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What is Consumer-Owned Generation

Several options are available for the sale of the consumer’s power to the cooperative. For a small generator, it may be as simple as offsetting part of the customer’s internal electrical load and delivering the remainder to the cooperative on a limited basis. A larger generator may desire to sell the entire output of the generator. Each method is briefly described below.

You will notice that the rate paid by the cooperatives for energy from distributed generation is less than the retail rate that the cooperative charges its consumers. The cooperative’s retail rate reflects all of the costs associated with generating the electricity and delivering it across the electrical grid to the consumer. The cooperative’s rate for purchasing energy from distributed generation reflects the value of the energy in terms of avoided fuel costs and market energy prices.

Approximately,  $0.012 (PURPA) divided by the Cooperative’s average retail rate % of the cost of electricity is for all of the poles, wires, transformers, substations, main generating plants, and other electrical infrastructure that make up the electrical power grid. Distributed generation does not eliminate the need or offset the cost of this electrical infrastructure, which needs to be in place to deliver electricity to all of the different customers as well as to provide the distributed generation with a connection to the grid and a backup source. Distributed generation reduces, by a small amount, the fuel, such as coal, that the cooperative’s power supplier needs to use to generate electricity but does not reduce the electrical infrastructure requirements and costs. There may be a “standby” charge or rate if distributed generation is used to provide some or all of a consumer’s electrical needs and the cooperative facilities are only used to provide part of the consumer’s electrical needs or are used as a backup for the distributed generation.

Generation Under 150 kW at a single site:

  • The generation supplies some of the electrical needs of the customer, reducing electrical purchases from the cooperative.
  • Any production in excess of the consumer’s local needs that is delivered into the grid is purchased by the cooperatives at the cooperatives’ “PURPA” avoided fuel cost rate of $0.012/kWh.
  • If the generation is fueled by a renewable resource such as wind, biofuels or solar, the rate is $0.02/kWh.
  • The cooperative may implement a standby rate to insure that the other consumers of the cooperative are not subsidizing the electrical service to the location that is getting some of its power requirements from the distributed generation.

Generation Over 150 kW up to 5000 kW at a single site:

A. PURPA Avoided Cost Rate:

  • The generation supplies some of the electrical needs of the consumer, reducing electrical purchases from the cooperative.
  • Any production in excess of the consumer’s local needs that is delivered into the grid is purchased by the cooperatives at the cooperatives’ PURPA avoided fuel cost rate of $0.012/kWh.
  • A Standby Rate is required if the consumer wishes to receive power from the cooperative when the consumer’s distributed generation is not running. Since the consumer has the same facility requirements but is purchasing power from the cooperative only on a part-time basis, a standby rate is in place to prevent the other cooperative members from subsidizing the service to the independent power producer.

B. Commercial Wind Purchased Power Rate:

  • All energy from the wind powered generation is purchased by the cooperatives at $0.020/kWh, with annual escalator
  • The wind generation does not offset any of the consumer’s purchases from the cooperative.
  • Maximum term is 15 years
  • All Green Tags go to the cooperative
  • Not to exceed 2000 kW per site
  • Total wind capacity subject to specific delivery point limitations

C. Base Load Distributed Generation Rate:

“Base Load” means the distributed generation is connected to the grid on full time and operates on a continuous basis.

  • All energy from the distributed generation is purchased by the cooperatives.
  • The distributed generation does not offset any of the consumer’s purchases from the cooperative.
  • Rate has two components:
    • The “Capacity Payment” is based on the output capability, in kW, of the generator.
    • The “Energy Payment” is based on the amount of energy, in kWhs, the generator produces.
    • The combination of these two rate components averages approximately $0.02/kWh, depending on how often the generator runs.

D. Peaking Option Distributed Generation Rate:

  • “Peaking Option” means the distributed generation is only operated when the cooperative requests operation.
  • All energy from the distributed generation is purchased by the cooperatives.
  • The generation does not offset any of the consumer’s purchases from the cooperative.
  • Rate has two components:
    • The "Capacity Payment" is based on the output capability, in kW, of the generator.
    • An "Energy Payment" is to cover the cost of the fuel needed to run the generator when the cooperative requests operation.

These rates are not available to generation that is operated under the cooperatives’ Load Management Program.

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