Solar advocates in California — including from church groups, social justice organizations, farms, schools, and city councils, as well as the usual industry figures — are on the edge of their seats, awaiting a decision from the utility regulator that will shape how rooftop solar is billed in the future.
Industry insiders say they are most worried that utilities are lobbying behind the scenes for fees and charges that will effectively destroy net metering, a billing system that pays solar customers back for excess electricity that goes back on the grid.
“Utilities are taking a multi-pronged approach to undermine net metering in any way they can,” said Susan Glick, senior manager for public policy for Sunrun, a California-based solar company.
But as the number of people with solar approaches the current cap on net metering, the California Public Utilities Commission has to consider what the program will look like going forward. The PUC will vote Thursday on a proposed decision — but they have the option to adjust the proposal or even replace it entirely.
Rate-making is both art and science. The PUC is tasked with ensuring “safe, reliable utility service and infrastructure at reasonable rates, with a commitment to environmental enhancement and a healthy California economy.” That is no small feat. It has to balance the amount customers pay, how the payments are calculated, and utilities’ need to maintain the grid and, yes, to make money. California’s three biggest utilities, Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric, are all investor-owned.
An average system owner could see fees go from between $8.80 and $10.07 to between $18.30 and $21.85 — not including the actual cost of electricity
The proposed decision for net metered rates is an acceptable compromise, Glick said. As currently written, new net metered customers will pay a one-time interconnection fee, a “non-bypassable charge” that goes to support low-income and other common good programs, and time-of-use rates, which scale the cost of electricity to the amount of demand throughout the day. (California is in the process of transitioning all customers to time-of-use rates, in an effort to incentivize conservation during peak demand times. The PUC doesn’t want people to be charging their electric cars or running their driers at noon, while every office building is running air conditioners at full blast.)
Generally speaking, in addition to paying for the actual electricity, customers pay additional fees per kilowatt hour. California residents pay a negligible amount towards a bond in preparation for an energy crisis. They also pay for nuclear decommissioning and a Public Purpose Program charge. The new rate structure will ensure that solar customers pay more towards the Public Purpose Program and other shared costs than they do now by setting that as a non-bypassable charge.
But the biggest concern for Thursday’s decision is that the PUC will tack on more fees — ones that aren’t in the proposal so far. Her company estimates that including transmission and other charges could double the cost to solar customers. An average system owner could see fees go from between $8.80 and $10.07 to between $18.30 and $21.85 — not including the actual cost of electricity. Glick says the PUC needs to clarify that only funding for the Public Purpose Program, nuclear decomissioning, competition transition, and a California bond would be included.
In comments to the PUC, California’s utilities offered a different proposal, which would also change the way solar customers are metered.
“They have a history of lobbying heavily to wipe out rooftop solar,” Glick said.
In its comments to the PUC, the Sierra Club said the proposal from the three investor-owned utilities “goes too far too fast and creates significant risk of severely crippling rooftop solar adoption in California.”
It wouldn’t be the first time the CPUC acted too hastily.
In 2012, the CPUC drastically changed a net metering proposal at the last minute — reportedly under pressure from the utilities — to one that would end net metering altogether in 2014. That decision ultimately led to the California legislature passing AB 327, which directed the PUC to figure out how net metering would work once the 5 percent cap had been hit. The current action is the result of that law.
Utilities generally argue that solar customers are shifting the cost of maintaining the grid to customers who can’t go solar, either because of cost or location. A study commissioned by the Nevada Public Utilities Commission found that, in fact, solar customers help the grid, by reducing stress on transmission lines and reducing demand during peak times.
That finding, though, didn’t stop the Nevada PUC from hammering both new and existing solar customers with huge fees. In a decision just before Christmas, the Nevada PUC dramatically lowered the rate customers are compensated for excess electricity. The state, which was the third-largest solar market last year, is expected to lose many of its 5,000 solar jobs.
Update:
An earlier version of this post mischaracterized the utilities’ alternative proposal and the estimated costs associated with it. The estimated costs are based on a theoretical policy, not a current proposal.