Idaho utility authority lowers solar reimbursement rates, pauses annual adjustments
The Idaho Public Utilities Commission, which sets utility rate changes in the state, issued a ruling Thursday that will see solar generators in the state who are customers of Idaho Power compensated at lower rates with further adjustments not to be made until 2028.
The order from the Idaho Public Utilities Commission (IPUC) comes after Idaho Power submitted a proposal on April 1 to adjust the Export Credit Rates (ECRs) for power generators and on an annual basis moving forward. These credits are then provided to both residential and business solar users who generate excess energy that is then transmitted back to the power grid and resold by Idaho Power to its other customers.
Idaho Power had proposed a change that would have seen compensation decrease by an average of 60%, prompting an hours-long public hearing at the IPUC office in Garden City and a deluge of written feedback submitted to the IPUC from customers, business owners and even the city of Boise expressing concern about the utility company’s proposal and the impact it would have on the local solar industry.
Prior to this week’s ruling, however, the IPUC had already approved a request from Idaho Power to change its compensation structure from “net metering” to “net billing” as well as designate certain time frames for ECR credit rates in accordance with the hours of the day and the months of the year when electricity is most in demand, as was previously reported by the Idaho Press.
Solar owners who installed their panels prior to December 2019 were not subject to this change, maintaining the prior, legacy arrangement that compensated them for their excess energy at the same rate that Idaho Power sold it back to its other users. Those who did not meet this cutoff point (estimated to be over 14,000 households) were subject to a decrease when the net billing system was implemented, and, through the first proposed annual adjustment that came in April, were subject to another sizable decrease.
Effective Oct. 1, the IPUC moved to decrease the net billing compensation rate 31%, about half of what Idaho Power had originally proposed, and delayed a subsequent rate update until 2028.
In an emailed statement from a company spokesperson, Idaho Power said the following on the decision:
“Idaho Power accepts the IPUC’s decision and will implement the new export credit rate (ECR) as directed. The company followed the IPUC’s prescribed process for updating the ECR, and we understand the commission’s reasoning for mitigating the ECR to limit customer bill impacts. Idaho Power continues to support clean energy and fair prices for all customers.”
A strong opponent of the proposed changes, a release from the Sierra Club indicated a degree of amenability to the changes, at least relative to what had originally been proposed.
{p class=”p5”}“Even though we’re opposed to these solar rate changes, we appreciate the adjustments the PUC made to Idaho Power’s original proposal to help reduce the impact on customer power bills,” Lisa Young, Director of the Idaho Chapter of the Sierra Club, said in a Sierra Club release. “Energy affordability is an increasingly important issue in Idaho, and the PUC has a key role to play in ensuring that our monopoly utilities don’t unfairly raise our bills. We will continue pushing the PUC to listen to Idaho ratepayers and prioritize fair rates moving forward.”
{p class=”p5”}OUTSTANDING DIFFERENCES
{p class=”p4”}Idaho’s Sierra Club chapter has consistently maintained that the recommendations from Idaho Power’s IPUC-commissioned Value of Distributed Energy Resources (VODER) study needed to be redone through an independent arbiter. The study is central to ECR determinations and provides the framework for determining how to fairly compensate individuals and businesses who generate their own power and sell it back to the power grid. The conclusions made in Idaho Power’s study were already approved by the IPUC, however, and the utility company moved in October 2023 to establish a compensation plan according to the season and time of day that excess electricity is generated, shifting away from the previous flat rate compensation.
As noted in the IPUC final order documents on the matter, the Sierra Club continued to question the methodology employed by Idaho Power in their credit determinations. To ensure greater stability in pricing as opposed to annual, double-digit percentage changes, they recommended ECR rates be based around avoided energy costs, or the energy Idaho Power doesn’t have to generate due to solar user contributions to the grid, based upon a 36-month average from January 2022 through December 2024.
{p class=”p4”}Idaho Power contended that while many who commented on the proposed change disagreed with the methodology behind the ECRs, it was “not appropriate for parties to now challenge the approved methods for calculating the ECR components or to seek to deviate from the annual update process that had previously been approved by the IPUC.” The utility company also said that industry conditions had not sufficiently changed to make the ECR methodology, which was approved 18 months prior, in need of reevaluation.
