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Distributed Generation and DS&O Rates

Distributed Generation and DS&O Rates

During the annual meeting this past April a member asked about the cooperative’s distributed generation (DG) rates and changes the board may consider when evaluating the net metering rate.

Currently, DS&O has two rates from which the member can choose if they install solar or wind generation.  Option one is the Parallel Generation rate.  This rate will pay the member for all kWhs they generate at the time they generate them.  DS&O prices those kWhs as equivalent to its normal cost of power paid to its wholesale supplier (KEPCo).  The current rate is about $.06 per kWh.  Option 2 is the Net Metering rate which allows the member to bank or get credit for kWhs they generate if used within the month.  DS&O pays the average retail rate (currently about $.094 per kWh) for those kWhs.   With the Net Metering rate, all kWhs must be used during the month generated.  At the end of the month, any kWhs that are not used are swept from the meter and the member starts over again the next month. The DG credits from either rate offset any energy usage purchased from DS&O.

A common complaint from our members who have net metering is that they would like to see more monies coming from the utility or they would like to be able to use their stored kWh any time throughout the calendar year.  But this may only be possible if other members subsidize the net metering members.

The challenge net metering and DG provide DS&O is the member-owners who receive the benefit of net metering may not be paying their fair share of the costs necessary to construct, operate and maintain the grid so that they (DG owners) can rely on the grid when their DG is not producing electricity.   Approximately 75% of those costs are included in the monthly facility charge (Availability Charge found on your bill each month). This still leaves 25% that is normally collected as a small portion of the energy rate, but if the member’s energy usage is reduced or eliminated because of DG, then DS&O never fully recovers the cost to serve that DG member.

DS&O’s last cost of service study was performed in 2014 by a third-party vendor.  It is anticipated that the cooperative will begin another study later in 2018 to ensure all rates are bringing in the revenue needed to properly cover the costs to serve each class of service.  If that study shows the cooperative can give more back to the members with DG, then rates will be modified.

Judy Barten, CFO

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