Discussion
of Issues
Issue 1:
Should the Commission grant Petitioners’ Joint
Petition for Approval of Regulatory Improvements for Decentralized Solar
Net-Metering Systems in Florida?
Recommendation:
No. Staff recommends that the Commission treat the
filing as a petition to initiate rulemaking to amend Rule 25-6.065, F.A.C.,
Interconnection and Net Metering of Customer-Owned Renewable Generation. Staff
further recommends that the Petition be denied. (DuVal, Cowdery, Vogel)
Staff Analysis:
Although not styled as a petition to initiate rulemaking,
the Petition amounts to a Section 120.54(7)(a), F.S., petition to initiate
rulemaking to amend Rule 25-6.065, F.A.C. While Petitioners do not cite a
specific rule, their requested action would require amending the Commission’s
rule on interconnection and net metering. Therefore, staff recommends that the
Commission treat the filing as a petition to initiate rulemaking to amend Rule
25-6.065, F.A.C.
Applicable Law
Petition to Initiate Rulemaking
Section 120.54(7)(a), F.S., states that any person regulated
by an agency or having substantial interest in an agency rule may petition the
agency to adopt, amend, or repeal a rule. The petition is required to specify
the proposed rule and action requested. Although Petitioners do not specify the
rule they wish to amend, it is obvious from the Petition that they are
referring to Rule 25-6.065, F.A.C., as they cite to specific language from the
rule. Section 120.54(7)(a), F.S., further requires the Commission to either
initiate rulemaking proceedings or deny the petition with a written statement
of its reasons for denial no later than 30 days from the date the petition was
filed.
Interconnection and Net Metering
Section 366.91, F.S., Renewable energy, reflects the
Legislature’s finding that it is in the public interest to promote the
development of renewable energy resources in this state. Pursuant to Section
366.91(5), F.S., electric utilities must have standardized interconnection
agreements and net metering programs for customer-owned renewable generation. That
statute further requires the Commission to establish requirements related to
such agreements and programs and permits the Commission to adopt rules
necessary to administer the provisions of Section 366.91(5), F.S.
Customer-owned renewable generation is defined in Section
366.91(2)(b), F.S., as “an electric generating system located on a customer’s
premises that is primarily intended to offset part or all of the customer’s
electricity requirements with renewable energy.” Section 366.91(2)(c), F.S.,
defines net metering as “a metering and billing methodology whereby
customer-owned renewable generation is allowed to offset the customer’s electricity
consumption on site.”
Rule 25-6.065, F.A.C., sets forth the Commission’s
requirements for interconnection and net metering of customer-owned renewable
generation. The purpose of the rule includes promotion of
the development of small customer-owned renewable generation, particularly
solar and wind generation, and to minimize costs of power supply to investor-owned
utilities and their customers. Rule 25-6.065(4)(a), F.A.C., requires that in
order to qualify for interconnection, Tier 1 customer-owned renewable
generation must have a gross power rating that is less than 90% of the
customer’s utility distribution service rating and generate 10kW or less. Further, Rule 25-6.065(8)(e)-(g), F.A.C.,
provides the process by which customers may accumulate and use the energy
credits produced through the use of customer-owned renewable generation.
In addition to regulating the interconnection and net
metering of customer-owned renewable generation, the Commission regulates Florida
electric utilities’ purchase of electricity from cogenerators and small power
producers. Under Section 366.051, F.S., Florida electric utilities must
purchase all electricity offered for sale by a small power producer within its
service area or the small power producer may sell such electricity to any other
electric utility in the state. Chapter 25-17, F.A.C., contains the Commission’s
rules regarding small power producers and the utilities’ purchase of the
electricity they generate.
Petition
Petitioners assert that they operate or plan to install
“solar net-metering systems” within the Commission’s jurisdiction and contend
that the general public should be able to operate such systems without any
utility-imposed limitations. The Petition also states that Florida electric
utilities’ ability to benefit from exclusive service areas and from the use of
utility easements on public land without just compensation should be
“rescinded.”
Petitioners make three specific requests for Commission action. Each of these
requests would require amending Rule 25-6.065, F.A.C.
First, Petitioners request that the Commission raise the maximum
range for a Tier 1 customer’s generating capacity from 10 kW to 50 kW. In
support, Petitioners maintain that the 10 kW maximum is an unjustifiably strict
limitation because interconnection agreements in other states’ jurisdictions
contain limitations for Tier 1 customers that range from 100 kW to 1,000 kW.
Second, Petitioners request that the Commission allow net
metering customers or their contractors to choose the size of their net
metering systems, provided that the electric power grid can support the system
and the system complies with county codes and permit standards. Petitioners
state that electric utilities in Florida commonly limit the size of new solar
net-metering installations to the past year’s electricity usage measured at a
particular account. They further state that Florida Power & Light Company
requires potential customers or contractors to submit technical components of
their desired system in order to determine whether or not the system will be
approved for interconnection. Petitioners assert that these limitations and
processes unfairly prevent customers from attaining their desired system size
and result in additional costs when customers wish to enlarge their systems due
to increased future usage.
