Utility Intertie Systems: Part 2 Mick Sagrillo c. 1993 Mick Sagrillo Connecting a renewable energy system to the grid entails dealing with that RE arch-enemy: THE UTILITY. However, if you know how to approach your utility, and how to prevent them from taking advantage of you, it can make for an enjoyable, long-lasting relationship. In Part One of this article (Home Power #32), we looked at PURPA (the federal law regulating utilities and co-generators), intertie equipment, utility requirements, avoided costs, and the advantages and disadvantages of utility intertie systems. This time we'll address how to deal with your local utility, metering options and the buy-back rates and options. Your Utility Contact your utility before even considering buying a utility intertie renewable energy system. You may purchase equipment only to find that your utility's interconnect requirements are too stringent for you to meet, or their buy-back rates are ridiculously low. Then you have equipment that won't be used in a grid intertie system, and that you may not be able to use in a stand-alone system which utilizes batteries for storage. Now what?! While I know of people who have connected RE systems to the grid without their utility's permission, I consider this a foolish venture. By law, any utility has the right to disconnect a co- generator who is backfeeding into their grid without meeting their requirements. Some of these people have been ignored by their utility. Some have not. Others have been disconnected from the grid, with no recourse. Anyone who has ever tried to interconnect to the grid can vouch that their utility was the most formidable hurdle to cross in their entire RE experience. Utilities are veritable catacombs of bureaucracy, rivaled only by the IRS. However, like most computer maze games, there is a key player. Your job is to find that person! In all likelihood, there is no one specific person in the utility who deals with permitting wind generators or PV arrays for grid intertie applications. Subsequently, no one wants to make "that crucial decision." In addition, there are lots of "old wives tales" circulating around the utility hallways about linemen being electrocuted by runaway wind generators and other such nonsense. However, you could get lucky. Your utility may have done a wind or PV demonstration project sometime in the past. If that's the case, try to find out who the project director was and start with him/her. Hydro and biomass generators are a different story. Hydro has been used by utilities since their inception, and many utilities still operate their own small hydro plants. Biomass generators are typically associated with big industries, such as paper mills, pulping facilities, saw mills, and wood products manufacturers. Quite often, these large industries will generate a certain amount of their electricity by burning wood, pulp, and paper wastes. Because of possible prior utility experience, permitting should be easier if you co-generate with either of these technologies. Making Contact It may help to call the Public Utility Commission in your state before contacting your utility. The Public Utility Commission is the state regulatory agency charged with overseeing electric, gas, and/or water utilities. Find out who in the agency handles questions concerning RE technologies and co-generation. These people should know the permitting process for the various utilities under their jurisdiction, or at least be able to put you in touch with someone who does. When you finally do contact your local utility, be a name dropper. Mention that you have been in touch with the Public Utility Commission and who you have dealt with there. This lets your utility know that you have done your homework. Try to find out who in your utility will review your plans and who is responsible for making the final decision concerning your interconnection. Deal with that person only. Do not let the utility trap you in a frustrating bureaucratic shuffle. Your utility will likely request block diagrams, electrical schematics, or blueprints of the proposed installation, including a diagram of the site with component placement. Be very prepared! If you can't answer a question, admit it, then go out and get the answer. Do not expect them to do your homework. Your project is not their priority. Utilities are not interested in researching a project they are probably skeptical about in the first place. Let your utility know that you expect to be treated respectfully and expediently. Delaying tactics are their forte. Set a time schedule that you can both live with, then hold them to it. However, keep in mind there is no bigger turn off than having to deal with an arrogant know-it-all. While you may be in the right, they are a lot bigger than you are, with much more legal expertise. Your utility can make your permitting process either very easy or unbelievably difficult. They not only have all the marbles, they've also got the bag, and they know it! Few homeowners have the resources to challenge a utility in court. Your best bet, in the case of irreconcilable differences is to work closely with the Public Utility Commission. Metering Options There are two basic metering options available to the utility. The first is to use just one kiloWatt-meter for your home and RE installation (fig. 1). When you are consuming more electricity than you produce, your kiloWatt meter runs forward, as it normally would. When you are producing more electricity than you are consuming, your meter will be running backwards. By allowing your meter to run backwards, the utility is basically paying you the same for your electricity that you pay for theirs: the retail rate. The utility will just bill you for whatever electricity you use on a monthly basis, plus the meter rental and reading charge. This is called net billing, and is the best buy-back you can hope for. The other metering option that the utility has is to install a second kiloWatt-hour meter. This meter is installed so that it is dedicated to the generating device (fig. 2). In this situation, both meters would be ratcheted; that is, they will move in one direction only and cannot run backwards. Because the utility can now monitor your production separate from your consumption, they are able to differentiate between the two. This is where the problems can arise. The utility may begin by offering to pay you the retail rate for your electricity, then later pay only the wholesale rate for your kiloWatt-hours. Or they may offer to pay only the wholesale rate from the start. Additionally, the utility will bill you for the meter rental as well as reading that second meter on a monthly basis. It is in your best interest to convince the utility that only one meter is necessary. If the utility does install a second meter, be very careful as to the placement of that meter. The correct connection is shown in fig. 2. I have seen utilities wire the second meter as illustrated in fig. 3. It may be a subtle difference, but let's examine the two configurations more closely. In fig. 2, the second meter is on your side of their