PORTLAND, Maine — Central Maine Power Co. says it needs to change a rate structure that no longer reflects its costs for delivering electricity. But some of the utility’s largest customers have countered that the proposed rate structure change would penalize them for generating their own power, using solar panels or other technologies.
As proceedings in CMP’s five-year rate case continue in Augusta, opposing sides in the debate sounded off Thursday during a talk hosted at the University of Southern Maine by the clean technology industry group E2Tech.
In response to the utility’s plan to restructure its rates, the Portland-based GridSolar has asked the Maine Public Utilities Commission to consider an alternative rate design structure. And in a separate matter, the company has asked state regulators to let it coordinate smart grids to address the state’s power needs, instead of building more transmission and distribution lines in parts of the state.
Tom Welch, chairman of the Maine Public Utilities Commission, said Friday that the PUC decided to move ahead with that case — to decide whether a smart grid coordinator should be designated and whether that coordinator should be GridSolar — in a unanimous vote Tuesday.
The commission has not made a decision in the case and deliberations will be “a matter of months, not weeks,” Welch said.
Taking center stage now is the fight over the proposed rate plan from CMP, which covers a wide range of changes over the next five years. Most notably, it aims to eliminate what John Carroll, spokesman for CMP parent company Iberdrola USA, called an “anachronism” in the company’s billing structure for residential and small-business customers.
“Our rate structure is from the 1990s,” Carroll said to the Portland audience Thursday. “The rates are largely volumetric when, in fact, the value you get from a [transmission and distribution utility] is not volumetric, it’s a fixed price.”
In other words, customers’ bills are disproportionately based on consumption and do not accurately factor in the cost of delivery.
Carroll said the fixed-cost portion of CMP customers’ bills has not accurately reflected the cost of maintaining that system since deregulation of Maine’s power markets in 2000 in most cases prohibited companies that own power lines from also generating power.
For a customer with a $40 monthly power bill, around $9.40 pays for the utility’s fixed costs. Over five years, the company’s rate proposal would raise the fixed-cost portion to more than $20 of that total.
Apart from that change, the company’s proposal to assess a “standby rate” on customers that generate their own power has sparked the most controversy, particularly among advocates of solar power and an industry group that includes paper mills with on-site generation.
The solar company ReVision Energy has a set up a website at iratepayer.org to criticize the plan they say discriminates against customers seeking to save money with solar installations.
CMP argues the cost for connecting to its lines is the essentially the same for customers, regardless of their overall power consumption.
The request to change the utility’s rate structure comes as growth in renewable technologies and energy efficiency investments have taken off. Forecasts from regional power regulators, national industry groups and CMP indicate growth in the use of technologies such as photovoltaic solar panels will continue, which means declining revenue for CMP under its current rate setup.
But that fight is raising an even broader question before state regulators: Will Maine’s power grid be built out the same way it always has been?
GridSolar, which operates a pilot project on the Boothbay peninsula aimed at proving that there are other ways to address power capacity needs than building new power lines, says no. The group’s petition for the PUC to consider making it the state’s smart grid coordinator aims to expand its approach in Boothbay to the rest of the state. There, the company aims to generate power and reduce peak hour demand on the grid as a way of avoiding an estimated $18 million transmission line project CMP had proposed.
GridSolar’s petition elicited opposition from some parties who wanted the PUC to review results from that project before moving ahead with consideration of naming a smart grid coordinator, Welch said.
That would include making comprehensive changes to the way customers are billed for power use, which could include altering prices based on the time of day and demand elsewhere on the system. Those suggestions are also part of GridSolar’s counterproposal for how CMP wants to restructure its rates.
But such an effort would require still more technological advances beyond CMP’s smart meter installation program, an upgrade costing around $192 million.
“Small general service and residential meters don’t have the chip required to enable use of demand- and critical peak-type pricing,” Hinchman said. “That’s the subject of another PUC docket contesting whether [CMP’s Advanced Metering Initiative] met its goals and objectives.”
Both companies participated in the panel Thursday in Portland on the topic of distributed generation and microgrid technology. Those developments are changing demands on the power grid and the structure of that system.
Carroll said those technologies are forcing states like New York to begin assessing ways to restructure the industry and create what he called “utility 2.0.”
“We are living through a part of that debate and it’s popping out in this rate case,” Carroll told the Portland audience. “And it’s exciting because it’s about where the industry will be in the next 10-15 years.”
Smaller-scale alternative energy sources, known in the industry as “distributed generation sources,” are a large part of the change.
“Distributed generation is growing,” said Eric Wilkinson, external affairs representative for regional grid operator ISO-New England. “We’re preparing for that growth and we’re accounting for that growth in our future planning.”
The largest area of distributed generation growth is in solar photovoltaic installations, which ISO-New England projects will increase capacity in Maine from around 8.1 megawatts to nearly 30 megawatts of nameplate capacity by 2023. The regional grid manager decided last year that it needed to conduct a survey to forecast just how much distributed generation would be coming on the grid, forming its Distributed Generation Forecast Working Group.
The expected increase in distributed generation — from sources such as photovoltaic solar electricity, solar heat and biomass — is bringing into focus just what customers pay for when they pull down power from the grid. That’s because those types of local generation, combined with investments in energy efficiency, are reducing the amount of power customers are buying. And that means lower revenues for a utility such as CMP.
Distributed generation other than solar is on the rise as well, typically with institutional power customers such as colleges and hospitals, according to Dan Kelley, vice president of energy and power engineering for Woodard and Curran. Those systems include biomass boilers, combined heat and power systems, or cogeneration, and others.
But adding those systems into the existing electric grid isn’t simply a matter of plugging in, according to Carroll, who said each of the company’s distribution circuits — from substations to individual customers — is unique.
“You have to look at 470 separate circuits and ask what is the impact of each installation,” Carroll said. “Some will be positive and some will be a negative.”
In a case study in Colorado, Carroll said that around one-third of a sampling of distribution circuits were not suited to adding photovoltaic solar panels, saying that their addition would require further upgrades to the system.
“We’re part of the industry that’s trying to come to grips with what this technology means,” Carroll said.
But Hinchman disagrees with how CMP plans to come to grips with that technology.
“It can spend billions of dollars to make the existing ‘dumb’ grid even bigger, or it can invest in a smarter and more dynamic system that can optimize the grid to match electric supply to capacity, and encourage Maine residents and businesses to install solar PV systems and energy conservation measures,” he wrote in a Portland Daily Sun commentary.
Carroll argues that by shifting more of the company’s revenue generation to the transmission and distribution portion of customers’ bills, it will reduce the incentive the company has now for customers to consume more power.
Carroll said he expects a PUC decision on that case by June, which would put a new rate structure into effect by July 1 for the company’s nearly 600,000 customers. The PUC was scheduled to continue considering that case during a hearing on Friday.