Third, Petitioners request that the Commission raise the
minimum compensation for surplus solar electricity generated by “decentralized solar
net-metering systems” to a minimum of $0.08 per kWh. Petitioners allege that
“decentralized solar electric systems” have the potential to raise “the amount
of clean, regenerative electric power production” without requiring the
additional land needed for utility-sized solar farms and that homeowners should
be encouraged to construct “powerful decentralized solar net-metering systems
in residential areas.” They further assert that these systems will avoid
transmission loss due to their proximity to the consumers and will contribute
to general grid resilience through the use of battery backup systems or
micro-grid capable inverter systems. Accordingly, Petitioners maintain that the
requested compensation is needed to encourage the production of surplus solar
electricity and to reflect the actual value of the peak-power generated by
those systems during the daytime.
Analysis & Conclusion
Petitioners’ first request appears to seek an amendment to
the allowable range for Tier 1 customer-owned renewable generation as provided
in Rule 25-6.065(4)(a), F.A.C. Petitioners do not provide any specific
reasoning as to why the suggested amendment would promote the development of
small customer-owned renewable generation or otherwise meet the purpose of the
rule. Although Petitioners argue that other states’ jurisdictions contain
limitations for Tier 1 customers that range from 100 kW to 1,000 kW, there are
other state jurisdictions that limit net metering eligibility to systems that
have generating capacities that are less than those provided in the
Commission’s rules, and still others that do not offer net metering at all. Additionally,
the rule already contains provisions for customer-owned renewable generation up
to 2 MW through its Tier 2 and Tier 3 ranges.
Staff does not agree that the allowable range for Tier 1
customers should be amended. The tiers were developed to carve out different
levels of customer-owned renewable generation that can be treated differently
for purposes of fees, testing, interconnection studies, and insurance. Staff
believes that the current allowable range for Tier 1 captures the vast majority
of residential systems within the state. Moreover, customer-owned renewable
generation within Florida has grown from 577 customers in 2008, when the
provisions of Rule 25-6.065, F.A.C., were adopted, to 37,862 customers in 2018;
the majority of which are Tier 1 customers. The increasing number of small
customer-owned renewable generation indicates to staff that the purpose of the
rule is being met under the current tier structure.
Petitioners’ second request appears to seek an amendment
to Rule 25-6.065, F.A.C., to add a new provision that would allow net metering
customers or their contractors to choose the size of their net metering
systems, to be limited only by whether the electric power grid can support the
system and whether the system complies with county codes and permit standards.
Pursuant to the rule, customer-owned renewable generation is limited to 2 MW.
Although Petitioners maintain that industry imposed limitations unfairly
prevent customers from attaining their desired net metering system size and
result in additional future costs, staff does not agree that the suggested
amendment would promote the development of small customer-owned renewable
generation or otherwise meet the purpose of the rule. The Commission has
promulgated separate rules in Chapter 25-17, F.A.C., that address electricity
produced and sold by small power producers under 80MW.
Based on their arguments, it appears that Petitioners may
be seeking to generate electricity at a capacity that is beyond what is
currently needed to offset part or all of their individual electricity
requirements. If the intent of this surplus generation is to become supply-side
independent power producers by installing systems that are intended to generate
in excess of customer load, Petitioners’ request would be outside of the
purpose of the Commission’s interconnection and net metering rule. In fact, during
the rulemaking proceedings to amend Rule 25-6.065, F.A.C., staff stated that
certain provisions of the rule were meant to ensure that customers will not
intentionally oversize their systems for the primary purpose of selling energy
to the utility or becoming an independent power producer.
Petitioners’ third request is “to raise the minimum
compensation for surplus solar electricity generated by decentralized solar
net-metering systems to a minimum of $0.08 per KWh [sic].” This request appears
to seek an amendment to Rule 25-6.065(8)(f) and (g), F.A.C., that would change
the amount by which unused credits are purchased by the customer’s utility at
the end of the year or when a customer leaves the system. Rule 25-6.065(8)(f)
and (g), F.A.C., currently reflects that this amount should be calculated “at
an average annual rate based on the investor-owned utility’s COG-1,
as-available energy tariff.” Staff believes that the current amount is
appropriate because it is consistent with the rate paid by investor-owned
utilities to all other power producers within the state.
Petitioners’ argue that encouraging homeowners to
construct “powerful decentralized solar net-metering systems in residential
areas” is in the public interest. As discussed earlier, customer-owned
renewable generation has substantially increased under the current rule.
Therefore, staff believes the purpose of the rule is being met using the
current amount by which unused credits are purchased by the customer’s utility
at the end of the year or when a customer leaves the system. If, by reference
to “powerful decentralized solar net-metering systems,” Petitioners intend to generate
electricity at a capacity that is beyond what is needed to offset part or all
of their individual electricity requirements, their requested relief is outside
of the scope and purpose of the Commission’s interconnection and net metering
rule. If the purpose of this Petition is to allow individuals to generate and
sell electricity on a wholesale basis, the provisions of Section 366.051, F.S.,
concerning cogeneration and small power production, and Chapter 25-17, F.A.C.,
would apply to such generation, not the Commission’s interconnection and net
metering rule.
Based on the foregoing, staff believes it is not necessary
to open the interconnection and net metering rule for rulemaking at this time.
Accordingly, staff recommends that the Commission deny the Petition for the
reasons stated above.
Issue 2:
Should this docket be closed?
Recommendation:
Yes. If the Commission approves staff’s
recommendation in Issue 1, this docket should be closed.
Staff Analysis:
If the Commission approves staff’s recommendation in
Issue 1, this docket should be closed.
