Allies emerge for solar, state by state

Solar advocates on both sides of the blue/red divide rally to protect distributed power

By Seth Masia

In 1989, a power engineer for Pacific Gas & Electric Co. named Dan Shugar proved that distributed solar reduced the peak loads handled by transmission lines and transformers. This meant that a utility company could save a lot of money by encouraging small solar installations scattered around its service territory. When air conditioning loads are met in part by power generated in the neighborhood, it reduces the need for expensive new power lines from central generating plants. It even reduces the need for expensive new generating plants.

solarcitizenlogoThat’s still true. The more distributed power comes on the grid, the less ratepayers must pay for new and upgraded facilities. A number of municipal utility districts (notably in Sacramento, Calif. and Austin, Texas) have made good use of distributed power to cut their maintenance and infrastructure costs. Austin utility calculates that the value of solar to its own operations is more that 12 cents per kilowatt-hour, and that’s what it pays for rooftop power. The argument was so persuasive that over the years, 43 states have adopted net-metering rules to encourage distributed solar.

But investor-owed utility companies (IOUs) don’t see it that way. What they see is that they make money by selling electricity, and owners of rooftop solar buy less of that. And they see that they have traditionally made money by building new generating and transmission facilities (most regulated utilities are allowed to earn a profit on everything they build or buy, from nuclear plants to coal).

Many utilities now recognize that they can make money building large solar and wind farms, with the transmission lines to handle the new capacity. The cost is passed on to ratepayers, and the electricity is sold just as if it came from a coal or nuclear or hydro plant.

But distributed generation, owned by homeowners, ranchers, farmers or leasing companies, is a serious threat to a utility’s business plan. In January, 2013, the Edison Electric Institute (EEI) – a research organization funded by the utility industry – called distributed generation and net metering a “disruptive” threat, and made the following recommendation:

While net metering policies vary by state, generally customers with rooftop solar or other DG systems are credited for any electricity they sell via the electric power grid. Electric companies are required to buy this power typically at the full retail rate, which includes all of the fixed costs of the poles, wires, meters, advanced technologies, and other infrastructure that makes the grid safe, reliable, and able to accommodate solar panels or other DG systems. Through the credit they receive, net-metered customers effectively are avoiding paying these costs for the grid. As a result, these costs are shifted to those customers without rooftop solar or other DG systems through higher utility bills.
Net metering policies and rate structures in many states should be updated so that everyone who uses the electric grid helps pay to maintain it and to keep it operating reliably at all times. This will ensure that all customers have safe and reliable electricity and that electric rates are fair and affordable for all customers.

In effect, EEI chose to ignore the work done by Dan Shugar’s team 24 years ago. The industry now claims that non-solar ratepayers support the grid infrastructure and solar ratepayers do not.

And so, over the past year, utilities in California, Arizona, Georgia and Colorado have sought to add a surcharge to the monthly electricity bills paid by the owners of rooftop solar arrays.

  • In California, the nation’s largest and most progressive solar market, IOUs backed Assembly Bill 327, which would have imposed a flat $10 fee on all ratepayers as a regressive way to support the grid infrastructure; and it would have ended net metering next year. The solar industry and solar homeowners fought back and got the bill amended into something much more solar-friendly. When signed into law in August, AB 327 continues net metering and gives the California Public Utilities Commission authority to lift caps on net metering and even on the 33-percent renewable portfolio standard.
  • In Arizona, the IOU Arizona Public Service asked for permission to impose up to $50 monthly surcharge on electric bills paid by net-metered homeowners and small businesses. Free-market conservatives led by Barry Goldwater, Jr. joined with solar advocates to fight the new fee. While the state’s Corporation Commission generally agreed that APS needed the fee, in November they slashed it 90 percent. New solar system owners will for now have to pay 70 cents per kilowatt of installed capacity, per month, or about $4.90 for 7kW system. It’s a setback but not a show-stopper for solar installations. The door is open, however, for the Commission to raise the fee in years to come, so the battle will continue.
  • Georgia Power was dead set against any form of solar power. Consumers – conservative and conservationist alike – were enraged when the IOU pushed through a surcharge to support construction of nuclear power plants. The result:  Tea Party and Sierra Club activists came together as the Green Tea Coalition. They lobbied hard, cited Austin’s value-of-solar experience,  and in July convinced the Public Service Commission to mandate 525 MW of solar power. Click here for the full story.
  • That same month, in Colorado, Xcel Energy filed its power delivery plans for 2014. The company said that its value of solar was only 4.6 cents per kWh, and it wants to slash the net-metering rate, currently set at the retail electricity rate of 10.5 cents. And it wants to impose a monthly grid-maintenance charge. The solar industry will fight back vigorously. Hearings are set to begin Feb. 3.

Challenges will be mounted to distributed energy in more states. Local solar advocates need to follow utility-company actions closely and be prepared to respond.

In the meantime, energy free choice has emerged as an issue that can unite solar advocates from the right and left. It’s time to reach out to folks who don’t trust monopolies, for whatever reason, and make common cause.

You can help! Join and support your local chapter of the American Solar Energy Society.  

And join ASES today!

