Legislature(2025 - 2026)BUTROVICH 205
05/14/2025 03:30 PM Senate RESOURCES
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| Audio | Topic |
|---|---|
| Start | |
| Presentation(s): Railbelt Reliability Council (rrc), Senate Bill 123, House Bill 307, and Where We Go from Here | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
SENATE RESOURCES STANDING COMMITTEE
May 14, 2025
3:31 p.m.
MEMBERS PRESENT
Senator Cathy Giessel, Chair
Senator Bill Wielechowski, Vice Chair
Senator Matt Claman
Senator Forrest Dunbar
Senator Scott Kawasaki
Senator Shelley Hughes
Senator Robert Myers
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
PRESENTATION(S): RAILBELT RELIABILITY COUNCIL (RRC), SENATE BILL
123, HOUSE BILL 307, AND WHERE WE GO FROM HERE
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
GWEN HOLDMANN, Chief Scientist
Alaska Center for Energy and Power
Fairbanks, Alaska
POSITION STATEMENT: Co-presented Railbelt Reliability Council
(RRC), SENATE BILL 123, HOUSE BILL 307, And Where We Go from
Here.
STEPHEN COLT, Research Professor
Alaska Center for Energy and Power
Fairbanks, Alaska
POSITION STATEMENT: Co-presented Railbelt Reliability Council
(RRC), SENATE BILL 123, HOUSE BILL 307, And Where We Go from
Here.
ACTION NARRATIVE
3:31:53 PM
CHAIR GIESSEL called the Senate Resources Standing Committee
meeting to order at 3:22 p.m. Present at the call to order were
Senators Myers, Kawasaki, Dunbar, Hughes, and Chair Giessel.
Senators Claman and Wielechowski arrived thereafter.
^PRESENTATION(S): RAILBELT RELIABILITY COUNCIL (RRC), SENATE
BILL 123, HOUSE BILL 307, AND WHERE WE GO FROM HERE
PRESENTATION(S): RAILBELT RELIABILITY COUNCIL (RRC), SENATE BILL
123, HOUSE BILL 307, AND WHERE WE GO FROM HERE
3:32:28 PM
CHAIR GIESSEL announced the presentation, Railbelt Reliability
Council (RRC), SENATE BILL 123, HOUSE BILL 307, And Where We Go
From Here.
3:33:13 PM
GWEN HOLDMANN, Chief Scientist, Alaska Center for Energy and
Power, Fairbanks, Alaska, introduced herself.
3:33:34 PM
MS. HOLDMAN advanced to slide 2:
[Original punctuation provided.]
Questions to be addressed
? What do we need for a healthy electric grid
ecosystem?
? Railbelt Reliability Council (RRC) - How did we
get here?
? What problems was SENATE BILL 123 addressing via
the RRC?
? What does the RRC do?
? Why are reliability standards and integrated
resource planning (IRP) bundled together?
? What about HOUSE BILL 307 and the Railbelt RTO?
MS. HOLDMAN said the presentation would conclude with an
overview of net metering versus net billing.
3:34:56 PM
MS. HOLDMAN advanced to slide 3:
[Original punctuation provided.]
Q1: Ingredients for a healthy grid ecosystem
These functions work together to enable:
? Efficient, cost-effective investments
? Maximum participation from independent generators
and third parties
? System-wide coordination that supports
reliability and ratepayer value
Healthy Grid Ecosystem
GOAL: affordable and reliable energy
System-wide Planning
Identifies long-term needs for generation and
transmission; process should be transparent,
inclusive, and data driven.
System-wide Development (e.g. transmission)
Implements those long-term plans by advancing shared
infrastructure projects
Independent Regulator
Ensures fair rates, enforces non-discriminatory
access, and protects public interest.
Reliability Standards
Maintains grid stability through technical rules,
contingency planning, and enforcement mechanisms.
