Comments in opposition to PSC staff recommendation to raise rates in MGE's Energy for Tomorrow program

by | Oct 22, 2009 | Uncategorized

COMMENTS FILED ELECTRONICALLY IN

Application of Madison Gas and Electric Company for Authority to Change Electric and Natural Gas Rates 3270-UR-116

Commentor Information:
Name: Michael Vickerman
Address: 509 Elmside Blvd.
City: Madison State:WI Zip:53704
E-mail: mvickerman@renewwisconsin.org

To the Commission:

I would like to comment on the recommendations from PSC staff (witnesses John Feit and Jerry Albrecht) to increase the premium charged to Green Power Tomorrow subscribers. I approach this issue from a multiple of perspectives: (1) as a professional renewable energy advocate; (2) as a 100% program subscriber (since 1999); and (3) as a proud owner of a 1.7 kW solar electric system that was installed after Madison Gas and Electric launched its Clean Power Partners program in 2008.

All of MGE’s Clean Power Partners, (including me) sell the output from our solar systems to Green Power Tomorrow program subscribers through a 25 cents/kWh buyback rate. Among these customer-producers of clean energy are TDS Custom Construction, Goodman Community Center, City of Madison, Dane County Regional Airport, Madison No Fear Dentistry, and Isthmus Engineering.

The solar buyback rate is supported through voluntary purchases of renewable electricity. When the Clean Power Partners program was announced, MGE envisioned a 300 kilowatt ceiling on solar energy purchases through the special tariff. All Clean Power Partners must subscribe to Green Power Tomorrow. At the same time Clean Power Partners was launched, MGE reduced the subscription premium to a penny per kWh. The declining premium sparked a significant upsurge in subscribership, which enabled MGE to carve out a larger space for solar electric production supported by the program. The ceiling on the Clean Power Partners program is now one megawatt.

I mention Clean Power Partners to highlight the link between subscription volume and solar electric production. The larger the volume of electricity flowing through Green Power Tomorrow, the greater the amount of solar generation that the program can support. The reverse, however, is also true.

The participation rate of these programs is very sensitive to premium amounts. According to research compiled by the National Renewable Energy Laboratory, the median premium price of voluntary programs nationwide is about a penny per kWh. Programs with higher premiums have a significantly smaller participation rates than Green Power Tomorrow. Forcing MGE to increase its renewable energy premium would trigger a falloff in participation, which in turn would very likely result in higher rates to nonparticipating ratepayers. Moreover, a contraction in subscribership may very well force MGE to curtail its Clean Power Partners program due to insufficient program revenues.

Clearly, the special buyback rates offered by MGE, Wisconsin Power & Light and We Energies have delivered a positive jolt to Wisconsin’s solar electric marketplace. Wisconsin is actually a regional leader in solar electric capacity. No other Midwestern state comes close to where Wisconsin is right now. Given the significant progress made in the last three years, how does it benefit the state to choke off the one enabling policy that makes solar generation a reasonable value proposition to responsible energy users?

Shifting gears somewhat, there is an implicit understanding among program subscribers that they are committing to energy resources whose costs are fixed through long-term contracts. Many of these subscribers are likely to react negatively to a higher premium, because they know that the renewable resources leveraged through Green Power Tomorrow are not going up in price. They are likely to interpret an increased premium as expressing a public policy preference for burning more fossil fuel to take advantage of temporary dips in coal and gas prices. Is that really the message the PSC wishes to convey?

Let’s summarize the consequences of a higher premium:

1) Decline in program participation rate, due to a combination of economic impacts and negative reinforcement.
2) Decline in program revenues, forcing MGE to compensate through higher rates on all customers.
3) Premature seizing up of the solar electric marketplace in the Madison area.

It is highly ironic that the PSC would consider inflicting such a cascading sequence of perverse outcomes to a nationally recognized renewable energy program like Green Power Tomorrow. Just last month, MGE’s renewable energy program received the U.S. Department of Energy’s (DOE) Utility Green Power Program of the Year Award. The award was announced at the Green Power Leadership Awards banquet in Atlanta, Georgia. The honor bestowed to MGE was well-deserved, as evidenced by the letter I wrote in support of its program (see below).

Let’s not wreck a good thing. Please refrain from forcing MGE to raise its premium on current and future renewable energy subscribers. Thank you.

Michael Vickerman
RENEW Wisconsin
222 S. Hamilton Street
Madison, WI 53703

Home address:
509 Elmside Blvd.
Madison, WI 53704
+++++++++++++++++

June 5, 2009

Mr. Courtney Welch
Green Power Leadership Awards
Navarro Research & Engineering for
U.S. DOE Golden Field Office
1617 Cole Blvd, MS 1501
Golden, CO 80401

Dear Mr. Welch:

It is with great pleasure that I submit this letter of support on behalf of Green Power Tomorrow, the highly popular renewable energy subscription program offered by Madison Gas & Electric. I offer this letter of support not only in my capacity as a professional renewable energy advocate, but also as a customer purchasing 100% of household electrical use through this program.

