Are Utilities Wilting From Heat of Solar Competition?

A man brooms in front of a house with solar panels on the roof in Grevenbroich near Aachen, southern Germany on September 11, 2012.
National Journal
Dec. 23, 2013, 12:36 a.m.

Sol­ar en­ergy has be­come in­creas­ingly power­ful. Its rise to the top, however, hasn’t been without a few bumps along the way. 

Reg­u­lat­ory battles pit­ting the sol­ar in­dustry against power com­pan­ies in a fight over pay­ment mod­els played out in sev­er­al states this year. As the dust settles, sol­ar pro­viders are claim­ing vic­tory. Util­it­ies, on the oth­er hand, are try­ing to re­frame the con­ver­sa­tion en­tirely by in­sist­ing they aren’t an en­emy of the in­dustry.

Much of the de­bate so far has centered around a policy on the books in 43 states called net-meter­ing. Net-meter­ing al­lows rooftop sol­ar own­ers to sell ex­cess elec­tri­city back to the grid, with util­it­ies is­su­ing full re­tail cred­it to the cus­tom­er based on the amount of power they provide.

Util­it­ies are push­ing to scale back or get rid of net-meter­ing, call­ing it a sub­sidy that sol­ar has out­grown. The rooftop sol­ar in­dustry, on the oth­er hand, has res­isted the fight to dis­mantle net-meter­ing, ar­guing that it’s an equit­able way of pay­ing for power gen­er­a­tion.

In a series of high-pro­file cases this year in Ari­zona, Cali­for­nia, Idaho, and Louisi­ana, state law­makers and reg­u­lat­ory com­mis­sion­ers sided with in­dustry and moved to either up­hold or strengthen net-meter­ing.

“The na­tion­al story right now is quite clear,” said Bry­an Miller, the pres­id­ent of the Al­li­ance for Sol­ar Choice, a sol­ar-ad­vocacy or­gan­iz­a­tion. “There have now been four ma­jor ver­dicts on net-meter­ing, and in every case pro­posed reg­u­lat­ory changes to the policy have been re­jec­ted.”

A second point of con­ten­tion has been wheth­er util­it­ies should charge sol­ar cus­tom­ers ex­tra. Util­it­ies say ad­di­tion­al fees are needed to de­fray the cost of grid up­keep. Op­pon­ents say power com­pan­ies simply want to stamp out com­pet­i­tion.

In Novem­ber, Geor­gia Power backed down from a pro­pos­al to tack on fees for rooftop sol­ar cus­tom­ers amid pres­sure from con­sumer ad­voc­ates and sol­ar boost­ers. And in Idaho, the state pub­lic util­it­ies com­mis­sion re­jec­ted a sim­il­ar pro­pos­al.

Ari­zona bucked the trend when the Ari­zona Cor­por­a­tion Com­mis­sion de­cided that Ari­zona Pub­lic Ser­vice, the state’s largest util­ity com­pany, could hike rates for sol­ar cus­tom­ers.

It sounds like a win for the util­ity. But sol­ar groups say it’s not.

“In Ari­zona, APS got a lot less [in terms of the fee] then what they were ask­ing for,” Miller com­men­ted. “They wanted the fees to be some­where in the range of 50 to 100 dol­lars so the fi­nal rul­ing shows the polit­ic­al bound­ar­ies of the is­sue. And at the same time the com­mis­sion up­held net-meter­ing.”

Util­it­ies pro­viders, un­sur­pris­ingly, have a some­what dif­fer­ent per­spect­ive. 

“The com­mis­sion’s de­cision re­cog­nizes there is a cost shift oc­cur­ring where sol­ar users aren’t pay­ing what they should for use of the grid,” said Dav­id Owens, the ex­ec­ut­ive vice pres­id­ent of the Edis­on Elec­tric In­sti­tute, a trade as­so­ci­ation for U.S. in­vestor-owned elec­tric com­pan­ies.

Sol­ar groups gained more ground than they lost this year. But de­clar­a­tions of vic­tory by either side fail to cap­ture the whole pic­ture. 

“There is an un­fair char­ac­ter­iz­a­tion of util­it­ies versus sol­ar,” Owens said. “I’m not afraid of rooftop sol­ar. We see op­por­tun­it­ies there and we’re in­vest­ing in util­ity scale and oth­er sol­ar pro­jects. We’re not anti-sol­ar at all.”

What is clear is that head­ing in­to next year the ques­tion of sol­ar power pay­ment has not been re­solved.

State-level de­cisions im­pact­ing net-meter­ing and fees for sol­ar cus­tom­ers are be­gin­ing to look like just the start of a much lar­ger con­ver­sa­tion around re­work­ing util­ity pay­ment struc­tures in the age of dis­trib­uted gen­er­a­tion, an era whose hall­mark will be cus­tom­ers that cre­ate their own elec­tri­city without need­ing to rely on a cent­ral­ized power gen­er­at­or.

Both sides know the con­ver­sa­tion is com­ing, if it hasn’t already ar­rived.

“What we need to be talk­ing about is what’s the best way to al­loc­ate costs and how can we do this equit­ably and con­tin­ue to en­hance the grid,” Owens said. “What we’ve seen this year is a re­cog­ni­tion in vari­ous states that cur­rent rate-design struc­tures are not work­ing and they need to be re­vis­ited.”

For once, rooftop sol­ar ad­voc­ates don’t dis­agree. 

“I think we’re see­ing is that reg­u­lat­ors real­ize that you have to ad­dress these is­sues in the con­text of rate design,” Miller said. “The main thing is that when we look at rate design as a whole, sol­ar shouldn’t be made a tar­get.”

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