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Home My WebLink AboutA037 - Modifications to Municipal Code for Renewable Energy Buyback ProgramITEM #:39 DATE:07-22-25 DEPT:ELEC SUBJECT:RENEWABLE ENERGY BUYBACK PROGRAM CHANGES COUNCIL ACTION FORM BACKGROUND: Following the adoption of the Climate Action Plan by City Council, and in light of the recent Cost of Service Study for the Electric Utility, the Electric Utility Operations Review Advisory Board (EUORAB) was asked to review the existing Retail Solar program. Based on the analysis and recommendations from the Cost of Service Study, staff developed several alternatives or adaptations of the existing Retail Service program which are consistent with the Cost of Service Study results. After discussion at several EUORAB meetings, EUORAB held a public workshop on October 24, 2024, requesting feedback from the public (minutes attached). After reviewing the comments from the public meeting, EUORAB recommended the following changes: 1. Increase the rebate level for new solar installations from $100/kW-installed to $500/kW-installed. This will lower the amount a customer needs to borrow for an installation. Funding for this increase will come from the Electric Services Demand Side Management (DSM) budget. For a typical installation of 7 kW, the rebate would change from $700 to $3,500. 2. Adjust the excess energy buyback rate formula for new solar installation by using the MISO on-peak energy prices for all customer classes (3-year average of on- peak MISO energy costs is approximately 3.5 cents/kWh). This allows all customers to receive the same rate, and links excess energy production to the alternative costs the utility would otherwise pay to purchase the energy. 3. Grandfather existing customers under the program terms they joined under. Following a date to be determined, new solar projects would be subject to the updated terms and conditions. 4. Raise the existing program cap from 2,000 kW to 4,000 kW. The existing program is capped at 2,000 kW of installed solar. With 1,658 kW already installed, the program is nearly full. This change will allow additional projects to be added to the system. In order to codify these changes, amendments to the Municipal Code and the Electric Utility Tariff are necessary. Draft amendments have been drafted and are attached to this report for the Council's consideration. 1 ALTERNATIVES: 1. Make changes to the Renewable Energy Buyback Program by approving: a. First reading of an ordinance amending Chapter 28 of Municipal Code b. A resolution amending Appendix H, Ames Municipal Electric Utility Tariff No. 5 2. Do not approve changes to the retail Renewable Energy Buyback program. 3. Refer this item back to EUORAB or staff for further information. CITY MANAGER'S RECOMMENDED ACTION: Adopting the proposed changes to the Renewable Energy Buyback program will better align buyback rates with the recently completed Cost-of-Service study results. The proposed program changes provide more money to customers upfront, align the energy cost with market value, and create a common energy buyback rate across all customer classes. Therefore, it is the recommendation of the City Manager that the City Council adopt Alternative 1, as noted above. ATTACHMENT(S): Resolution Appendix H - Net Metering (Sec.2.7).PDF Ordinance Renewable Energy Buyback Rates(Sec.28.110).PDF 2 RESOLUTION NO. ______ A RESOLUTION AMENDING APPENDIX H BE IT RESOLVED by the City Council for the City of Ames, Iowa, that the following Appendix H, Section 2.7 Availability of Net Metering rate shall be amended for the purposes of net metering regulations. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Ames, Iowa, that Appendix H, Section 2.7 shall be amended as follows: APPENDIX H AMES MUNICIPAL ELECTRIC UTILITY ELECTRIC TARIFF NO. 5 SERVICE RULES SHEET NO. 12 * * * Sec. 2.7 Availability of Net Metering Net Metering is available to any retail customer receiving electric service under a City of Ames Electric Services rate schedule who owns and operates an approved on-site generating system powered by a renewable resource capable of producing not more than 500 kVA (kilovolt-amperes) of power, and who interconnects with the City of Ames Electric Services’ electric system. In order to qualify for this tariff an applicant must first obtain approval to interconnect and meet the City of Ames requirements, as determined by the City of Ames Electric Services department. Renewable energy technologies include those that rely on energy derived directly from the sun, on wind, geothermal, hydroelectric, wave, or tidal energy, or on biomass or biomass-based waste products, including landfill gas. A renewable energy technology does not rely on energy resources derived from fossil fuels, waste products from fossil fuels, or waste products from inorganic sources. Net metering applies to a customer- owned