Renewable Energy Rider

• Jurisdiction: Barbados
• Court: Fair Trading Commission (Barbados)
• Judgment Date: 09 August 2013
• Docket Number: Document No.: FTC/URD/DECRER 2013-02

Renewable Energy Rider

Document No.: FTC/URD/DECRER 2013-02

FAIR TRADING COMMISSION

DECISION

TABLE OF CONTENTS

EXECUTIVE SUMMARY	4
1. INTRODUCTION	6
2. BACKGROUND	7
Development Objectives of the RER	7
3. THE EXISTING RENEWABLE ENERGY RIDER (Pilot)	9
4. THE PROPOSED RENEWABLE ENERGY RIDER (Permanent)	10
5. THE COMMISSION'S DETERMINATION	11
Value of Permanent RER Credit	11
Minimum Credit	11
Capacity Limit	12
Billing Arrangement	13
Metering System	13
RER Customer Reimbursement of Credits	14
Contract Period	14
RER Interconnection Agreement	15
Appendix 1	16

EXECUTIVE SUMMARY

1 The Fair Trading Commission (Commission) has completed its review of the Barbados Light & Power Co. Ltd.'s Renewable Energy Rider (RER). The objective of this review was to assess the newly proposed terms and conditions of the RER programme which the BL&P is seeking to implement on a permanent basis.

2 The RER was designed specifically to facilitate the sale of excess electricity to the grid by customers using a solar photovoltaic (PV) or wind renewable energy (RE) system up to a maximum of 150 kW to offset electricity consumption from the grid. The rider is not intended to offer an avenue for revenue generation, but to compensate RER participants at the opportunity cost of the RE (i.e. the cost that would otherwise have been incurred by the BL&P had the RER customers not fed their excess RE generated electricity to the grid). It is not meant to be used by commercial entities as a revenue generating enterprise. These entities are considered Independent Power Producers (IPPs) for which a different legal regime is required.

3 The Commission is satisfied that a rider of 1.6 times the fuel clause adjustment (FCA) is representative of the avoided fuel cost when consideration is given to, among other things, the type, quantity and cost of the fuel utilised to generate electricity, the fuel generation share (i.e. the percentage of electricity generated that is attributable to a particular fuel type or renewable energy resource), the cost at peak load and the RE generating capacity limit. The Commission further determined that establishing a predetermined minimum credit is not appropriate given the link between the RER and the avoided cost of fuel which is volatile.

4 The Commission agrees that the national intermittent RE capacity should remain at 10% of peak demand, pending the findings of the intermittent penetration study which the BL&P is undertaking. The Commission has determined that the capacity limit for distributed intermittent RE generation should be increased to 7MW. The Commission has also decided that, when the capacity reaches 5MW (there are 182 customers utilising the capacity of 1.7 MW), 1MW of the remaining 2MW should be reserved for domestic distributed intermittent generation. The Commission has also determined that the individual customer capacity limit of 1.5 times the customer's current usage is appropriate up to a maximum capacity of 150 KW.

5 The Commission has determined that the billing arrangement shall be based on the sale of excess electricity to the grid and that “the two-meter alternative metering connection 1” shall be implemented for all new installations. With this metering arrangement one meter measures site generation output while the second meter is bidirectional and is placed at the service entrance and records gross flows in both directions between the customer site and the grid.

6 Having considered the proposed length of time that a customer will be required to wait to be reimbursed the RER credit versus the additional cost associated with more frequent reimbursement, the Commission has determined that reimbursement of the RER credit on a quarterly basis, where the credit is greater than or equal to $100.00, is appropriate.

7 Having given consideration to customers' concerns regarding fluctuating payments due to monthly variations of the RER credit and the need to reduce the customer's risk by guaranteeing access to the grid, it is determined that RER customers shall be offered a grid access contract for a minimum of 10 years and that the value of the RER shall be subject to review every three years from the date of implementation of this Decision.

