Skip to main content

Utilities push back against solar

In an effort stave off the "utility death spiral," many utility companies are levying increased fees and subsidy cuts on rooftop solar customers.

We recently wrote about the tug of war going on between distributed and centralized power generation. The front line of that battle appears to forming along the rooftops of those who own, or who would like to own, their own solar panels.

For most of the 900,000 homeowners that currently have solar on their roofs, the decision behind those purchases was influenced by the fact that utilities were obligated to buy back excess power through a variety of net metering programs.

With many customers 'defecting,' it will be left to those remaining to shoulder the cost of maintaining the grid infrastructure.

But now utilities, concerned not only about profitability, but perhaps even their very survival, are pushing back. Proposals in states including Arizona, Colorado, Louisiana and Utah among others include measures that would change their net metering programs or raise the monthly fees charged to home solar users for hooking their equipment to the grid.

One commonly voiced objection is that with many customers "defecting," it will be left to those remaining to shoulder the cost of maintaining the grid infrastructure, which in turn will encourage them to defect. There are fears that this could lead utilities into the so-called "solar death spiral."

This is the same argument that is just beginning to gain traction with electric cars. After all, gas taxes historically have been the primary source of highway maintenance funds. Those running their cars on electricity no longer will be paying those either.

While these problems are real, they are far from insurmountable. It’s basically a matter of getting the right fees to the right people in the right amount to ensure that the system remains fair, even as it’s changing.

That’s pretty much what Donald Brandt, chairman and chief executive of Arizona Public Service Co., had to say. "What is in danger of being overlooked is the harm inflicted on the 96 percent of our customers who do not have solar. This is about a sustainable model for both rooftop solar and the electricity grid, but it’s also about basic fairness for customers." He said this while pressing for reductions in solar reimbursement rates.

Fair is what we all want, but the pendulum has a habit of swinging too far, especially when lobbyists are pushing it.

In Nevada, the Public Utility Commission dramatically raised the fee for solar users, which resulted in SolarCity's halting its sales and installation activities, laying off 550 workers in the process. The monthly fee, which had been $12.75, will be increased up to $38.51 by 2020. At the same time, utilities, which were reimbursing customers at the rate of 11 cents per kWh for excess power, will only be required to pay 9 cents. That number will fall to 2.6 cents by 2020. For a homeowner selling back 300 kWh per month, that's a combined hit of about $600/year.

Nevada Gov. Brian Sandoval, who considers himself a supporter of solar, said that the state needed to find the right balance for the industry.

Federal subsidies, which were extended in December, help homeowners pay for the installation of rooftop solar panels. But for many, it’s the ability to sell power back to utilities, which helps to offset the cost of nighttime backup, that seals the deal.

So while the question of paying for services rendered, when it comes to using the grid to back up solar, is by all means a fair one, using it as a smokescreen for utilities to hold onto their monopoly when customers want to change with the times is not.

This story first appeared on:


More on this topic