1. NET METERING & FEED IN TARIFF REVIEW IURC Technical Conference
Cause No.43922
September 21, 2010

2. Agenda
High Level Overview of NIPSCO Proposal and Interaction Between Net Metering and Feed-In Tariff
Example Customer “Decision Tree” to Demonstrate
Net Metering Proposal (generally following proposed tariff language)
Overview
Discussion of Questions re Net Metering Proposal (e.g. eligible technologies, facility size, facility ownership, meter aggregation, system cap)
Interaction and Consistency with Draft Commission Rule
Feed-In Tariff Proposal (generally following proposed tariff language)
Discussion of Questions/Issues re Feed-In Tariff Proposal (e.g. eligible technologies, facility size, facility ownership, pricing, system cap)
Any Other Related Matters (e.g. interconnection, etc.)
Next Steps
Overview of NIPSCO Proposal and Interacction Between Net Metering and Feed-In Tariff
II. Net Metering Proposal (generally following proposed tariff language)
A. Discussion of Questions re Net Metering Proposal (e.g. eligible technologies, facility size, facility ownership, meter aggregation, system cap)
III. Feed-In Tariff Proposal (generally following proposed tariff language
A. Discussion of Questions/Issues re Feed-In Tariff Proposal (e.g. eligible technologies, facility size, facility ownership, pricing, system cap)
IV. Other Related Matters (e.g. interconnection, etc.)
V. Next Steps.

3. Policy Overview Feed-in Tariff Net Metering
Renewable initiative
Increasing customer interest
Technological advancements (both application and cost) and federal initiatives through tax credits
Gather information about how and when customers use these programs
Experimental rates under a three pilot program
This effort is consistent with the Hoosier Homegrown Energy Policy
Net Metering
Permanent change that is supportive of the renewable initiative
Complimentary to the feed in tariff
No sunset on the effectiveness of expansion to net metering
Part of NIPSCO’s Mission to invest in clean, modern and affordable energy solutions

4. Policy Overview (cont.)
Encourage job and economic growth
Increase diversity of energy supply system
NIPSCO filed a request to enhance the current Net Metering tariff and provide a Feed-in tariff for its customers on July 16, 2010
Based on customer requests
Higher project limits and expansion of availability beyond residential and K-12 customer for Net Metering
Adding Feed-in tariff for larger projects
Feed-in tariffs can be implemented alongside net metering
IPL has the only Feed-in tariff in Indiana at this point
Customers who are building environmental homes are increasing the use of renewable energy technologies in their designs.
Existing building owners are looking at renewable energy as a way to be cleaner and reduce their energy bills.
Commercial buildings that have a sustainability goal are looking for a better return on their investments and the current avoided costs do not satisfy their economic needs given the expense of installing renewable technologies.
Cities and Towns are looking at renewable sources as a means to lower their bills and clean up the environment as well as demonstration value for its citizens.
The legislator has considered and encouraged the utilities to expand the coverage for net metering in the state of Indiana.
And finally we have heard from our customers that they are interested in renewable and what to be paid the retail for their power fed to the grid.

5. Customer Feedback
Approached by a customer looking to install a solar farm in Porter County
Told by the solar project developer that a long term contract is essential
Limited window due to the expiration of a federal tax credit
A developer responding to school’s request to install wind power in Elkhart County
Indicated that fixed-price and long-term contract are desirable
Use of feed-in tariff affords multiple locations for project
Approached by a large agricultural business for pricing to support a bio-gas to electricity project in White County
I am one of several owners of a 130 acre farm on the I80/I94 interstate.  We are approximately 3 miles south of Lake Michigan and directly south of the Dunes where there are several thousand homes.  I approached BP Solar about a solar farm to generate electricity for the homes in the dunes beach area.  They are interested, especially since they have a big refinery in Whiting.  Diane said that you could help me. The BP Solar project developer told me that a long term contract is essential for them.  I need someone to see how the various pieces can be brought together.  BP wants a long term contract, there is a strong movement in Indiana to create more alternative fuel sources, and NIPSCO is making a strong effort with the tarriff application.  The site make generate 10 megawatts or more, depending upon equipment - this is not my expertise.  The 30% tax credit is expiring soon, so there is a limited window.   The site would be directly visible on the busiest section of interstate in the country, so there would be some PR value to NIPSCO and BP.   There are potentially many positives.  
BP Solar has been very active in New Jersey, California and Nevada because of direct state support.   The State of Indiana said that the rates are attractive enough.  I have no way of judging that.  Could you give some sense of what level of commitment - pricing and years - would be posible from NIPSCO?  Am I correct that it would be easier and more efficient to have one larger solar provider?   Does this help you get to your goal easier than if you do not have to staff a department to deal with all the individuals who will not be satisfied with web site information?    Clearly I hope the one big user is cheaper argument prevails because I can sell or rent our farm. 
I look forward to hearing your thoughts.

