Stillwater News

Understanding how installing renewable energy systems affects your City of Stillwater electric bill

Released:Jan 21, 2020

MEDIA RELEASE

(STILLWATER, OKLAHOMA / Jan. 21, 2020) — Are you are considering installing a renewable energy source (wind, solar energy, water, etc.) system for your house to help control your energy costs?  If you are also a City of Stillwater electric customer, we’d like to speak with you before you sign any contracts.

“We want renewable energy in our community,” said City of Stillwater Electric Director Loren Smith. “In fact, one of the City’s strategic priorities is to provide reliable utility service that meets the needs of today’s customers as well as to anticipate future ones, and that means including renewable energy.”

However, before signing a contract and/or calculating any potential savings, it is import for customers to have a clear understanding of the methodology the City of Stillwater uses for calculating renewable electric energy and credits.

Change in Approach

According to Smith, there has been some confusion because the City changed its approach or methodology from a Net Metering policy (2008-2018) to an Avoided Cost for All Customers policy (established April 16, 2018). The reason for the change from the net metering approach was the concern for fairness to all customers.

“As utilities across the country gained more experience with these customer-owned systems, studies began to show that the rest of  the customers on the system were subsidizing those with renewable energy systems under net metering,” Smith said.

Net metering was a simple approach that allowed residents with customer-owned renewable energy systems (also called distributed generation or distributed energy resources) to offset their electric bill with energy they produce. As a result, when those customers reduced their consumption of power from the electric utility system, they also bypassed costs that were associated with the infrastructure needed to provide service when they were not generating—leaving non-distributed generation customers with the burden of paying those infrastructure costs. They were also given credits for their excess electricity from the City at their full retail rate.

Here’s the rub: The Electric Utility generally purchases electricity from the Grand River Dam Authority at an avoided cost of approximately three cents per kilowatt-hour (kWh). Under net metering, as mentioned above, it was giving electric credits to renewable energy customers at approximately eleven cents per kWh.

Smith said that “asking the City’s Electric Utility to give credits at a higher price for energy produced by a single customer than the price it would pay to purchase it elsewhere is not fair to other customers—and it is simply a bad business practice.”

Avoided Cost

The Avoided Cost for All Customers rate policy is set up differently. Smith explained that the rate policy set in 2018 establishes that the utility gives credits for renewable energy at the Stillwater Utilities Authority’s Avoided Cost price and sells all energy to the customer at the applicable retail rate.

This approach also covers the not-so-obvious costs associated with generation, infrastructure, transmission, and distribution of electricity available to customers on demand. “Again, it’s a matter of fairness and consumer protection for all of our customers,” he added.

Electric Utility Revenue

So, what does the City of Stillwater do with the revenue generated by providing public power? “A lot actually,” Smith said. “In addition to providing jobs to about 65 people in the electric department who keep Stillwater’s lights on, the revenue is used to replace or repair transformers and to purchase equipment like poles, wiring, street lights and bucket trucks.”

Another important benefit of being a public power community is that a portion of the revenue is reinvested to improve and maintain crucial city services – such as fire, police, parks and roads.

“Since Oklahoma cities rely primarily on sales tax to fund local government services, cities like Stillwater are fortunate to have this additional revenue source,” he added.

Stillwater has been a community-owned electric utility since 1901 and has owned its own electric generation since 1903. Stillwater is the second largest municipal electric utility in the state as well as the largest transmission owner and electric generator. It is one of 191 of the nation’s public power utilities to earn the Reliable Public Power Provider (RP3®) designation from the American Public Power Association for providing consumers with the highest degree of reliable and safe electric service. 

Learn more about your utility bill at http://stillwater.org/page/home/government/departments-divisions/utility-and-billing-services/billing-payment-information

Thinking of Adding a Renewable Energy System? Talk to the City of Stillwater First

“Because of the expense of these systems and the perceived savings, it is important for our customers to talk to the City before signing a contract that promises you will see savings on your electric bill if you purchase X, Y or Z renewable energy system,” Smith said. “What we are seeing is that some vendors are selling their systems promising savings that don’t reflect the Avoided Cost rate policy we have in Stillwater.”

If you are considering a renewable energy system, contact Electric Chief Engineer Kyle Muret at 405.533.8444 and Kyle.Muret@stillwater.org.

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For media inquiries, contact the Department of Marketing and Civic Engagement at 405.742.8219 or email news@stillwater.org.

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