Economic Dispatch Structure
Optimizes which generators run and when, minimizing
total system cost. (e.g., single GT, ISO, Transco,
tight power pool)
Real-time Balancing
Maintains second-by-second balance between supply and
demand. Supports frequency stability, coordinates
reserves, and prevents blackouts across defined areas.
[3:38:01]
MS. HOLDMAN pointed out that, unlike most other US
jurisdictions, Alaska is not part of an interconnected grid and
is therefore not subject to Federal Energy Regulatory Commission
(FERC) and North American Electric Reliability Corporation
(NERC) oversight. She commented that, for better or worse,
Alaska must create its own institutions and rules to perform
functions that may be more clearly defined at the federal level.
She stated that the Railbelt Reliability Council (RRC) and the
Railbelt Transmission Organization (RTO) are Alaska's grid
oversight institutions. She highlighted that the railbelt is
served entirely by public power entities and offered examples.
3:39:33 PM
MS. HOLDMAN said that the previous slides provided high-level
context and the presentation would address the issues in greater
detail.
3:40:13 PM
STEPHEN COLT, Research Professor, Alaska Center for Energy and
Power, Fairbanks, Alaska, advanced to slide 4, containing a bar
chart illustrating the railbelt winter capability (includes
nonfirm wind capacity) from 1952-2019:
[Original punctuation provided.]
Q2: RRC - How did we get here? Timeline Pre-2015:
2010 - 2015: "$1.5B" of new generation built by
Railbelt utilities, while sales declined
May 2014: $250k capital approp. to RCA to determine
"whether creating an independent system operator or
similar structure for electrical utilities in the
Railbelt area is the best option for effective and
efficient electrical transmission"
June 2015: RCA recommendations letter
MR. COLT directed attention to the circle on the bar chart on
slide 4 and explained that this shows a significant deployment
of new gas and oil-fired generation for the 2010-2015 timeframe.
He surmised that this brought coordination issues related to
railbelt spending into greater awareness.
3:40:50 PM
SENATOR CLAMAN joined the meeting.
MR. COLT continued to discuss slide 4, containing a bar chart
illustrating the railbelt winter capability (includes nonfirm
wind capacity) from 1952-2019:
[Original punctuation provided.]
Q2: RRC - How did we get here? Timeline Pre-2015:
2010 - 2015: "$1.5B" of new generation built by
Railbelt utilities, while sales declined
May 2014: $250k capital approp. to RCA to determine
"whether creating an independent system operator or
similar structure for electrical utilities in the
Railbelt area is the best option for effective and
efficient electrical transmission"
June 2015: RCA recommendations letter
3:44:02 PM
SENATOR MYERS noted the various forms of energy generation shown
on the bar chart on slide 4. He acknowledged that it may be
necessary to increase generation capacity to ensure backup
energy is available when needed. He asked why utilities would
increase generation capacity when sales were declining.
3:44:39 PM
MR. COLT surmised that this question was the primary reason for
the 2014 capital appropriation request. He shared his
understanding that, at that time, the utilities built new plants
to increase energy efficiency. He added that the Regulatory
Commission of Alaska (RCA) held extensive proceedings on this
issue.
3:46:02 PM
SENATOR DUNBAR briefly discussed the history of the George M.
Sullivan Plant 2-A, which was built during that timeframe (and
owned by Municipal Light & Power (ML&P)). He noted that ML&P was
owned by the Municipality of Anchorage and did not have an
independent board. He agreed that the plant was built to
increase efficiency. He said that, for several years, RCA seized
the dividend the Municipality of Anchorage would have received
from ML&P and briefly discussed the reasoning behind the actions
of RCA.
3:47:10 PM
SENATOR MYERS expressed appreciation for this additional context
related to the Anchorage area. He pointed out that multiple
generation systems were added across different areas and
expressed confusion as to the reasoning. He indicated that he
would seek out additional information related to RCA proceedings
during that time.
3:47:53 PM
CHAIR GIESSEL noted that the presentation would focus on current
events and acknowledged that the history is important.