By any objective standard, MG&E’s program is a hit with its customers. As reported in NREL’s annual assessment of leading green power programs, Green Power Tomorrow has the second-highest customer participation rate (9.7%) among investor-owned utilities in the United States. The program ranks sixth among all utilities in sales as a percentage of total retail electricity sold (3.8%). Through a judicious blend of wind projects from the region, MG&E was able to lower its premium to one cent/kWh, which set the stage for the upsurge in customer participation in 2008. Many a Madison landmark, from the State Capitol to Monona Terrace Convention Center, is powered in part through Green Power Tomorrow.

Notwithstanding its modest premium, the program also supports customer-owned photovoltaic systems through a special buyback rate fixed at $0.25/kWh for 10 years. Called Clean Power Partners, this initiative has motivated dozens of customers to install PV on the residence or business. Last August, I became a Clean Power Partner, when the electricity from the newly installed 1.7 kW system on our house began flowing into the grid. With this installation we now produce nearly emission-free 2,000 kWh/year on top of the 4,000 kWh/yr of emission-free electricity we buy from MG&E. In the 18 months since Clean Power Partners was launched, customer participation has surpassed MG&E’s initial expectations, prompting the utility to increase the ceiling on this initiative from 300 kW to one megawatt.

More than a renewable energy program, Green Power Tomorrow is a community-based sustainability initiative that supports about 50 MW of windpower that otherwise would not have been part of MGE’s resource portfolio. Instead of settling for small, incremental growth for its program, MGE elected to pursue a more ambitious path that would be appealing and affordable to a broad cross-section of its customer base, and the results are impressive. In my estimation, it is an outstanding candidate for this year’s Utility Green Power Program of the Year.

Sincerely,

Michael Vickerman
RENEW Wisconsin

Testimony in WPS Rate Case, asking for a docket to set uniform buy-back rates across utilities

by | Sep 8, 2008 | Uncategorized

Michael Vickerman submitted the following testimony (a question and answer format) in the WPS rate case (Docket No. 6690-UR-119) on behalf of RENEW Wisconsin:

Q. What is the purpose of your testimony?
A. . . . The purpose of my testimony is to show that differences in utility buyback rates for solar electricity are beginning to skew the Wisconsin marketplace, resulting in a concentration of installation activity in those territories that offer the most attractive rates. This asymmetry is a reason for convening a proceeding to set Advanced Renewable Tariffs for distributed renewable generation sources that are technology-specific and are uniform across service boundaries. . . .

Q. Which utilities offer a special solar electric buyback rate to customers?
A. We Energies (WE) instituted in January 2006 a 22.5 cent/per kWh buyback rate for solar electric installations. The next utility to offer a solar electric buyback rate was Madison Gas & Electric (MGE). Its 25 cent/kWh rate took effect January 2008. Both rates are fixed over a 10-year term. They are available to all residential, commercial and industrial customers of WE and MGE until a certain capacity threshold is reached. WE’s experimental solar tariff was initially capped at 500 kW. In 2007 WE raised the cap to 1 MW. MGE initially set a ceiling of 150 kW for its solar electric buyback rate, but has since raised it to 300 kW.

Wisconsin Power & Light has proposed a 25 cent/kWh rate as part of its pending rate case. If approved by the Public Serviced Commission, it would take effect January 2009.

In addition to its 22.5 cent/kWh solar rate, WE provides a significant up-front incentive to nonprofit customers that seek to install solar electric systems. Unlike the solar rates offered by WE and MGE, which are adjuncts of their voluntary renewable energy purchase programs, WE’s nonprofit incentive program is supported by all of its customers.

Q. Are the higher buyback rates for solar beginning to influence the marketplace?
A. We’re starting to see signs that they are. Focus on Energy keeps track of the flow of solar electric incentive checks by utility territory. From May through July 2008, Focus incentives supported the installation of 253.8 kW of customer-sited solar generating capacity. Of that total 116.2 kW were installed in WE territory, constituting about 46% of the statewide total. Slightly more than 24 kW of solar were installed in MGE territory during the same time. Taken together, about 55% of Focus on Energy-supported solar electric capacity was interconnected to WE’s and MGE’s distribution systems during that period. For comparison purposes, WE and MGE make up less than half of the state’s electricity sales.

I expect the solar buyback rates offered by WE and MGE will attract an even larger share of total installation volume as the year wears on. Bear in mind that MGE’s solar buyback rate has existed for less than nine months, and we are likely to see a surge of installations in the second half of 2009. Focus on Energy’s August results should be available before the technical hearings begin.

Q. During the same three-month period, how many kW of Focus on Energy-supported solar electric capacity were completed and interconnected to WPS?
A. According to Focus on Energy records, 13 kW of solar electric capacity were added to WPS’s system between May 1st and July 31st, 2008. That number is about 5% of the total solar electric capacity supported by Focus on Energy during that time. For comparison purposes, WPS accounts for about 15% of the state’s electricity sales.

Full testimony here.