generating system that primarily offsets part or all of the customer’s electric service energy requirements provided by City of Ames Electric Services. The availability of this tariff is limited to the first 2,000 4,000 kW of qualified and interconnected generation (based on the aggregate sum of the individual system output ratings of all interconnected systems served under this tariff). All of the requirements, benefits, terms and conditions of this tariff are subject to change. Customers receiving net-metered service under this tariff assume all risks associated with future changes to this tariff. * * * ADOPTED this day of , 2025. __________________________________________________________________________ Renee Hall, City Clerk John A. Haila, Mayor 3 ORDINANCE NO. __________ AN ORDINANCE TO AMEND THE MUNICIPAL CODE OF THE CITY OF AMES, IOWA, BY AMENDING SECTION 28.110 THEREOF, FOR THE PURPOSE OF ESTABLISHING RESIDENTIAL, COMMERCIAL AND INDUSTRIAL RENEWABLE BUYBACK RATES; REPEALING ANY AND ALL ORDINANCES OR PARTS OF ORDINANCES IN CONFLICT TO THE EXTENT OF SUCH CONFLICT; AND ESTABLISHING AN EFFECTIVE DATE. BE IT ENACTED, by the City Council for the City of Ames, Iowa, that: Section One. The Municipal Code of the City of Ames, Iowa shall be and the same is hereby amended by amending Section 28.110 as follows: “Sec. 28.110. Renewable Energy Buyback Rates. Renewable electrical energy produced by an Ames Electric Utility customer and delivered to the City's electric system (in accordance with the conditions of service specified in Section 2.7 of Appendix H of the Ames Municipal Code) shall receive a credit to their utility account as follows: (1)For all retail customers who installed their system prior to September 1, 2025, these rates apply: (1) (a)Residential service.A residential rate customer's account shall be credited: (a) (i) 40% of $0.1213, plus $0.025 = $0.0735 per kWh of delivered energy for bills mailed on or between July 1 and October 31 (summer period). (b) (ii) 40% of $0.1005 per kWh, plus $0.025 = $0.0652 per kWh of delivered energy for bills mailed on or between November 1, and June 30 (winter period). (2) (b) Small Commercial service.A small commercial service customer's account shall be credited: (a) (i) 40% of $0.1149, plus $0.020 = $0.0678 per kWh of delivered energy for bills mailed on or between July 1 and October 31 (summer period) (b) (ii) 40% of $0.0986 plus $0.020 = $0.0594 per kWh of delivered energy for bills mailed on or between November 1 and June 30 (winter period) (3) (c)Commercial service.A commercial service customer's account shall be credited at 50% of $0.0644, plus $0.015 = $0.0472 per kWh of delivered energy (4) (d)Industrial service.An industrial service customer's account shall be credited at 63% of $0.0644, plus $0.010 = $0.0506 per kWh of delivered energy. (2)For all retail customers who interconnect a new system, or acquire an existing system on September 1, 2025 or after, these rates apply: (a)Residential service.A residential rate customer's account shall be credited: (i)Based on a 3-year rolling average of the MISO on-peak energy cost. The number will be calculated on a fiscal year basis and updated/applied on the first bill that is mailed every January. 4 (b)Small Commercial service.A small commercial service customer's account shall be credited: (i)Based on a 3-year rolling average of the MISO on-peak energy cost. The number will be calculated on a fiscal year basis and updated/applied on the first bill that is mailed every January. (c)Commercial service.A commercial service customer's account shall be credited: (i)Based on a 3-year rolling average of the MISO on-peak energy cost. The number will be calculated on a fiscal year basis and updated/applied on the first bill that is mailed every January. (d)Industrial service.An industrial service customer's account shall be credited: (i)Based on a 3-year rolling average of the MISO on-peak energy cost. The number will be calculated on a fiscal year basis and updated/applied on the first bill that is mailed every January. Section Two. All ordinances, or parts of ordinances in conflict herewith are hereby repealed to the extent of such conflict, if any. Section Three. This ordinance shall be in full force and effect from and after its passage and publication as required by law. Passed this day of , 2025. __________________________________________________________________ John A. Haila, Mayor First Reading: Second Reading: Third Reading: Passed on: I, Renee Hall, City Clerk of the City of Ames, Iowa, hereby certify that the above and foregoing is a true copy of Ordinance No. _____________, passed by the City Council of said City at the meeting held on ____________________________, and signed by the Mayor on ____________________, and published in the Ames Tribune on _________________. ____________________________________ Renee Hall, City Clerk 5