Friday, December 6, 2019

Energy Commission denied motion challenging charges on net-metered customers

By on May 2, 2017

SAN JUAN – The Puerto Rico Energy Commission (PREC) denied a motion by two renewable energy companies and the Institute of Competitiveness and Economic Sustainability (ICSE) that challenged certain charges imposed on net-metering customers.

ICSE Coordinator Tomás Torres said that while an appeal of the ruling is being evaluated, the institute supports the PREC as a regulator. “The regulatory framework is needed,” he said. Besides the ICSE, the motion had been filed by Sunnova and Windmar.

Torres made his remarks at a news conference of the Puerto Rico Manufacturers Association (PRMA), which praised the Financial Oversight & Management Board’s decision to order the Puerto Rico Electric Power Authority (Prepa) to make a plan to reach a target rate of 21 cents per kilowatt-hour (kWh) in the cost of energy by 2023.

Entrance to the Puerto Rico Electric Power Authority in San Juan. (Yoel Parrilla/CB)

Entrance to the Puerto Rico Electric Power Authority in San Juan. (Yoel Parrilla/CB)

The renewable energy sector has said the charges to net-metering customers could hinder the industry’s growth at a time when the law calls for Prepa to increase the use of renewables. The ICSE wants, by 2050, to have all of the energy on the island generated by renewables.

A net-metering customer receives energy from two sources. In the case of customers with photovoltaic, or solar systems, during certain periods of time or nighttime, the customer’s energy consumption is supplied by Prepa. In these cases, the customer experiences inflow of energy. During the times when the customer’s distributed generation system is producing energy, said energy is consumed by the customer, and any excess energy not consumed by the customer is exported to Prepa’s system. The energy produced by the customer’s distributed generation system and exported to Prepa’s system is termed outflow.

By self-generating all or a portion of their consumption, a net-metered customer is able to reduce the amount of energy consumed from the grid and receives a credit.

All net-metering customers pay Prepa’s full rate on their net inflow. But so-called grandfathered customers, which got net metering before 2016, are exempt from certain charges as opposed to non-grandfathered customers, who pay a contribution in lieu of taxes (CILT) and costs associated with other subsidies.

The PREC determined to reduce the credit received by non-grandfathered net-metering customers for their outflow by the portion of Prepa’s full rate associated to non-avoidable costs. “That is, non-grandfathered net-metering customers would receive a credit for outflow that is below Prepa’s full rate, which is the rate at which a grandfathered net-metering customer’s outflow is credited. In doing so, non-grandfathered net metering customers pay non-avoidable costs based on their total inflow from Prepa, without offsetting such amount through their outflow,” the motion reads.

The Commission says such charges obey a legislative mandate.

“As stated before, to comply with the statutory mandate of establishing a mechanism for charging non-grandfathered net-metering customers for costs which are ‘common to all,’ the Commission determined that it was just and reasonable and consistent with the Legislative intent, to exclude from the credit for outflow the charges associated with non-avoidable costs costs such as [CILT], public lighting, the energy efficiency charge, the Energy Commission assessment and the life-preserving equipment, LRS Tariff, RH3 Tariff, residential fuel subsidy and RFR Tariff subsidies. The Commission determined that such charges where ‘social commitments’—things that benefit the public as a whole, including net-metering customers,” the commission stated.

Meanwhile, PRMA President Rodrigo Masses denied that the 21-cent cap will interfere with Prepa’s restructuring support agreement, which requires the utility to have enough funds to pay bondholders. The ICSE coordinator said that is why the institute will be monitoring the situation, and assured there are different ways of maintaining the cost of energy at 21 cents, such as by making power plants more efficient.

“We would like to achieve a manufacturing cost for energy that is not higher than 15 cents,” Masses said, adding that competitive costs of energy create economic development.

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