Tom Lutey’s May 10, 2019 article explains NorthWestern Energy’s demand charge for new residential solar power customers. I served as the Public Service Commission’s chief economist from the mid 1980s until 2010. I also have an agreement with NWE to exchange energy and donate our annual excess solar energy to NWE.
NWE’s plan raises before the PSC serious public policy issues.
During my PSC career I helped implement federal and state statutes. My experience was that NWE, and MPC previously, did their utmost to impede renewable energy development. A pattern evolved whereby the utility would seek to recover costs for its resources that greatly exceeded the rates it sought to pay its competitors. This is expected monopoly/monopsony behavior that, if left unchecked by the PSC, is discriminatory.
As an existing solar power producer, the NWE letter sent us indicates we can choose to not be impacted by NWE’s demand charge proposal. That we may choose to avoid this charge is little consolation. The number of residential customers who bypass NWE by means of substitute fuels (wood, gas, efficient LED lights etc.,) surely dwarfs the 2,100 who use solar electric panels.
To impose demand charges based on a solar customer’s peak demand vis-a-vis the system peak demand totally ignores the importance of economic cost-based pricing. Even if it was premised on the correlation to the system peak demand, it is discriminatory vis-a-vis other residential customers whose coincident-peak demand is not demand metered.
Michael Lee, Helena