FEUS customers ask city to remove standby service rider for solar generation
AZTEC —Residential solar advocates have opposed Farmington Electric Utility System’s standby service rider since before the utility implemented it three years ago.
The rider is a fee that people who generate some of their electricity must pay to remain connected to the grid. This fee is based on the size of their generation system.
Now a group of customers called San Juan County Solar Voters have sent a letter to city councilors asking to have this fee removed. This letter comes as Farmington prepares for another rate study.
More than 50 customers signed the letter.
The fee does not only apply to customers with solar panels. Customers who produce some or all of their electricity through natural gas must also pay the standby service rider. In the past, FEUS has had some commercial customers who used natural gas to generate their own power.
The City Council approved the standby service rider in January 2017 and it went into effect in March 2017. Solar customers connected to the grid in most of San Juan County pay FEUS a fee of $7.28 per installed kilowatt.
According to the letter, the average solar customer in FEUS pays $35 a month as a standby service rider.
City officials say the standby service rider provides reliability to customers with solar panels who remain connected to the grid to either supplement or back up the electricity their solar panels are providing.
Prior to adopting the standby service rider, the city hired consultants to perform a rate study. The rider was one of the study's recommendations.
There’s more that goes into a utility bill than just the cost of the electricity delivered to the house.
A frequently-asked questions document on the city's website states that when solar panels produce energy the customers "avoid a portion of utility costs that are variable in nature."
"For FEUS, these costs are primarily related to fuel and purchased power," the document states. "Also, a certain amount of electricity is lost as it is transported through the grid. When your solar panels produce energy, you avoid these losses. However, a significant portion of the costs that support reliability to the benefit of the customer are not avoided. These costs are fixed and remain a cost to the utility regardless of the solar panels’ energy output."
Farmington officials say they must have enough power on standby that they could send it to solar customers if the panels were not able to function. That could mean a cloudy day, an eclipse or damage to the solar panel itself.
And solar customers also rely on grid infrastructure to provide power when their panels are not functioning.
“We welcome solar customers and are happy to provide electricity to them intermittently and on cloudy days and every night,” said City Manager Rob Mayes in a statement. “We look forward to the public engagement during this rate review process. However, as a cost recovery policy, we remain committed to minimizing or eliminating cost-shifting from one residential class to another. All customers should pay for the service they need and utilize on the system.”
Eli Briody-Pavlik argues that those costs should be included in the base rate for all customers rather than recovered through an additional fee for customers who can generate some of their own power.
“What they’ve done is they’ve singled out a type of customer — in this case solar customers and they’ve decided to charge an arbitrary fee,” he said.
Briody-Pavlik authored the letter and gathered signatures prior to sending it to the City Council.
The letter states that the base charge is artificially low and benefits larger energy customers.
He said solar panels can still help customers lower their utility bills, but the standby service rider reduces the savings. That means it takes longer for the customers to pay off the investment into the solar panels.
Briody-Pavlik said it does not cost any more to serve solar customers than other customers, and the city must also be able to meet the demand if someone from out of town comes and plugs in an RV at a family member’s house, thus increasing the demand for electricity. However, that customer would not be charged an additional standby service rider on top of their regular bill.
New Mexico state statute allows these riders to be imposed by investor-owned electric utilities, however every time a standby service rider has been brought to the PRC it has been denied. That means none of the large investor-owned utilities charge standby service riders.
The state statute does not apply to municipal utilities, which are overseen by city councils rather than the PRC and governed by city ordinances.
Farmington is not the only city in New Mexico that has implemented a standby rate. The nearby Aztec Electric Utility has a flat charge that all customers who have solar panels must pay in order to remain connected to the grid. This flat charge is based on the average electrical usage by Aztec customers.
“In fact, though there are dozens of public, co-op, and municipal utilities in New Mexico, serving cities and towns from Albuquerque to Jal, only two have a (standby service rider): Farmington and Aztec. We citizens demand this change,” the letter states.
Several solar customers have sued Farmington over the standby service rider. The U.S. district court dismissed the case, citing jurisdiction, and the plaintiffs have since appealed the case.
A 2018 study conducted for the New Mexico Public Regulation Commission said other options utilities can use to address the challenges of increased solar customers on the grid could include fixed customer charges, demand charges, minimum bills, time-of-use rates or updated net energy metering policies.
For his part, Briody-Pavlik said he would support time-of-use rates, which charge people more money for electricity used during certain times of the day when there is higher demand for power.
Hannah Grover covers government for The Daily Times. She can be reached at 505-564-4652 or via email at email@example.com.
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This story has been modified to reflect that a lawsuit against the city was dismissed by district court