5.5. ERMUSR 03-19-2013 - Laserfiche WebLink

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IFIAFri&kof considered at this point to be experimental. The reimbursement rate calculation is quite complex and was not designed to be administered by a small utility with a skeleton staff. The mix of factors in- cluded in the calculation may be appropriate for a large, standalone utility with responsibility for generation and transmission as well as distribution of electricity, but those factors may not translate well to a small system with a long -term contract for power supply and transmission. We believe that it is very premature to build a state mandate around an unproven, voluntary program that has been ad- opted by a single, very large utility in a distant part of the country with a much different climate and solar resource potential than we have here in Min- nesota. Concerns about Expansion of Net Metering The impact of net metering is much more problem- atic for a small municipal system than it would be for a larger utility. Ninety of Minnesota's 125 municipal electric utilities have fewer than 2,500 customers. Forty -eight have fewer than 1,000. In these communities, costs associated with net meter- ing would be distributed over a much smaller group of net - payers, meaning each utility customer would pay more to carry the same number of customer - generators than customers of larger utilities. The relatively small number of customers served by a municipal utility also results in lower system size. The median annual peak load of our systems is only about 6 MW. Nearly a third of our systems have total demand of 3 MW or less. A 2,000 MW utility could accommodate a 1 MW net - metered load with little administrative, financial, or opera- tional impact. Forcing a 2 or 3 MW municipal util- ity to accommodate a 1 MW net metered load could cause enormous problems, both financially and operationally. A utility with a relatively predictable load curve could become subject to large swings as it is forced to respond to the unpredictable output of a large and variable net - metered generator on its system. Increased variability of load could result in higher cost of power from the utility's wholesale power supplier. Forcing a small municipal utility Position Statement • to accommodate a 1 MW net - metered load would be completely inappropriate for the size of the system. Forcing small municipal utilities to accommodate large net - metered loads could also have a negative impact on our municipal power agencies, which are established under Minn. Stat. Chapter 453 and play an important role in our industry. Most of our municipal electric utilities have long -term contracts with a municipal power agency for power supply and transmission service. These contracts provide necessary security for repayment of tax - exempt bonds that have been issued by the agencies to fund large investments in generation and transmission facilities. If municipal electric utilities are forced to accommodate large, net - metered loads in sig- nificant numbers, the resultant loss of sales could impair the security underlying hundreds of millions of dollars of tax - exempt bonds. We urge the legisla- ture to tread very carefully in this area. 2013 State Position Statements / 5 • •