PUC avoids “avoided cost”

If you are not into the minutiae of state government or the rather slow process of rule-making, what we’re about to post about might seem unbearably dry. Until, of course, you realize that when the Public Utilities Commission looks at something like rule-making for governing PURPA avoided cost determinations in South Dakota, you realize sometimes paying attention to seemingly boring things can be important.

Okay, so let’s clarify. The Public Utilities Commission, the body charged with regulating a hodge-podge of industries, today declined to look at establishing a methodology for determining avoided costs. Avoided costs are costs that a utility avoids by purchasing power from an independent producer rather than generating power themselves, purchasing power from another source or constructing new power plants (thank you, NC Sustainable Energy Association). So, say, when you put solar panels up on your house and sell the extra electricity you generate to the power company, they avoid having to pay for expensive mid-day electricity, new power plants, and electricity lost on those long power lines.

But what, exactly, the level of compensation you get for the electricity you sell them is a bit of a mystery in South Dakota, in large part because we don’t have any methodology for determining that. We could, like Minnesota does, and it would solve a lot of problems.

But the PUC just decided to pass the buck, and continue leaving it up to each electricity provider how much they pay you for your solar energy. Which really isn’t fair to you, since that utility is only motivated to pay you as little as possible. More profits for them that way, right?

The reason for not taking up the issue of avoided costs cited by Commissioner Fiegen made no sense at all: that the PUC has to look out for ratepayers, and they don’t want to favor anyone. But if that were really they case, they would have taken up the issue of avoided costs, because right now South Dakota ratepayers are being hurt by not being able to take advantage of more distributed generation, and individuals are being hurt in favor of the utilities who get to pay you less for your product than it is worth.

Not taking up avoided cost only helps the utilities, by covering up the real data about what they’re paying for and when. It isn’t transparent, it isn’t good for rate payers, and it isn’t good for South Dakota.

And since the PUC declined to take up avoided cost, we’ll keep pushing our legislation to get South Dakotans a fair rate for their electricity. Because at this point, that legislation is the only way energy fairness is going to happen.


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