Earlier this month, PNM, New Mexico’s largest electricity provider, proposed a distributed solar generation fee that could cost new solar installers $30 a month to connect to the grid. PNM considers the fee to be part of a greater “fairness issue” in which customers with rooftop solar systems aren’t paying their share of the fixed costs needed to maintain power lines and other elements of the grid.
“With solar customers who don’t use a lot of energy, other customers are actually picking up a greater piece of the cost,” Susan Snyder Sponar, senior communications representative at PNM, told ThinkProgress. Sponar said that most of the costs for maintaining their grid are not in fixed customer charges, but in energy charges. Since solar customers are generating a lot of their own energy, they aren’t paying the full cost of keeping the grid at the ready.
The “solar distributed generation interconnection fee” would add $6 per kilowatt per month to residential solar owners feeding power back into the grid. The average home solar system is between three and five kilowatts, so the monthly charge would add between $18 and $30 to a customers’ bill, according to PNM. It is part of a broader proposed electricity rate increase of around 7.7 percent for PNM’s 500,000-plus residential and business customers.
“Everybody benefits from the grid,” said Sponar. “For solar customers, when the sun doesn’t shine, or the home system doesn’t generate enough electricity, they rely on the grid too.”
Sponar said that 4,400 PNM customers already participate in the utility’s rooftop solar program, which since 2006 has relied on Renewable Energy Certificates to compensate distributed generation. She said the company recognizes the important benefits of solar to the system and that PNM is adding 40 megawatts of utility-scale solar next year, bringing their total to 107 megawatts at 15 facilities. In a sun-drenched state, these numbers are not exactly impressive. New Mexico did not crack the top ten states for solar capacity in 2013, and neighboring Arizona installed 700 megawatts of solar in 2013 alone. California has a total of over 8,000 megawatts installed.
PNM is one of many utilities seemingly stifling the proliferation of distributed solar power due to concerns over business-model disruption and long-term revenue impacts. Distributed solar advocates argue that solar can generate energy for the grid during peak demand hours when costs are highest, thus reducing strain on utilities and conventional power sources like coal, gas, and nuclear. In helping reduce the amount utilities rely on fossil fuel generation, renewables likes solar and wind also reduce emissions that may otherwise prove costly under new regulations such as the Clean Power Plans that aim to cut back on GHG pollution.
In the last year, this dynamic has made news in Arizona, where fixed fees were imposed on solar installers; Utah, where it led to customer outrage; Wisconsin, where a proposed fixed charge escalated the already heated debate; and recently in Wyoming, where a utility withdrew a proposed rate change due to customer backlash.
“I don’t think there should be an access fee for solar,” Mariel Nanasi, executive director of New Energy Economy, a New Mexico-based clean energy and low-carbon economy advocacy organization, told ThinkProgress. “Solar provides benefits to the system and also provides lots of jobs. In New Mexico, solar matches peak energy demand time in the summer and can displace other forms of energy. This is huge.”
Nanasi said that PNM has a history of “trying to quash solar in New Mexico” and that the utility is the “big bully in the state.” She said the proposed solar fee is just one part of a “very reactionary” rate increase that customers are outraged about.
PNM is considering buying a coal mine in northwest New Mexico after its lease runs out in 2017. The mine owner, BHP Billiton, has been supplying PNM with coal since the plant opened in 1973. Nanasi said that PNM is potentially squandering a big opportunity by not shifting away from coal at this juncture. It’s a decision that will impact electricity rates and carbon emissions for decades to come.
“We thought this was going to usher in the new opportunity for significant solar and wind deployment,” said Nanasi. She said PNM’s plan right now is to add 96 percent more coal and nuclear, four percent solar, and no wind.
“Unfortunately while other states are moving away from their problems, PNM is doubling down,” said Nanasi. “We are fighting what we see as backwards.”
PNM’s new solar interconnection charge would only apply to new solar customers after January, 1, 2016. One thing both Sponar and Nanasi can agree on is that solar power will be cheaper by then, and for the foreseeable future, as technological advances, improved deployment, increased storage, and economies of scale make the energy source even more appealing. Sponar said that since PNM built their first solar plant in 2011 the cost has decreased by half.
Nanasi pointed out that the consistency in pricing for solar, as customers lock-in fixed rates for years and even decades, benefits users by removing the risks associated with price volatility.
A recent report by Deutsche Bank found that in 2016 solar will reach grid parity with conventional forms of electricity in more than half of U.S. states, with New Mexico being one of these. So just when PMN is implementing their solar access fee, solar could cost less to produce than energy coming from the utility’s grid.