Tuesday, September 7, 2010

More on Oregon's feed-in tariff program

Here's a more detailed look at how Oregon's new feed-in tariff program is working for one participating family. The pilot program is designed to encourage local production of solar power, and is backed by AfD partner organization Oregonians for Renewable Energy Policy (OREP).

by Richard Read. Posted September 1 on The Oregonian
Like almost all Oregonians, Jeff Ramp has paid utility bills for years to power his home, which sits on an onion farm near Salem.

But within a few weeks, Ramp will start receiving monthly checks from Portland General Electric Co. instead. The utility will pay him a premium for solar energy he produces and consumes. The checks will keep coming for 15 years and could exceed $600 a month, ultimately more than repaying his investment.

Ramp, 61, is the first PGE customer to generate electricity under a pilot program in which utilities pay homeowners for power produced from solar panels. The program, also available to Pacific Power customers, proved so popular when it launched July 1 that available spots ran out in 15 minutes. The next chance to apply is Oct. 1.

"I've been wanting to do this for years, but it never made economical sense," Ramp said. "I like to take advantage of what nature will give you."

Directed by the Legislature, Oregon's Public Utility Commission launched the solar program in such a hurry that Ramp and other early adapters had to wait while installers and utility workers refined details.

PGE managers overcame a glitch in insurance requirements. An electrician returned to Ramp's house and rewired a meter after the utility developed specifications. The fixes will smooth the way for the next round.

Solar advocates say a far more significant barrier is posed by an obscure federal regulation, interpreted by state officials as preventing homeowners from selling to utilities any power beyond what they consume. Because of the regulation, Oregon and other states have stopped short of an approach that has boosted solar power in Europe and Canada's Ontario province, where homeowners sell their surplus electricity to power companies.

Under Oregon's pilot program, revenue from surplus electricity is donated to Oregon Heat, a low-income energy-assistance organization. A spokeswoman for the Federal Energy Regulatory Commission, which presides over the U.S. energy system, declined to comment Wednesday on the sell-back prohibition.

National Solar Inc.'s Kim Berhorst, who helped design Ramp's system and managed the project, is pleased to see Oregon's pilot program move forward. She hopes residents of Oregon and other states will eventually be allowed to sell excess solar power to utilities, using a so-called feed-in tariff system.

"This is a first step toward trying to craft a true feed-in tariff for the state of Oregon," Berhorst said. "That's the only way for the United States to catch up with people in Europe and Ontario."

Berhorst said she discovered while working on Ramp's system that insurance companies would not allow residential customers to add liability coverage for PGE to their homeowners' policies. PGE amended its contract language to waive the provision.

In Central Oregon, homeowner George Jameson got his solar system running Aug. 11 with minimal problems, apparently becoming the first person in the state to connect under the pilot program. Jameson, 66, a retiree from the computer industry, said the only hitch was Pacific Power's refusal to tell him what day -- let alone what time -- its technician would arrive to install meters.

"They eventually showed up," Jameson said, "and, luckily, we were here."

Jameson and his wife, Deanna, spent just over $20,000 on their system, installed by Bend's Sunlight Solar Energy. The Crooked River Ranch residents are eligible for a 30 percent federal tax credit. But like all participants in Oregon's pilot program, they're ineligible for state tax credits and cash incentives.

Oregon residents can still qualify for those local perks, and the federal credit, if they install solar systems without applying to receive utility checks.

The Jamesons expect checks averaging about $185 a month, meaning they'll break even in about nine years -- profiting during the remainder of their 15-year contract with Pacific Power. George Jameson marvels over an idiosyncrasy of the system that encourages him to burn more energy in order to receive bigger payments. He's not likely to do so, given his interest in conservation.

In Brooks, Ramp expects a payback in roughly the same time period as Jameson. Ramp spent $63,000 on his 9,900-watt system, which uses U.S.-made panels and electrical inverters manufactured by Bend's PV Powered Inc.

Payback times may be somewhat longer for future applicants. That's because the Public Utility Commission could decide during a Sept. 21 public hearing in Salem to reduce payment amounts by 10 percent, as requested by PGE and Pacific Power, due to the program's popularity.

Also -- perhaps predictably, during tight budgetary times -- state and federal officials have decided homeowners must pay income tax on the utility payments they receive.

The determination doesn't faze Jameson. "If you're going to tax me on the revenue that comes from that solar system," he said, "I can depreciate that asset."

How to apply: Utility customers can apply to enter the next round of Oregon's solar pilot program starting at 8 a.m. Oct. 1. They'd better be prompt. When the program opened July 1, applicants snapped up available spots in 15 minutes. Successful applicants can proceed to install solar panels and receive monthly checks at premium rates for power they produce and use themselves.

Pacific Power customers can apply online for the company's Solar Incentive Program. Portland General Electric customers can apply for PGE's Solar Payment Option. Applicants must come prepared with detailed information concerning their proposed project.

Idaho's Power customers in Oregon are also eligible, starting at the same hour. They can apply for the utility's Oregon Solar Photovoltaic Pilot Program.

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