Pointing to past precedent established by the IPUC on the role of ECRs, Idaho Power cited the commission’s establishing the purpose of credit rates “is not to ensure that customers who have installed self-generation facilities are able to recoup their investment or earn a return on investment, it is to ensure that customers are paid fair, just, and reasonable rates for their exports and non-self generating customers are not subsidizing the rates for self-generating customers.”
Idaho Power previously told the Idaho Press that the prior legacy rates — in which solar generators were compensated for excess energy at the same rate their power was sold to other customers — resulted in 98% of Idaho Power customers subsidizing the 2% of the company’s customers with on-site power generation.
The originally proposed 60% average reduction in ECR would be more in line with the price Idaho Power pays for wholesale energy on the open market when energy demands exceed what Idaho Power can produce. This decrease, the utility company had said, was the result of a sizable decrease in wholesale energy prices in 2022, when the previous values were calculated, compared to 2024 prices reflected in the proposed ECR.
COMMISSION DECISION
In its decision, the commission firstly established guiding principles in the matter, reiterating Idaho Power’s invocation of the purpose of establishing credit rates and then asserting, based on past precedent, that “rate schedules, including net-metering program fundamentals, are subject to change” and in turn bring “no guaranteed return on investment.”
The commission acknowledged that Idaho Power’s application to update ECRs complied with past commission directives, but presented a potential for dramatic power bill increase for certain customers — in some cases resulting in a monthly bill increase of up to 100% when accounting for the proposed ECR change and Idaho Power’s recent general rate increase for all power users.
The commission also ruled that, while the body had previously approved an Idaho Power request to update ECRs on an annual basis, an annual update would prove difficult “for non-legacy on-site generation customers to adjust and complicates investment decisions by potential on-site generation customers.”
This concern of variability was held by some solar power companies and residential solar users, who previously told the Idaho Press that significant changes to ECRs each year could upend stability in the industry and make prospective solar owners less sure about the break-even point on their investment.
Addressing these concerns, the IPUC moved to suspend the previously-approved annual update requirement until 2028.
To address concerns about future fluctuations in ECRS, the IPUC limited increases or decreases to the avoided energy value to 40% in future years. This variable in the ECR equation was deemed by IPUC staff to be the “most significant driver of the ECR” and is representative of the cost Idaho Power avoids by not having to generate or purchase electricity. A limit to its movement was meant to account for its high degree of variability due to a number of factors including “weather conditions, hydroelectric availability, natural gas supply and pricing,” IPUC documents said.
What this means for residential solar owners is that the changes will, on average, cut the Idaho Power-proposed ECR rate cut in half, from a 60% reimbursement decrease to a 31% reimbursement decrease.
With the rate change in place, owner of Boise-based Empowered Solar Alex McKinley said that, while better for the industry than the initial proposal, the IPUC decision amounted to “locking in” a rate that was still detrimental to solar customers.
Speaking to the temporary reprieve from an annual ECR change, Ketchum-based solar owner Scott Pinizzotto said while there was rationale behind the change that would make the return on investment in solar easier to pencil out in theory, it comes without changes to how Idaho Power adjusts its annual electricity rates.
“They basically have locked in low compensation for the exported power that we generate, while not constraining the rate increases that they’re charging,” Pinizzotto said. “What they should have done is cap that delta, so if you’re going to lock us in for three years, don’t lock us in on how much you’re paying us — lock us in on the differential of how much you’re paying us (compared) to the power price.”
Despite the reduced returns on solar generation in the state and changes enacted by the Big Beautiful Bill to phase-out the federal solar tax credit by the end of the year, McKinley said he still believes that advocacy for the use of solar would continue in spite of its broader policy challenges.
“It’s one of the few things these days that cuts across political interests and ideology and everything,” McKinley said. “There’s so many different reasons that it’s a positive, good thing for people who have solar, people who live near people with solar, just our state in general — it’s a resource that we’re letting go to waste.”