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Section 4 <br /> The State of Minnesota has a statute governing net metering. Prior to the 2015 <br /> legislative session, municipal utilities like ERMU, were required to pay the customer the <br /> 'average retail utility energy rate'. In the statute, "Average retail utility energy rate" <br /> means, for any class of utility customer, the quotient of the total annual class revenue <br /> from sales of electricity minus the annual revenue resulting from fixed charges, divided <br /> by the annual class kilowatt-hour sales. For ERMU's residential customers, this would <br /> mean reimbursing customers at the current average annual residential rate of 12.6958 <br /> cents/kWh. The customer charge is not part of the calculation and is still paid by the <br /> customer regardless of their net metering situation. <br /> During the 2015 legislative session, the statute was revised to include the following <br /> language: 'A cooperative electric association or municipal utility may charge an <br /> additional fee to recover the fixed costs not already paid for by the customer through the <br /> customer's existing billing arrangement. Any additional charge by the utility must be <br /> reasonable and appropriate for that class of customer based on the most recent cost of <br /> service study. The cost of service study must be made available for review by a <br /> customer of the utility upon request.' It is not clear how this may ultimately be <br /> interpreted, it could mean: <br /> • A higher customer charge to reflect more distribution fixed costs <br /> • A different rate such as a retail demand charge structure <br /> • A separate charge based on solar generating capacity <br /> • Other potential interpretations <br /> The table summarizes calculations performed based on the unbundled cost-of-service <br /> results for the residential class to calculate a cost-based solar access charge for <br /> application to customers installing solar generating capacity at their customer location. <br /> Based on data for the residential class, the average ERMU residential customer has an <br /> average monthly peak demand of 3.6 kW. The solar access charge calculation is based <br /> on allocated fixed local costs divided by the total residential class estimated annual <br /> billing demands. Based on the calculation, it is estimated that the cost of the local <br /> - 6 - <br />