Rate case holds rates steady, according to utility board
The Block Island Utility District Board of Commissioners had a lot of ground to cover at its meeting on Tuesday, Oct. 22. After welcoming newly elected commissioner Elliot Taubman, the board got down to business.
There were 13 items on the agenda, including the usual treasurer’s and president’s reports, the status of the recently filed rate case, and some new items involving an energy efficiency program and a discussion on the future of net metering.
“Things are moving along really well,” said Treasurer Bill Penn after going through the numbers during his report.
This is despite a decline in revenues and usage from last year. During his report, BIPCo President Jeffery Wright said: “Sales were looking really good until mid-August,” and then there was a two-percent drop. “It’s not the end of the world,” he said. “It shows how dependent we are on weather and tourism.”
Commissioner Mary Jane Balser said that with schools on the mainland starting earlier and earlier, “this happens to us every year.”
Some of the decline could be offset by new construction. “We’ve been really busy doing new services,” said Wright, specifically mentioning the five-house Cherry Hill affordable housing development, underground electric service to the tent at The Sullivan House, which was previously serviced by generator, and a new house being constructed on Calico Hill.
Wright also reported on the status of the rate case that was filed with the R.I. Public Utilities Commission on Sept. 30. The rate case has been set up as Commission docket 4975 on the PUC’s website. While the procedural schedule has not yet been set, Wright said he had already received his first set of questions.
Commissioner Everett Shorey said the new rate structure, which is “three-tiered” as opposed to the present two tiers, would hold the rate revenue “steady.” By tiers, he was referring to the proposed three seasonal rates, which will now include, in addition to a winter rate and a summer rate, an intermediate rate during the shoulder months.
Winter rates will actually go down from where they are now, while rates for July and August will go up. The reason, said Wright, “is to try to discourage usage during the peak times.”
This might be easier said than done. Balser noted that people in summer rental houses don’t care how much power they use, and both Shorey and Taubman offered up stories of spikes in their electric bills due to renters bringing in their own air conditioning units for their stay on the island.
Resident Chris Warfel, who owns a solar installation business, said he “assumed” net metering would be included in the new rate case filing and he wanted to know why it wasn’t.
Chair Barbara MacMullan said that, especially with the Solar Initiative starting, she didn’t want to “mix things up.”
Wright said they “might decide to change the net metering tariff during the process of the rate case” but that it would be separate.
“We didn’t want to delay the rate case,” said MacMullan, “while studying the net metering issue.”
After a relatively brief discussion of a proposed energy efficiency program, which is a part of the rate case, but is still being formulated – it will be the subject of a meeting in November – the commissioners got back to the subject of net metering.
MacMullan said, “We’re at the cap,” meaning the three-percent of peak usage cap on net metering mandated by state law. “We need to change that.” But it’s not just a matter of increasing the cap, something that could be proposed legislatively for, if not the entire state, specifically for the B.I. Utility District and the Pascoag Utility District. “We need to figure out the costs and benefits of that.”
Warfel said he reviewed about two-thirds of the “data” and felt that there were flaws that indicated there was a bit more of that three-percent cap to go around. “What was freed up should be available to new customers.”
“We have a waiting list,” said Wright.
“I had no idea about the waiting list,” said Warfel. “Is the waiting list going to cycle?”
“Like the taxi list?” asked MacMullan. She used the example of calling up the next person on the list and “maybe they’re not ready.”
Wright said that it was only since hitting the cap that a waiting list had been made. Right now, there are only four customers on the list, he said.
With terms like net metering and avoided costs being bandied about, resident Socha Cohen said: “I feel like I’m in a second language class.” She asked that the commissioners at least provide the public with a list of definitions. “I swear, most people don’t know how it works. What you’re doing is highly technical. Take a moment and educate us on the basics.”
“I think it would be helpful to talk about the difference between net metering and avoided cost,” said Taubman.
There are three main components to BIPCo’s electric bills: the flat rate customer charge, the standard offer rate for energy used, and the plant and distribution charge. The latter covers all of the overhead of line maintenance, salaries and overhead costs.
Under net metering, customers producing energy via solar or wind systems are credited for both their energy used and the plant and distribution charge. Under avoided cost, they are only credited the energy charge.
A major criticism of net metering is that customers are not paying “their fair share” for line maintenance and overhead, thus the reason for the three percent cap. Utility companies have to protect themselves from the loss of revenues, and the only way to do that is to increase the distribution charge for other customers.
For BIPCo, according to a handout provided at the meeting, “The current policy degrades the District’s revenues by an estimated $20,000 per one percent in net metering. The current policy is not sustainable without creating a cost shift (rate increase) to everyone to support the program.”
(To put the $20,000 into perspective, at a public hearing held on the island by the PUC a few years ago, one PUC staff member estimated that each $110,000 of expenses for BIPCo translated to one cent per kwh of the utility’s rates.)
“Whatever we do,” said Wright, “Our climate goals have to align with our rate goals.” He said he was in talks, which for now are confidential, whereby BIPCo could possibly secure a power purchase agreement that would include solar in the mix. If that were to happen, he said, BIPCo could “do it cheaper” than people could by installing their own solar systems. “There’s lots of options to achieve the same goal.”
For now, the commissioners and Wright are having their consultants look at the dollar impacts. “It’s a complicated question,” said Shorey.
“For November I’ll have some numbers,” said Wright. “And then we’ll have a starting point.”