States weigh rate changes for rooftop solar

A nationwide struggle over how to integrate solar energy into the electrical grid is underway as rooftop solar has become more cost-competitive and utilities are looking at how new technology affects their business models, experts say.

“Solar rule making is a topic that will heat up around the country, due to the affordability and attractiveness of rooftop solar,” said Kevin Haley, director of communications at the American Council on Renewable Energy, a non-profit group based in Washington, D.C.

Regulators at the Public Utility Commission (PUC) in Nevada and California have recently updated their policies regarding costs for solar customers, showing two different directions for reform: one that bolsters the solar market and the other aimed at protecting non-solar customers.

The most divisive issue in Nevada is the PUC's proposed changes to its “net metering” policy for solar customers — a policy that credits utility customers who have rooftop solar at the full retail rate for the excess power they generate and supply back to the local grid.

Nevada’s PUC (PUCN) approved changes to its net metering policy on Dec. 22 that would reduce the credit solar customers received for selling power back to the grid — instead of being paid at full retail value they would receive wholesale value prices. Additionally, this decision would be retroactive, PUCN said.

The decision to grandfather those changes will be reviewed at a hearing next week, according to Peter Kostes, public information officer for PUCN.

For Nevada’s 17,000 net metering solar customers and the venture capitalists who have supported the renewable market in the state, the decision will significantly impact their ability to make money back on their investments, critics say.

Solar Energy Industries Associated has asked the PUCN to reconsider the new rates, saying failure to do so would cause private investment in renewable energy to drop, impacting economic growth, the Las Vegas Review-Journal reported.

But the PUCN maintains that solar customers aren’t paying their fair share for grid maintenance, even though they require the grid be available to them when their solar arrays aren’t producing energy and they must import electricity from the grid.

The PUCN wants to reduce the amount solar customers would receive for selling energy back to the grid, as well as increase the fixed charge — as much as tripling it — for connection to the grid.

“Current rates enable net metering customers to avoid paying for some of the fixed costs associated with the sale of electric service by NV Energy to net metering customers,” the PUCN said in a press release following the rule changes.

That solar customers were paid at full retail value for extra energy supplied to the grid “unreasonably increases the costs that are ultimately borne by other ratepayers,” the PUCN release said.

The debate over net metering pits powerful interests against each other, experts say.

“Utilities don’t want to risk losing financial (compensation) for their investments in the grid to serve all customers, while rooftop solar developers don’t want to lose business opportunities if their potential customers are not compensated as highly by utilities when excess rooftop solar generation is sent back to the grid,” read a recent blog post by Pierre Bull, a policy analyst for the Natural Resources Defense Council (NRDC).

Following Nevada’s decision, California’s new rules for solar customers showed there is a “better way,” Bull wrote.

California’s PUC decided last week to take a pause to look at grid impact and market analytics before making its decision.

In the meantime, “they have assured existing net metering customers that their generation will continue to be credited at the full retail rate, which is a good, reasonable approximation for the benefits they provide to the grid,” Bull wrote.

Last week, California’s PUC upheld net metering by 3-2, allowing solar customers to continue lowering their overall power bills — which assists them in paying off the investment in rooftop solar.

While home and business owners celebrated the decision, some utilities argued it rewarded solar customers while leaving the burden of cost to maintain the grid on non-solar clients.

To address that concern, California regulators added an increased fee to solar customers to offset those costs.

“Under the proposed decision, the utility meter will continue spinning backward at full retail rates for solar customers when they are generating more electricity than they are using, but a new fee will partially offset the value of those credits,” the California Environmental Justice Alliance said in a press release on Jan. 29.

"Solar customers will be required to pay increased charges for upkeep of the grid,” the release added.

At least 42 states have passed laws to allow net metering at full retail value, but significant drops in the cost of solar arrays in recent years have led some to call for an end or changes to the policy.

Critics of PUCN’s decision to end net metering said it’s too early in the solar market’s development to end policies that foster its growth. Since the decision, at least two major solar companies have announced they will end operations in the state.

In the first week of January, Sunrun exited Nevada, affecting 550 of its employs in the state. The same week, SolarCity Corp said it would cut hundreds of jobs, relocating workers to more business-friendly states.

Unlike Nevada's new rules, California regulators' decision showed there can be a balanced policy that meets the needs of both solar customers and utilities, experts say.

“As tempers in Nevada are running high, it’s important to pull back and realize that there’s a middle ground available to both the utility sector and the solar companies,” Haley said.

The solar industry shouldn’t be completely shut out to appease utilities, he says, just as utilities and non-solar customers shouldn’t bear the burden of grid maintenance and solar integration on their own.

“Getting to that middle ground is a challenge, but not an insurmountable one,” Haley said.

With wire services