KIUC proposes hybrid renewable rate scheme

The Kauai Island Utility Cooperative is proposing a new system to expand the production of electricity by small renewable operations like rooftop solar or small wind generators.

It has the potential to provide a roadmap toward a distributed power generation future for Kaua'i.

(Image: a vertical axis Wind Lotus wind generator. Credit: Leviathan Energy. )

The utility is calling it net energy meeting, although it's not. It appears to be a hybrid rate system. It values excess energy from small power producers less than does traditional net energy metering, but more than what it would cost the utility to produce its own power.

And it aims to support larger renewable energy systems than does net energy metering, which, according to KIUC's own documents, is “intended primarily to offset part or all of the customer’s own electrical requirements.”

In traditional net energy metering, the excess power you produce is valued the same as the power you purchase. If you have photovoltaic panels, the power you produce in the sunshine offsets the power you consume at night, kilowatt for kilowatt. The meter runs backwards when you're producing excess power.

The problem with the system is that it doesn't compensate the utility for its non-generation costs—paying for distribution systems, making repairs, answering phones, sending out bills, etc. That means that other power users in the community are subsidizing you. It's not a sustainable system. If everyone were net metering, the utility would be bankrupt.

The Hawai'i Public Utilities Commission (PUC) limited net energy metering to 1 percent of KIUC's peak power demand, and the utility met that limit last year. Thus no new net energy metering hookups are now being approved.

At KIUC, they have another system called Schedule Q. Here, you buy electricity at the going rate—currently in the neighborhood of $.35 a kilowatt-hour—and you sell power at about $.10. You could call this a wholesale price for power. Or, with Schedule Q, you can simply size your system to meet a portion of your electrical load, so you just avoid buying power when your system is able to produce power. The meter never runs backwards. You just pay for all KIUC power you use.

The new system, which KIUC is confusingly calling a Net Energy Metering (NEM) Pilot Program, is, it says, designed to “analyze the potential benefits of customer generation.” It is similar to the Schedule Q, as best we can determine, although it doubles the rate for excess power to $.20 per kilowatt hour.

Here is how the utility describes it: “KIUC‟s NEM pilot program will allow renewable customer generators to supply their own power needs and be paid $0.20/kWh for power they export to the utility. When they do not have sufficient power to supply their own needs, they will pay regular tariff rates for the power they receive from the utility.”

It still requires PUC approval, and it has certain limitations. The program capacity is limited to no more than 3 megawatts of total capacity. Two-thirds of that, or 2 megawatts of capacity, is set aside for pretty big systems, sized 50 kilowatts to 200 kilowatts. Another sixth, or half a megawatt, is for systems from 10 to 50 kilowatts. And the remaining half a megawatt is for home-sized systems of 10 kilowatts or less.

KIUC customers who are already operating under Schedule Q can upgrade to the new system.

The new system already has the support of them state Consumer Advocate, the Hawai‘i Renewable Energy Association, and the Hawai‘i Solar Energy Association.

On the other islands, the PUC has approved a feed-in tariff, which has not yet been required of KIUC (although it may be at some point). A feed-in tariff generally applies to stand-alone renewable power generation facilities—like a windfarm, or an industrial-scale solar power plant—and it pays a premium for the renewable power to encourage people to build them.

Feed-in tariffs are negotiated on a case-by-case basis, and guarantee renewable power generators a profit, just as the PUC guarantees utilities a rate structure that provides a profit.

KIUC's new system, then, it not quite net energy metering, since your meter never runs backwards, and it's not quite a feed-in tariff, since it allows consumers to offset their own real-time power use while selling power at a higher rate than the wholesale price.

Our editorial comment: It needs a new name.

© Jan TenBruggencate 2009