3:48:05 PM
MR. COLT advanced to slide 5:
[Original punctuation provided.]
Timeline: June 2015 RCA recommendations
Rec 1: Independent transmission company
"An independent transmission company should be
created"? [and] RCA should have "siting authority for
new generation and transmission" and "explicit
authority to regulate integrated resource planning"
for the Railbelt.
Rec 2: Promote "system-wide merit order economic
dispatch", by voluntary action and/or "specific action
steps."
Rec 3: Allow time for voluntary actions [about 1 year
for initial filings]
Rec. 4: Reliability standard RCA "strongly encourages
[Railbelt utilities] to develop a common Railbelt
operating and reliability standard"
Rec 5: Adequate funding for RCA (via Regulatory Cost
Charge)
3:50:04 PM
MR. COLT continued to discuss slide 5. He noted that "system-
wide merit order economic dispatch" means to use the cheapest
generation available at any given hour of any given day,
regardless of who owns it or where it is located.
3:53:01 PM
MR. COLT advanced to slide 6:
[Original punctuation provided.]
Timeline: Volunteer efforts through 2019
? RCA Order 13 in I-15-001, March 2019, recounts:
"Acting on behalf of several Railbelt electric
utilities, ARCTEC hired a consultant to provide
recommendations on establishing an organization
that would act as the entity responsible for
establishing and enforcing Railbelt reliability
standards and (among other things) performing
regional integrated resource planning for the
Railbelt."
? The consultant, GDS, recommended a Railbelt
Reliability Council (RRC) be created:
? For reliability standards, a miniature
version of federal policy:
? 2005 Energy Policy Act created the
concept of ERO
? 2006: North American Electric
Reliability Corporation (NERC) was
designated by FERC as the ERO for the
U.S. Grid.
? For IRP function, GDS apparently followed
Rec. 1 of the June 2015 RCA Letter.
? RRC MOU: On December 18, 2019, six Railbelt
utilities signed the MOU for the creation of the
RRC. [But, for economic dispatch GDS said?study
it some more?]
3:57:15 PM
MR. COLT advanced to slide 7:
[Original punctuation provided.]
Timeline: 2019: RCA proposes legislative language
? June 2019: Alaska Railbelt Transmission Co
abandons its application.
? RCA feels statutory authority is needed to
implement RRC as an ERO.
? March 2019 Order 13, docket I-15-001: "Attached
as an appendix to this order is draft legislative
language that provides us with:
? express authority to certificate and
regulate an ERO
[and]
? "a legislative grant of siting authority for new
generation and transmission in the Railbelt, and
explicit authority to regulate integrated
resource planning for the Railbelt electric
system."
MR. COLT noted that this process began in 2015 when RCA made its
recommendations. He surmised that, at the end of 2019, RCA
requested statutory authority in an effort to move the process
forward more quickly.
4:01:08 PM
SENATOR MYERS recalled discussions related to coops throughout
the railbelt merging. He noted that this caused concern amongst
Fairbanks ratepayers and therefore did not occur. He asked if
this was a part of the 2019 deliberations.
4:01:39 PM
MR. COLT briefly directed attention to slide 6, which included
mention of the Alaska Railbelt Cooperative Transmission and
Electrical Company (ARCTEC) a cooperative of cooperatives. He
explained that ARCTEC was an attempt to merge the generation
function.
4:02:54 PM
MR. COLT advanced to slide 8:
[Original punctuation provided.]
Timeline: 2020: Senate Bill 123
1/15/2020 Letter from RCA to President Giessel and
Speaker Edgmon
3/10/2020 CS Senate Bill 123(RBE) passed Senate 19-0.
(RBE is the Special Committee on Railbelt Electric
System)
3/19/2020 CS Senate Bill 123(RBE) passed House 33-1
(As amended on H floor)
Note: Amendment 2 broadens the scope of telephone
utility cooperatives to include "related
telecommunications services", and allows utility
coops to use email, zoom, etc. to conduct
business and voting.