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6 Responses to Allies emerge for solar, state by state

  1. Fred L. Denby Reply

    December 9, 2013 at 10:29 am

    I too have a rooftop residential Photovoltaic (PV) Solar System attached to my home and link to the utility electrical grid through “Net-Metering.” Any electricity that I do not use is bounced back onto the utility grid and at a later hour of the day and/or another day I will re-consume the electricity through a current credit system as mandated by legislation. I have been an advocate of PV Solar application and Net-Metering for many, many years before I had my PV System installed. I thought that the utilities would had been given permission by the Public Service Commission’s (PSC’s) to set the rate for net-metering “for example” my utility Potomac Electric Power Company (PEPCO) is selling electricity to me for .06¢ a KWH and each KWH that I generate and not use but sent back onto the grid to PEPCO they could buy each KWH from me at a rate that they calculated and approved by the PSC as a fair return on their investment like .04¢ a KWH. This would allow PEPCO to sell that same KWH’s back to me at .06¢ KWH a profit of .02¢ a KWH. PEPCO and electric utilities in general could profit from PV Solar System making .02¢ a KWH which could be gained by the utilities to pay for the use of their grid and offset the cost of fuel and plant equipment and operation cost to generate each KWH. If this would have been the case everybody should be happy the consumer who is only paying .02¢ a KWH for electricity generated against their PV System on a buyback net-metering program utilizing the utility grid to sell and buyback from the utility, and the utility who is making .02¢ a KWH profit without spending additional money for fuel and operation cost for generating electricity, but unfortunately this is not the case. I am somewhat embarrassed to say that my PV System as most PV Systems in the USA or free-loading off the utilities and the Utilities or mad as hell and want to now charge consumers in some cases an added fee to utilize the grid which is taking place nationwide with these added fee/surcharges for use of residential roof top PV System like mind. These utilities or proposing to charge consumers like myself up to .70¢ per KWH or more of design capacity of the system per month. In my case I would have to pay PEPCO a flat .070¢ x 14KW System = $9.80 per month added to my electrical bill every month. I think the advocates who initially promoted this legislation were a little naive and the utilities now or a little too greedy. I feel that legislation nationwide should be promoted and implemented by local government’s and PSC’s to amended and/or modify legislation to allow utilities to set a cost for buying every KWH back from consumers through net-metering in line the utility current operating expenses allowing them make a reasonable profit per KWH form consumer using their grid rather than consumer using the grid at no cost based on a current credit system.

  2. Clayton Mahan Reply

    December 9, 2013 at 1:08 pm

    If the utilities are going to charge customers utility rates calculated upon the cost of providing the service to them amortized over a specific period of time then their logic is beginning show some fairness. But they are not going to enter this economic analysis on a per customer basis. It would not be profitable for obvious reasons. So why are they attempting to do so, albeit in reverse?

    The utilities have to maintain circuits on which they want just their power for sale. However once a net metering customer dumps power onto their circuits it is theirs to sell. They do not pay for this power or have to worry about the generating equipment costs in doing so. Often it is actually sold back to the same customer. How would that customer then subtract from their bill from the utility their share of maintaining the circuit? They don’t and the utilities are not wanting to admit this.This delivery cost is factored into their costs within a large “averaging” calculation when selling power.

    The Utilities are suggesting they take a net metering surcharge from the net metered power creating the situation whereby the total annual costs to a customer for net metering is not based on the utilities’ equipment costs large “averaging” but the customers equipment investment, efficiency of production and of course the weather closely associated with this generation.

    One is fixed and the other is variable not related at all to the rationalization attempting to focus on equipment being used. This rationalization will only or should only lead to higher utility costs to those that use less power or have exceptional costs of power delivery.

    Many circuits were originally set up with an initial charge to the builder suggesting that if a net metering fee is initiated the amortized payback of that initial charge needs to be considered. Who receives the payback on that original equipment?

    For example a power company charges you $500 to drop a line to your house. This was 20 years ago. You have used it since and now want to use it for net metering. The current cost of dropping the line is $1500. As soon as the power company wants to impose an equipment charge upon a net metering customer does the homeowner have the right to charge the power company a prorated share on the power drop based not on the original price but the cost the power company would charge at the time they want to slap on their fee.

    So while they are charging a fee to the customer for net metering the customer is charging them for the part of the equipment otherwise paid for by the customer. On a 50% net metering estimate the utility would have to pay the customer $750 for the power drop they are now using to make money off the customer.

    If a development cooperatively converts to solar and pays the utility a net metering surcharge there is an obvious investment in solar that would be needed to hit an economic maximum that would force the utility to pay for the infrastructure they originally charged for but at the current costs they are building their recent rationalizations on. WOW talk about digging yourself a hole. No wonder they just want to influence it all to be taken off the table!

    Some developments stand to recoup the original investment and even profitably for reducing the investment in doing so. This is only on a simple residential model.

  3. Dan Coody Reply

    December 11, 2013 at 11:53 am

    In Arkansas, our all-electric house (-43 H.E.R.S.) produces about 12 times more power than it consumes. AEP/SWEPCO takes our excess power, sells it to our neighbors, then charges us about $8.50/month for grid costs. Such a deal!

    Thanks for your good online publication.

    Dan Coody, Fayetteville, AR.

  4. Pingback: Unity on Shout Out for Solar Day | Solar Today

  5. Sheila O'Keeffe Reply

    January 26, 2014 at 11:11 am

    New Mexico has abundant sun most of the time. The electric coops who receive their power from Tri-State Generation and Transmission Company charge excessive rates to all their customers. We have solar panels on our roof and at times I see on my inverter how they shut us out by the variations in the AC power and voltages. Our house is heated with an Electric Thermal Storage (ETS) unit which is an energy hog. Our know it all supplier just bought a coal plant last year. Guess who is paying for that!

    The greed with so called producers of electricity to hostage rate payers is outrageous. You should see the added costs for wintertime kWh’s added to our bills. We had hoped to cut our energy costs by half. We produce at least one third of our energy, but receive very little in return for our investment.

    The way our coop has the TOU structured they receive the greater benefit from our investment not theirs.When the sun is most productive during the spring and summer months our RC benefits decree markedly but their’s increase. Fair not as far a I am concerned. The customer always winds up getting the short end of the stick, and still they want and get more.

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