1. INTRODUCTION

8 In May 2009 the BL&P submitted an application for a review of its electricity rates. In its Memorandum on Proposed Tariffs, the BL&P proposed the introduction of an RER on a pilot basis. The Commission determined then that the pilot programme would not be addressed at the rate review hearing but as a separate public consultation. Accordingly, a consultation paper was issued in October 2009 and an oral session was convened in November 2009. Approval was subsequently granted for the BL&P to offer this RER programme on a pilot basis for two years. This trial period was intended to allow the BL&P to gather the relevant operational and feasibility information before determining whether the scheme would be offered permanently. In July 2012, the BL&P made an application to the Commission to implement the RER on a permanent basis with amended terms and conditions. Due to the nature of the newly proposed terms and conditions, the Commission considered it necessary to engage the public and stakeholders before making a determination. An RER consultation paper was issued on November 23, 2012 and a public forum was convened on May 10, 2013 to obtain feedback from all interested parties.

9 This Decision has considered the submissions from the BL&P and all other respondents. The issues discussed and determinations are presented herein. The Commission extends its appreciation to all parties who were involved in this exercise.

2. BACKGROUND

10 The BL&P, having implemented the RER on a pilot basis for two years, is seeking to make this rider permanent. The RER was designed specifically to facilitate the sale of excess electricity to the grid by customers using a solar PV or wind RE system to offset electricity consumption from the grid. The rider is not intended to offer an avenue for revenue generation, but to compensate RER participants at the opportunity cost of the RE (i.e. the cost that would have otherwise been incurred by the BL&P had the RER customers not fed their excess electricity to the grid). It is not intended to be used by commercial entities as a revenue generating enterprise. These types of operators are considered Independent Power Producers (IPPs) for which a different legal regime is required. Further, it is distinct from a feed-in-tariff which is applied in other jurisdictions, as it does not offer a premium payment for RE, neither is a contract expected to be offered for the design life of the RE technology employed.

11 It is important to note that the RER is not a new rate because it does not fall within the definition of rates as prescribed in the Utilities Regulation Act, CAP. 282. Notwithstanding this, the Commission considers that it is within its remit to scrutinise and provide regulatory oversight to any programme which introduces new provisions or terms of service to customers, as the proposed permanent RER does.

12 Public response to the pilot RER has been positive with over 182 customers signed up on the programme at the end of June 2013. The pilot RER appears to be achieving the objective of facilitating the expansion of distributed renewable systems.

Development Objectives of the RER

13 In assessing the revised RER proposal it is necessary to have a broad appreciation of what Barbados is seeking to achieve as it relates to its sustainable energy policy. The Commission is cognisant of the fact that this initiative is voluntary on the part of the BL&P and that the primary pieces of legislation by which the Commission is guided, namely the Fair Trading Commission Act and the Utilities Regulation Act, do not speak to RE pricing and the conditions under which it is to be offered.

14 It must be noted that Barbados is working towards finalisation of its National Sustainable Energy Policy and the RER initiative is only one component of a broader framework aimed at transitioning the country to a sustainable energy environment.

15 It is recognised that there are many stakeholders in the area of renewable energy. These include:

• • Households and businesses with individual systems for their own use;

• • Businesses who want to supply both for their own use and commercially;

• • Independent power producers (IPPs) whose primary business will be to generate electricity for sale;

• • Persons who are primarily interested in the environmental benefits of RE and/or a reduction in fuel importation;

• • Businesses who market RE systems; and

• • Lending agencies interested in funding RE projects.

16 These stakeholders have varying interests; however, this programme does not seek to address all of the issues associated with the development and use of renewable energy.

3. THE EXISTING RENEWABLE ENERGY RIDER (PILOT)

17 The pilot RER was available to all customers — Domestic Service (DS), Employees (EMP), General Service (GS), Secondary Voltage Power (SVP), Large Power (LP) — with renewable power sources located on the customer's own or rented premises. All of the provisions of the applicable tariffs therefore applied except as amended by the rider. The...