3/20/2020 Senate concurs in amendment 17-3.
Essentially, Senate Bill 123 passed unanimously, with
minor modifications.
And Chugach merged with Anchorage Municipal Light and
Power (!)
MR. COLT stated that Senate Bill 123 included the proposed
legislative language submitted by RCA to the legislature in
2019.
4:05:19 PM
MR. COLT advanced to slide 9:
[Original punctuation provided.]
Q3: What problems was SENATE BILL 123 trying to
address via RRC?
Going back to the RCA findings in its June 2015
letter:
"Concerns about the fragmented, balkanized and often
contentious Railbelt utilities have been raised
numerous times over the past 40 years. Several efforts
have been made to reform and reorganize the Railbelt
electrical system, but none have succeeded."
This preamble led to the RCA's 2015 recommendations
and the voluntary actions during 2015-2019, which
culminated in RCA's request for legislation.
Along the way, other things fell by the wayside. Thus,
SENATE BILL 123 addressed a surviving, or perhaps a
feasible, subset of the 2015 RCA recommendations.
4:07:13 PM
MR. COLT advanced to slide 10, which highlights the inclusion of
siting authority, integrated resource planning, and reliability
standard in Senate Bill 123:
[Original punctuation provided.]
Q3, cont. Which 2015 Recommendations survived into
SENATE BILL 123?
Rec 1: Independent transmission company "An
independent transmission company should be created"
[and] RCA should have "siting authority for new
generation and transmission" and "explicit authority
to regulate integrated resource planning" for the
Railbelt.
Rec 2: Promote "system-wide merit order economic
dispatch", by voluntary action and/or "specific action
steps."
Rec 3: Allow time for voluntary actions [about 1 year
for initial filings]
Rec. 4: Reliability standard RCA "strongly encourages
[Railbelt utilities] to develop a common Railbelt
operating and reliability standard"
Rec 5: Adequate funding for RCA (via Regulatory Cost
Charge)
MR. COLT noted that Senate Bill 123 included process
implementation. He added that the next slides would discuss the
creation of a transmission organization.
4:09:10 PM
MS. HOLDMAN advanced to slide 11:
[Original punctuation provided.]
Q4: What does the RRC do? And NOT do?
The RRC promulgates reliability standards and develops
integrated resource planning (IRP) (which includes
transmission planning)
Reliability standards:
? provide for "reliable operation" of the
"interconnected" network.
? RCA may initiate a standard on its own motion
IRP provide "greatest value" - enables reliability
to be traded off against excessive cost
use "full range" of resources: "generation,
transmission, battery storage, and conservation or
similar improvements in efficiency?"
"regardless of the location or ownership" of resources
[Does this help move us to economic
dispatch?....maybe]
Large project pre-approval - linked to IRP process:
? Largely between utilities and RCA i.e., the RRC
does NOT approve large projects
? And yet, Projects included in the "preferred
portfolio" of an RCA-approved IRP are deemed
preapproved.
RRC does NOT operate a market or dispatch resources.
Utilities maintain control over most generation and
dispatch decisions within their service territories
(exception Southcentral tight power pool).
ERO Rules, created by RCA, are at 3 AAC 46.
MR. COLT added that AS 42.05.762 and AS 42.05.780 direct the ERO
to develop the integrated resource plan while explicitly
considering transmission. He noted that this is unusual. In
addition, ERO is directed to pursue resources regardless of
location and/or ownership. He opined that this raises an
interesting question related to remote energy resources.
4:11:03 PM
SENATOR WIELECHOWSKI joined the meeting.
4:12:26 PM
MS. HOLDMAN advanced to slide 12:
[Original punctuation provided.]
Q5. Why are reliability standards and regional
planning (IRP) bundled together as RRC tasks?
This is somewhat unusual. Reliability standards under
an ERO mimic U.S. practice, but IRP function in L48 is
done by numerous individual utilities; transmission by
RTO or ISO.