primary kiloWatt-hour meter. In other words, you are deferring the purchase of their kiloWatt-hours with your own. Even if they pay only the wholesale rate for excess production, you are still reducing the number of retail kiloWatt-hours that you have to purchase. In fig. 3, the second meter is wired on their side of the primary meter. In this case, the utility is purchasing your kiloWatt- hours at a wholesale rate, only to turn around and sell them immediately back to you at the retail rate. At a handsome profit, I might add. A nice business, if you let them get away with it! Buy-Back Rates Once you have jumped through all of the hoops, it's time to negotiate what the utility will pay you for the excess electricity you will be producing. Negotiation of buy-back rates is extremely important for you, the independent power producer. What the utility pays you for your electricity directly affects the economics of the entire installation. Net billing is the most desirable buy-back, because it means that the utility pays you the retail rate for your excess production. Here in Wisconsin, any RE installation of 20 kiloWatts in capacity or less is eligible for net billing. According to Mike Bergey, president of Bergey Windpower Co., there are eight states, besides Wisconsin, that offer net billing. These are include Connecticut, Iowa, Maine, Minnesota, New Hampshire, Rhode Island, Oklahoma, and Texas. In those states, the Public Utilities Commission have mandated net billing for all of the utilities operating within the state. If you don't live in one of these states, don't give up hope of net billing. Individual utilities may allow net billing, even though they are not required to do so by the state Public Utilities Commission. For example, Bergey says that Southern California Edison also offers net billing, but you have to ask for it. At the other extreme, you may be offered only the wholesale price for your excess electricity. Note I said "excess" electricity and not "the electricity you produce." This may seem like I am splitting hairs, but remember who you are dealing with: a rather slick, large corporation who has been granted a monopoly in a given service territory. "Excess" means just that: the kiloWatts you produce over and above that which you consume. Don't let the utility beat you down on this one. You cannot go to a competitor for the same product, as is possible with any other non-utility purchase that you make. The worst case scenario is that they may want to pay you the wholesale price for everything you produce. Why should you pay extra because you are using less of their product? If you replaced a kiloWatt guzzling refrigerator with a high efficiency model, would they charge you more? Of course not! As a matter of fact, they would call this approach to electricity consumption a "demand-side reduction." The argument can be made that there is little difference from the utility's perspective whether you reduce your consumption through energy efficiency or "grow your own." So, if you wind up on a wholesale rate, make sure that the rate only applies to excess kiloWatt-hours. If this is your situation, you will want to size the RE installation very carefully so that you are not over-producing. This is far easier to do with technologies, like hydro or a biomass generator, that have the ability to run at 100% capacity factor, that is at maximum output. Because wind and solar resources are affected by erratic weather patterns over which we have no control, the systems are usually oversized. While there are daily and seasonal resource availability patterns, you have little control over the monthly production of electricity. While all of this may sound trivial, consider the following. Mike Bergey has testified that some utilities charge from 12 to 19 cents per kiloWatt-hour while paying only 1.3 cents per kiloWatt-hour for electricity generated by a wind system. The payback period for those wind systems is 10 to 15 times longer than the payback period when one is offered net billing. If you find yourself in this situation, work closely with your Public Utilities Commission. They may be able to exert some pressure on the utility. Buy-Back Options If your utility balks at paying you for your electricity, get creative. You don't necessarily need money. For example, in my situation, the utility does not send a check each month. They a credit to me for my wind generator's production. This works out great for us because of the seasonal nature of our wind resource. Nine months of the year, the wind blows fairly continuously. However, during the summer months, the air is virtually still. No fuel! Ah, but I have credit built up from the previous fall, winter, and spring. We just use that credit up over the summer. No money changes hands, yet everyone is happy. In fact I actually make out on the deal in two ways. First, if our utility sent a check for nine months, yet got the money back over the summer, I would be making income in the eyes of the IRS. I would have to pay taxes on that income. But the utility is issuing credit in kiloWatt-hours over the winter, then collecting those same kiloWatt-hour credits over the summer. No taxes! Better than money! Second, the cost of electricity is higher in summer than in winter due to higher demand placed on the utility by the air conditioning load. Also, the price of electricity is always increasing due to inflation and higher utility operating and fuel costs. Since I am issued credits, the value of my kiloWatt- hours increases too. Again, better than money! Getting Creative So, at least one rate payer has been able to snooker The Utility. Here's another idea that I would like to try this summer Our usual retail rate is about seven cents per kiloWatt-hour (kWh). However, because of high air conditioning use during the summer, our utility began offering Time Of Use (TOU) rates last year. Billing works like this: if you go on TOU, the utility will charge you more during daylight hours in the summertime than at night for the electricity you consume. From 8 AM to 7 PM, TOU customers pay 12 cents per kWh. The rest of the time, TOU customers are charged only three cents per kWh. The idea behind this scheme is to dissuade customers from using their air conditioners during peak industrial and business hours. It works! Customers on TOU become very conscientious about when they use electricity-guzzlers like air conditioners, water heaters, and dryers. Coincidentally, those hours perfectly match peak solar hours for PV production in Wisconsin. I have a friend, who lives in an all-electric home, who is a TOU customer. We'd like to install a 1 kW PV array, just to see how the utility reacts. I'll keep you posted. In the meantime, do any of you readers out there have any experience with creative utility intertie installations involving hydro or biomass generators? Or wind, or PV, for that matter. Write to Home Power and share your ideas and experience with us. Access Author: Mick Sagrillo sells electricity to his utility at Lake Michigan Wind & Sun, E3971 Bluebird Rd., Forestville, WI 54213 ù 414-837-2267