Rationale for IndianaVoluntary Feed-in Tariffs (VFITs)
Presentation on 9/18/13 to theRegulatory Flexibility Committee
by Laura Ann Arnold, PresidentIndiana Distributed Energy Alliance(Presentation available at IndianaDG.net)
Our Mission Statement
To be the voice of the renewable energy (RE) and distributed generation (DG) business, educational and public sectors in Indiana to advocate public policies and to foster economic growth which fosters this business sector, creates jobs, promotes national security, provides stabilized energy resources and improves the quality of the environment.
IndianaDG Members
Renewable energy and distributed generation (RE&DG) developers both located in Indiana doing projects here and elsewhere across the country, as well as developers located outside the state either doing business or wanting to do business in Indiana
Manufacturers of RE systemsSupporting non-profits and
individuals wanting to develop a project
Properly designed VFIT #1The key element of a feed-in tariff is
to set a price that reflects the cost of generating the energy, including a reasonable rate of return that is fair and equitable to both investors and ratepayers.
A Properly Designed Feed-in Tariff Can Lower the Cost of Capital and Keep Electric Rates Down
Properly designed VFIT #2Properly designed FIT pricing is
generally designed the same way that regulators set electricity rates, by looking at a utility’s costs – including investments in new generation – and setting rates at a level to recover those costs plus a reasonable rate of return to their investors.
Properly designed VFIT #3The rate of return is critical, because
there is evidence that the necessary rate of return under a feed-in tariff program can be lower than the typical rate of return that utilities require. This means that renewable energy is cheaper with a feed-in tariff than without a feed-in tariff.
VFIT Golden Rule
Golden Rule: Do onto others as you would have them do unto you.
VFIT Golden Rule: Treat VFITs like electric utilities treat themselves, i.e. VFIT contracts should reflect the cost of generation including a reasonable rate of return that is fair and equitable to both investors and ratepayers.
What’s a good Indiana VFIT?Collaborative process to establish
terms and conditions as well as ratesBroad range of renewable energy
and distributed generation technologies
Contract length of 25-30 years for solar PV
Allows third party financingDoes not limit project to customer
usageTransparent selection processReasonable milestones
Advanced Renewable TariffsTariffs based on cost of generationDifferentiation by technology, project
size, application and densityFor example, solar PV tariff could
depend on: Solar PV integrated into building design; Solar PV panels installed on the roof; or Solar PV ground mounted.
FITs not just for IOUs
FIT programs of US municipalities include: Gainsville Regional Utilities (FL) Sacramento Municipal Utility District
(SMUD) Long Island Power Authority (LIPA) Los Angeles Department of Water and
Power (LADWP) Palo Alto (CA) Municipal Utility
Cogeneration & Alternate Energy Production RatesUtility 2013 Rates 2013
Capacity2012 Rates 2012
CapacityIPL peak $0.0299 $7.42 $0.0282 $7.30IPL off-peak $0.0257 $0.0246Duke $0.02851 $7.05 $0.033687 $9.85
I&M TOD peak
$0.0234 $8.56 $0.0274 $8.70
I&M off-peak $0.0223 $0.0241NIPSCO peak
.03221-.0399
$5.45 .03533-.03990
$5.49
NIPSCO off-peak
.02377-.02847
.02196-.02631
Vectren peak
$0.03882 $4.81 $0.04077 $5.03
Vectren off-peak
$0.03428 $0.03603
170 IAC 4.1. Cogen & Alternate Energy Production Facilities
170 IAC 4-4.1-4 Filing of rate data—annually
170 IAC 4-4.1-5 Obligation to purchase and sell
170 IAC 4-4.1-8 Rates for energy purchase
170 IAC 4-4.1-9 Rates for capacity purchase
History of Indiana VFITsIndianapolis Power and Light (IPL) Rate REP & Northern Indiana Public Service Company (NIPSCO) Experimental Rate 665 Renewable FIT
IPL Rate REP History
Cause No. 43623 Petition filed 12/29/08 Order issued 2/10/10
Cause No. 43960 Petition filed 10/13/10 Motion to temporarily suspend Rate REP
2/7/11 Order issued 11/22/11
IPL Rate REP History con’tCause No. 44018
Petition filed 4/11/11 Order issued 03/07/2012 Tariff expired 3/30/2013 All projects with IURC approved
contracts must be commissioned by ???
NIPSCO VFIT 1.0 History
Cause No. 43922 filed 7/16/10Technical conference held 10/04/10Settlement Agreement filed 4/18/11 IURC order issued: 7/11/2011Two stakeholder annual meetings
held in Goshen on 7/18/ 12; and Munster on 8/1/13
NIPSCO VFIT 1.0 expires 12/31/13
NIPSCO VFIT 2.0
NIPSCO filed petition with IURC 9/11/13 in Cause No. 44393 to explore another VFIT Prehearing conference TBA Technical conference TBA
IndianaDG filed petition to intervene 9/15/13
Duke Air Permit SettlementDuke Energy Indiana (DEI) enters
into Settlement Agreement on Edwardsport air permit on 8/28/13 requiring DEI to either: Implement a feed-in tariff for Solar PV
modeled on the current NIPSCO FIT; or Construct/install, and/or execute a long
term contract with one or more independent producers for energy and capacity from wind and/or solar with a combined nameplate capacity of no less than 15 MWs (minimum shall be 5 MW solar).
Possible Duke VFIT
Duke Energy Indiana (DEI) VFIT: Implemented in DEI service territory; Total program cap no fewer than 30 MW; No fewer than 5 MW to be reserved for
small systems (no larger than 10 kW in size); and
Be requested in a filing not later than 6/1/14.
Settlement not to preclude DEI and Petitioners from collaborating on other or additional VFITs.
IPL vs. NIPSCO VFIT RatesIPL RATE REP
Wind 50-100 KW: $0.14/kWh
Wind 100 kW-1 MW: $0.105
Wind > I MW:$0.075/kWh
Solar 20-100 kW: $0.24/kWh
Solar >100 kW: $0.20/kWh
Biomass 50 kW- 1 MW: $.085
NIPSCO RATE 665 Wind ≤ 100kW:
$0.17/kWh Wind 101kW-2MW:
$0.10/kWh Solar ≤ 10kW:
$0.30/kWh Solar 11kW-2MW:
$0.26/kWh Biomass ≤ 5MW:
$0.106/kWh New Hydro ≤ 1MW:
$0.12/kWh
Conclusion, Next Steps?
What steps or actions can be taken to encourage more electric utilities to offer VFITs in Indiana?
What happens at the end of current 15 year VFIT contracts?
To give VFIT customers option to net meter, net metering rule needs to be revised to: Allow net metering > 1 MW; and Allow third party net metering.
References and resourcesProvided upon request
Contact information
Laura Ann Arnold, PresidentIndiana Distributed Energy Alliance545 E. Eleventh StreetIndianapolis, IN 46202(317) 635-1701(317) 502-5123 [email protected] [email protected]
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