Functions and Typical U.S. Practice:
Reliability Handled by NERC or regional entities (e.g.
WECC)
Planning (IRP) Done by individual utilities, overseen
by state regulators
Transmission Planning Often done by RTO/ISO with
utility input
In Alaska (Post-SB123), these functions are all
handled by RRC (ERO)
Reliability standards and IRP are the pruned version
of the larger tree: Original ideas for RRC included:
? Reliability standards
? Planning
? Interconnection protocols
? Further assessment of economic dispatch
[ 3) and 4) were deferred/dropped, leaving 1) and 2).]
MS. HOLDMAN noted that RRC does not have the authority to build
projects or enforce IRP outcomes, which creates the risk of
developing plans but not acting on them.
4:14:17 PM
MS. HOLDMAN advanced to slide 13:
[Original punctuation provided.]
Key Provisions of AS 44.83.700 (from House Bill 307)
? Establishes the Railbelt Transmission
Organization (RTO) within AEA, tasked with
managing an open-access transmission tariff for
the Railbelt's backbone transmission system.
? The RTO is responsible for pooling and allocating
backbone transmission costs among load-serving
entities to ensure nondiscriminatory access to
the grid.
? Lays the institutional groundwork for future
coordination.
4:15:51 PM
MS. HOLDMAN advanced to slide 14:
[Original punctuation provided.]
Key Provisions of AS 44.83.700 (from House Bill 307)
Establishes the Railbelt Transmission Organization
(RTO) within AEA for the purpose of establishing an
open access transmission tariff that
? provides for recovery of transmission costs and
related ancillary services;
? replaces wholesale charges assessed by unit by
each utility in the Railbelt with a new mechanism
that fairly recovers and equitably allocates the
costs of operating the backbone transmission
system
The Alaska RTO, as currently structured, does not make
decisions about future transmission investments
(planning), implement those decisions (development),
or dispatch resources (operations). Its role is
focused on managing the open-access transmission
tariff and cost allocation for the backbone
transmission system.
MS. HOLDMAN noted that the original version of House Bill 307
included planning and implementation, which is consistent with
practices in other markets. She recalled discussions that the
role of RTO in managing the open-access transmission tariff
would remove pancaking wheeling rates as power is wheeled
through different utility jurisdictions and transmission assets.
She added that the RTO is structured in a way that allows for
improved decision-making with respect to building larger assets
where the resources are available and moving that power to where
it is needed.
4:17:23 PM
CHAIR GIESSEL expressed gratitude for Ms. Holdman's work on
House Bill 307. She highlighted that the original structure of
RTO included transmission planning and implementation. She
contrasted this with the tasks of RRC. She asked Ms. Holdman to
elaborate further on the backbone transmission system and noted
many discussions about the difference between this and the
distribution system.
4:18:36 PM
MS. HOLDMAN agreed that this is an important distinction. She
said it is a question of both asset size and whether the system
is moving power north and south between different utility's
systems. She described a radial transmission system and said
this is not part of the railbelt transmission system. She noted
working group research done prior to the passage of House Bill
307 that created a process to distinguish a backbone
transmission asset from a radial distribution level asset. She
noted an upcoming meeting of the RTO Board to potentially
approve that process.
4:20:08 PM
CHAIR GIESSEL commented that this is significant.
MS. HOLDMAN agreed.
CHAIR GIESSEL asked Ms. Holdman to explain "pancake wheeling"
and "postage stamp rates" for those who are not familiar with
the terms.
4:20:33 PM
MS. HOLDMAN said one of the challenges of modernizing the
railbelt grid is developing new generation assets (ideally
developed by an independent power producer) at scale. This would
provide cheaper power to consumers. She explained that this
means building assets where the resource is located and offered
examples. She emphasized the goal of getting the cheapest power
to customers wherever the asset is built. She explained that
when transmission assets are owned by many different users, the
power must be moved across those different systems while
navigating various transmission agreements. Those rates add up
and are referred to as "pancaked rates." She offered an example
to illustrate pancaking and the challenge this poses. She
explained that the costs are bundled into "postage stamp rates"
and then allocated to end users across the system.
