prices held the same, RE is better and saves line losses and equipment cost on those 1,000 mile runs.

No matter how it is looked at, if power can be produced locally it saves tons of money, the more power produced the more that is saved. So it's not just what is used or produced by the consumer, it has far reaching effects if enough people could get onboard. How do you get them on board, of course make it worthwhile to them, equal prices for power used/power made, and full wholesale prices that are being paid elsewhere for the same power above that equal mark. Anything less is just a reason to avoid the grid.

And make it easy and cheap to set up a grid feed that will be safe, it is not hard at all depending on what is being used for a power source. Get rid of all the strings and catches and barriers that people will avoid and just say forget that! They are not needed for anything except turning people away. Look at the places that use RE with out all those gimmicks, they don't have major problems or workers dropping like flies.

 Look at all the grid feeds the power companies don't even know about, those aren't killing workers either!! So the gimmicks are not needed!

I'm not up in that area, but I wish you the best of luck with this and hope something good comes of it. What I mention is my thoughts if I was going to be intersted in grid feeding and were in that area or if it were here.

Personally I have no real need to grid feed here, I have to pay $12 just to have a meter in the yard (I have to read it myself, they don't even do that) and my monthly bill runs about $40 average maybe for a high geuss. Including the $12 monthly charge.

 I would never give the grid here 1 watt unless paid equal retail up to what I am using, and actual wholesale above that. But I have reasons to dislike this low quality non-professional, un-qualified grid and engineers here! Bunch of morons!!!

 Many of my neighbors feel the same way also!! So it's not just me that think they are morons.

[nothing to lose]

Hey thanks for posting that link, I think I found something of interest to me also following another link from that page

[ghurd]

To me it sounds like a trade show.

Some of their information is deceptive.

For example, BS 'Tax Incentives'.

Spoke with 'the guy' you need to for the "tax incentives" a while ago.

First, the PV MUST be 'replacing' another form of energy supplied by certain genertion meathods.

New installations on a new building or for a new purpose DO NOT count. Nothing is being 'replaced'.

Second, the big tax incentive is no sales tax. Oh joy.

To get that part, you have to have all kinds of state engineers do studies and write papers and conclusions, that have to be studied by other engineers, and everybody has to approve it.  

The PV owner gas to pay all these enginneers.

Then, every year all the forms must be filled out, again, in the proper fashion, and approved again.

And the PV must be being used for the original application without changes.

Any failures result in owing back sales tax.

From the horses mouth, "This is really only any good for multi-million dollar installations."

There is no 'blanket exempyion', even though 80% of what I do is replacing Honda and car alternators with PVs.  Gas is on the list OK to be replaced.  It still needs all the engineers and fees and... to show it is actually replacing gas.

And do it year after year.

Then it can save the customer $40 in sales tax?

And last, but my favorite, lets say multi-million is only $2,000,001.

And lets say the installation cost $20 PER WATT.

That is over the 100kW that all of this BS rederic applies to anyway!!!

The only real incentive I can find, and I do not think it counts for much, is RE can not be counted for increasing property tax.  Oh joy again.

Then there is the actual person you must deal with.

He is going to say "Y'all ain't hookin' that mess up to MY wires!'

But it must read well in the newspapers. "Local politician pushes RE forward"

G-

[Gary D]

Chiron, you could point out that your proposed generator system could HELP the grid during peak times. High power demand peaks occur multiple times dailey where utilities charge premium prices. If you only put in a backup battery bank charged off of grid power, during peak demand times you'd be adding to the problem!

 However, explain that you could charge it(battery backup) during non peak times with a load control (generously supplied as for hot water heaters by many utilities) with no stress on the grid. This system would of course be primarily be used during blackouts ;-).

Also putting it into perspective, any excess would be used by the nearest houses ie: 2 hotwater heaters, electric clothes dryers, ovens etc. A Ten peak kw genny doesn't go far on grid tied homes....

Just a few thoughts... may not help, sure you can come up with other plusses, but it may get the state puc. to rethink their payback schedule and requirements.....(doubtfull) David vs. Golliath comes to mind.. Gary D.

[ghurd]

There was a guy in Homepower 3 or 4 years ago.

Fought to get paid for his RE at the rate for the time it was produced.

Found a loophole where 2 laws overlapped.

PV means daytime sell back at high prices,

and buyback at low prices.

He got a EV. Charging means night time at low prices.

He made money selling in the high $ daytime.

Saved money charging the car at low $ night.

And the state of california paid part to put the PVs in,

So he could get a check and not a bill!

Plus no gasoline.

My last one was sounding negative. This one is sure not.

G-

[Chiron]

For everyone who's replied thanks for your comments, I've had a car die and started a new job so things have been crazy here.

Keep in mind that I'm trying to corrupt, I mean, change the system from within.

For Nothingtoloose, let me play Devil's, I mean Utility company's advocate.

 That might be an improvement, but I don't like it. First, nothing should be based on what I use. First use is gonna most often be ME! Why should I have to make twice the power to have a zero bill?

1. : Who's going to pay for the power poles, lines, substations, transformers and everything else that either delivers electricity to you or carries the electricity you use away? You want to use our grid for "storage" your quite free to buy a large battery bank, inverters and other hardware and disconnect from us and the costs.
   
2. : Why should we pay you more than we pay any other power producer. In fact because of the tiny amount of power you produce compared to the large commercial producers and the billing/accounting costs are the same, it costs us more for your electricity per unit than it does thier's.
   
3. : If we paid you the same rate we charged you the cost of the infrastructure to YOUR home/farm and having to pay twice the wholesale rate for the electricity you produce there is only one thing we can do, pass those costs along to your neibors who don't have any production capacity.
   
   

 Producers get first use! Lets say I could feed 1kwhr into the grid with my 110 equipment, but I need to run a well or other 220 device ocasionally. Why should the producer pay extra for that? I would be feeding more power to the grid than being used, they are just converting it to the 220 for me. No extra equiment or problems on their end. Simple example, over speeding an AC 110V (motor or several) will back feed the grid fine, does not power a 220V well though. In such a case the 1/2 price still rips me off since they get more power than I am using. Certainally the motor is just an example of the 110 production, not a sugestion it should be done.

1. : Again this goes back to the means of delivering electricity to your site. Many arguments have been put forward about "saving stress on the grid" what about times when you need to pump water when the wind isn't blowing? Does that save anything as far as being able to supply you with high use power on demand? Remember that the grid is not a "battery" the power you produce must be used somewhere and when you place a short term high demand on it, it has to be generated somewhere.
   
2. : Keep in mind that this part of the country (where the regioanl conference will be)  summer temps often go over 100F with 90+% humidity and during those times the wind is usualy calm so there's no usable wind power. Even if you can forgo air conditioning and just use fans you'll still need grid power to run them.
   
   

Keep in mind that I am trying to find a fair solution for both the small RE producer and the utility company. Net metering would give incentives for small RE but raises costs to the utility and that cost gets passed along to thier other customers. The payments in SD are too low right now and are unfair to small and large producers alike. If RE is going to become mainstream it has to be able to "compete" on it's own .

I don't like what I'm finding out about electricity pricing from a small producer's standpoint but I do have to deal with the facts and not wishful thinking or wanting my neibors to pay for it.