6. Project Facts A 50 kW wind machine costs around $365,000 installed
For solar applications, Indiana there are 35 systems in the database with an average cost of $/W installed
Illinois: 8 systems with an average cost of 7.94 $/W installed
Michigan: 7 systems with an average cost of 9.67 $/W installed
Ohio: 166 systems at an average cost of $/W installed
Missouri: 5 systems at an average cost of 7.26 $/W installed
Avg. of all 5 – 9.87 $/W installed
7-10 $/W installed is probably the range for the Midwest, though other factors for your area such as labor costs and numbers of installers could change that
In the cases of Ohio and Indiana, the majority of systems are from 2008 and back
Illinois and Missouri (the lower $/W) have the majority of their systems from 2009 – 2010

7. Customer Decision Model
Proposed Net Metering and Feed-In Tariffs
Cost and Complexity
Net Metering
Feed-In
$$$
Net Metering Only
Net Metering and Feed-In
Feed-In Only $$ $
kW kW kW MW MW
Ease of Installation
Low Cost
Residential/ Small Commercial
Engineered System
Technical Interconnect
Large Commercial/ Light Industrial
Complex Engineered System
Wind Farms
Solar Farms
Large Farming Operations
For Illustration Only

8. NET METERING PROPOSAL

9. Net Metering
Customers owning qualifying renewable generators are billed only for their net energy consumption over a given billing period
Obtain a credit for future billing periods if production exceeds consumption
Provides a direct, inexpensive, and easily administered mechanism for encouraging the customer installation of small scale renewable energy facilities on their buildings

10. NIPSCO Proposal Highlights
All Customers eligible
Participation level increased to 100 kW (from 10 kW)
Wind, Solar and Hydroelectricity generation qualify
The state proposal
A renewable energy resource as defined in IC
Hydrogen
Other emerging renewable energy technologies the commission determines appropriate
No changes to interconnection policy

11. NIPSCO Proposal Highlights (cont.)
Aggregate amount increased to 6 MW (was 1 MW previously)
State proposes an optional limit of (1%) of the most recent summer peak load of the utility, with at least fifty percent (50%) of the capacity reserved solely for participation by residential customers
Metering requirements remain unchanged
Allows all customers to roll over credits from month to month
State proposes to limit customers with capacity up to 200 kW rollover credits from month to month

12. Customer Benefits Expanded to all customer groups
Allows for the customer to “spin the meter backward” and be credited for feed back at retail value
Fits in with the “Green” Building movement
Supports the growth of the renewable energy equipment sales and service industry
Moves the renewable energy option for our customers beyond the test period and allows for mainstream use
Gives our customers another option for conserving energy
Quote from a customer blog.
Net-Metering: With Net-Metering, surplus electricity generated by your renewable energy system will be credited back to your utility account. So if your solar system makes more electricity than you are using, the "meter spins backwards". You are not actually "selling" electricity, since in most states the utility will not reimburse you for excess electricity. But, if your utility offers "Net-Metering" you may be able to get credit for electricity provided back to the grid during peak periods. Combined with TOU metering, Net-Metering can result in multiplied savings since your electricity account may be gaining electricity credits during the time of peak utility rates -- Think of a hot, sunny summer day ... your solar system is producing power, spinning your electric meter backwards, and supplying the grid with electricity to run other people's air conditioners -- you're "spinning back" cost at peak rates! That's the savings power of Net-metering, combined with TOU rates.

13. Net Metering Customer Solar Site

14. Net Metering Customer Solar Site

15. Net Metering Customer Wind Site

16. Overview of NIPSCO Proposal and Interaction Between Net Metering and Feed-In Tariff

17. Interaction and Consistency with Draft Commission Rule
Eligible facilities
System Wide Cap (.2% vs. 1%)
Unit Cap (100 kW vs. 1 MW)
50% Reserve for Residential Customers

18. FEED-IN TARIFF PROPOSAL

19. Feed-in Tariff Encourages new renewable energy development
Long term financial incentive to customers who generate renewable electricity
Standardized and streamlined process to do so, easing the entry of new systems
Contract term up to 10 years obligates NIPSCO to purchase eligibility renewable energy
NIPSCO’s feed-in tariff is its first comprehensive purchase rate schedule for renewable electricity production
It offers stable prices under long-term contracts for energy generated from renewable sources, including:
Biomass
Biogas
Landfill gas
Wind
Solar photovoltaic (PV)

20. Feed-in Tariff (cont.) Attributes
Rates developed using a standard Discounted Cash flow model
Capped at 1% of project peak system demand – 30 MW
No Single technology can exceed 50% of the 30 MW cap
Could use up to 100 kW of renewable generation against own energy load
NIPSCO will retain all environmental attributes
Contracts subject to IURC approval
One year from contract signing to put project into service

21. Purchase Rate Schedule As Filed July 16, 2010
Discounted Cash Flow Model Approach
Solar = $0.26/kwh
Wind 0-100kw = $0.17/kwh
Wind 100-2MW = $0.10/kwh
Biomass = $0.07kwh + $6.58/kw
Long Term Contract 10 years
Contracts subject to IURC approval
One year from contract signing to put project into service

22. FEED-IN TARIFF PROPOSAL Discounted Cash Flow Modeling

23. Discounted Cash Flow Model Assumptions
20-year DCF model
2% Inflation Rate
Includes 30% investment tax credit
Effective Tax rate 40.53%
Accelerated depreciation
Prices set to achieve approximate zero net present value at year 20
Assumptions were used for capital, operating and maintenance expenses, capacity availability, and installed project size
Positive cash flows range from year 10-13

24. Project model Size Considerations
Net metering option available at 100 kW
Economies of scale
Footprint of the project (land required)
Simple to sophisticated operating requirements
Construction Expertise- Home owner to Professional developers
Customer applications and load considerations

25. FEED-IN TARIFF PROPOSAL Discounted Cash Flow Modeling
Review of Spreadsheets

26. Other Related Matters and Next Steps