4:22:31 PM
CHAIR GIESSEL recalled that this could be illustrated by a toll
road example. She shared her understanding that an electron
would pay a fee for passing through various transmission assets,
which stack up (i.e. pancake). She indicated that an electron
could begin as the least expensive but then be subject to many
additional fees as it passed through various transmission system
assets.
4:23:29 PM
MS. HOLDMAN said this is correct.
CHAIR GIESSEL asked for confirmation of her understanding that a
key function of the RTO is to level the cost.
4:24:39 PM
MS. HOLDMAN replied yes. She clarified that it is a reallocation
rather than a reduction of costs. Thus, rather than tying the
cost to the specific transmission source, the cost is
distributed across the users of the transmission system in a way
that is equitable and fair.
CHAIR GIESSEL noted that Iceland's model was used as a template
for House Bill 307. She asked Ms. Holdman to discuss Iceland's
transmission system and how Iceland reduced the cost of
electrons.
MS. HOLDMAN explained that Iceland is similar to Alaska in that
it is not part of an interconnected grid system. She briefly
discussed the history of Iceland's transmission system and
transmission organization. She pointed out that Iceland has
built out large economies of scale and thus has large-scale
industrial loads and a dynamic market. She explained how this
allows Iceland to reduce the costs for all users by spreading
fixed costs, despite having a small residential population
relative to the size of the railbelt.
4:27:26 PM
CHAIR GIESSEL commented that the goal is to have this level of
system integration in Alaska.
4:27:44 PM
MS. HOLDMAN advanced to slide 15:
[Original punctuation provided.]
Healthy Grid Ecosystem
Goal: affordable and reliable energy
These functions work together to enable:
? Efficient, cost-effective investments
? Maximum participation from independent generators
and third parties
? System-wide coordination that supports
reliability and ratepayer value
System-wide Planning
Identifies long-term needs for generation and
transmission; process should be transparent,
inclusive, and data-driven. (RRC)
Reliability Standards
Maintains grid stability through technical rules,
contingency planning, and enforcement mechanisms.
(RRC)
Independent Regulator
Ensures fair rates, enforces non-discriminatory
access, and protects public interest (RCA)
Real-time Balancing
Maintains second-by-second balance between supply and
demand. Supports frequency stability, coordinates
reserves, and prevents blackouts across defined areas.
(RTO, CEA/MEA Tight Pool) [Grey]
Economic Dispatch Structure
Optimizes which generators run and when, minimizing
total system cost. (e.g., single GT, ISO, Transco,
tight power pool) (RTO, CEA/MEA Tight Pool) [Grey]
System-wide Development (e.g. transmission)
Implements those long-term plans by advancing shared
infrastructure projects. (?) [Grey]
Grey areas: progress has been made, but there exist
opportunities for additional process
improvement/legislative action
MS. HOLDMAN highlighted system-wide development, which is not
assigned to any organization. She pointed out that planning is
assigned to RRC; however, no organization is responsible for
ensuring the enactment of those plans. She surmised that this
gap may emerge in the coming years as RRC moves forward with its
planning function.
4:29:48 PM
MS. HOLDMAN advanced to slide 16:
[Original punctuation provided.]
RTO - Current Status and Future
? RTO has been formally certificated by RCA
? Governance Committee meeting on Friday 5/16 to
consider Draft Backbone Transmission System
Policy proposed by the Working Group; list of
qualifying assets and considerations for revenue
mechanism (Open Access Transmission Tariff
(OATT)).
? The RTO is expected to assume operational control
by July 1, 2026, with ongoing meetings and
stakeholder engagements to refine its structure
and policies.
RTO also lays the institutional groundwork for greater
future coordination.
4:31:28 PM
CHAIR GIESSEL noted the potential for future legislation to
create a more sophisticated system. She invited Ms. Holdman and
Mr. Colt to discuss "net metering" and "net billing."
4:32:20 PM
MR. COLT explained that "net metering" refers to the backward
and forward movement of the meter as power is either taken from
the grid or injected onto the grid. During this process, kWh
produced by a rooftop solar panel are traded with kWh produced
at a generation plant. He explained that "net billing" refers to
anytime kWh are converted into dollars to complete a transaction
to settle the account. Net billing requires a price for kWh,
which may be different for buying versus selling kWh.
4:35:26 PM
MR. COLT advanced to slide 17:
[Original punctuation provided.]
Additional Topics: Net metering versus net billing
Example 1:
During sunny weeks 1-2, you produce 80 more kWh than
you draw from the grid. You are 80 kWh ahead. Your
meter has run backwards by 80 kWh, shows -80. You have
80 kWh "in the bank."
During cloudy weeks 3-4, you draw 100 kWh more than
you produce. The meter runs forward 100 kWh. End of
month, it sits at 20.
Billing time! The meter shows -80 + 100 = 20 for the
month. The excess production during sunny weeks has
been netted against the "excess" consumption during
cloudy weeks. You owe the utility 20 kWh x 30 cents
per kWh retail rate = $6.00
This is monthly "net metering." Within the month, one
kWh injected into the grid trades for one kWh drawn
from the grid. kWh for kWh. At the end of the month,
the net consumption of 20 kWh turns into a net bill.
One kWh trades for 30 cents. kWh for $$. Some people
might call this monthly net billing (!)
MR. COLT explained that in example 1, the client consumes more
kWh than the amount of kWh produced. He shared a hypothetical
scenario to illustrate this. He noted that, in the past, the
meter could potentially run backwards on sunny days.
4:37:12 PM
MR. COLT continued to discuss the hypothetical example shown on
slide 17. He explained the process of monthly net metering,
which trades kWh produced for kWh consumed. He noted that the
utility is not concerned with the specific details of the meter
changes over time. Instead, the utility focuses on the net
consumption, which is then converted into a net bill. He said
the terms "monthly net metering" and "monthly net billing" can
become obscured in this case. He opined that this example can be
labeled as either and briefly explained his reasoning.
4:39:29 PM
CHAIR GIESSEL noted that utilities have operational costs (e.g.
utility line investment costs and personnel costs) in addition
to the cost of generation and electrons. She pointed out that
the utility user in example 1 is not billed for the 80-kWh
generated during the month - and therefore is not paying any of
the associated operational costs. She asked who pays those
costs.
4:40:23 PM
MR. COLT replied that this is an important question in the
debate related to establishing net metering and pricing the
output of a solar panel. He offered a hypothetical example to
illustrate how primary reliance on solar panels may result in an
unfair advantage for those individuals, as they are hooked up to
the grid but do not pay "fixed cost" grid fees. He added that
this problem is not limited to solar panels and explained how
this issue extends to energy efficient appliances.
4:43:13 PM
CHAIR GIESSEL observed that one concern is related to the cost
of installing solar panels, which not all users can afford. In
this case, the fixed cost grid fees are shifted to those users
who cannot afford solar panels. She shared her understanding
that net billing allows the fixed cost grid fees to be
distributed equally amongst all users.
4:44:06 PM
MR. COLT confirmed this understanding about the potential for
allocating and distributing the fixed costs of the network so
that those who utilize solar panels also pay those costs. He
pointed out that Senate Bill 123 includes a customer charge. He
explained that one way to address the distribution of fees is to
increase the customer charge and relabel it to the "network
charge" - which is the label used in other jurisdictions and
countries. He briefly explained that this would ensure that all
users connected to the network pay the associated fixed cost
grid fees - regardless of whether they use the network. He
commented that this is a very simple solution but opined that it
is politically nearly impossible to implement.
MR. COLT noted that slide 18 contains an infographic to
illustrate net metering versus net billing (example 1). He
stated that this was discussed previously (slide 17), and he
would continue to slide 19.
4:45:59 PM
MR. COLT advanced to slide 19:
[Original punctuation provided.]
Net Metering versus net billing:
Example 2
During sunny weeks 1-2, you produce 1,000 more kWh
than you draw from the grid; meter runs backward to
reach -1000.
During cloudy weeks 3-4, you draw 100 kWh more than
you produce; meter runs forward by 100 kWh to reach -
900.
Billing time! The meter shows minus 900 for the month.
The sunny injection of 1,000 has been netted against
the cloudy draw of 100. The utility pays you for 900
kWh, but at the avoided cost rate of 6 cents per kWh.
900 x 6 cents = $54.00.
Again, the monthly net kWh turns into a monthly net
bill.
4:48:06 PM
MR. COLT noted that utilities compensate users who produce kWh
for the grid at a rate much lower than retail. He opined that
this is one solution to the problem of solar panel users not
paying fixed cost grid fees and briefly explained his reasoning.
He emphasized the difference in the price received by those who
sell kWh to the utility versus those who buy kWh from the
utility. He acknowledged that this is only a partial solution,
as those who buy less power continue to contribute less to the
fixed costs. He emphasized that, for net metering, the meter may
run backwards; however, this can have a very different value
when it comes to net billing.
4:50:27 PM
MR. COLT advanced to slide 21:
[Original punctuation provided.]
Net Metering versus net billing:
Example 3
What about Annual "Net Metering"
During June sunny weeks 1-2, you produce 1,000 more
kWh than you draw from the grid. You are 1,000 kWh
ahead. Your meter has run backwards by 1,000 kWh. You
have 1,000 kWh "in the bank."
During June cloudy weeks 3-4, you draw 100 kWh more
than you produce. Your meter runs forward 100 kWh. It
sits at minus 900.
Under Annual "net metering", you Roll Forward the
credit into July. If you pile up more excess
production, you roll the cumulative credit into
August?.and?.
Repeat, while the sun shines?.
4:52:32 PM
MR. COLT advanced to slide 22:
[Original punctuation provided.]
Net Metering versus net billing:
Act 3: Annual "Net Metering"
During winter, the meter runs forward and the credit
drops, but it continues to roll forward from month to
month. Just like eating a stored harvest of sunshine.
Settlement time occurs in March (say). Read the meter:
? If it has run forward over the entire previous
year, you pay for the net consumption, at the
retail rate.
? If it has run backward, the utility likely pays
you for your net production, at the avoided cost
rate.
? But the settlement could also occur in other
ways. For example, any accrued credit could
simply expire.
? Some people would call this annual net billing(!)
Hybrid arrangements are possible?e.g. bank the July
kWh injections as dollars using the summer retail
rate; withdraw banked dollars as kWh using the winter
retail rate.
4:55:55 PM
SENATOR MYERS surmised that annual billing could result in an
unexpected, expensive bill for users if the weather is cloudy
for prolonged periods. He asked for confirmation of his
understanding.
4:56:31 PM
MR. COLT agreed. He clarified that users would continue to
receive monthly bills for the customer charge. He surmised that
users would also receive a monthly bill for any kWh usage. The
surplus from excess kWh produced during sunny periods would be
converted into dollars at the retail rate. He explained that
this would result in a stock of kWh (converted to dollars) that
could then be applied to future billing. He clarified his
earlier answer and reiterated that, under annual billing, users
would continue to pay monthly for any energy usage and would
therefore not be subject to large, unexpected bills.
CHAIR GIESSEL thanked the presenters.
4:59:16 PM
There being no further business to come before the committee,
Chair Giessel adjourned the Senate Resources Standing Committee
meeting at 4:59 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| ACEP Testimony on RRC RTO Net Metering 5.14.25.pdf |
SRES 5/14/2025 3:30:00 PM |