Rooftop solar will soon get major subsidies directly from the pockets of Utah power customers thanks to a settlement between the solar industry and Rocky Mountain Power. Currently Rocky Mountain Power is forced to buy excess electricity from homes with rooftop solar at over three times the cost of other power sources.
Settlement would let Rocky Mountain Power charge nonsolar customers to pay for rooftop solar power
Charges could factor into Utah customers’ bills by mid-2019
By Emma Penrod
Utah’s Rocky Mountain Power customers could end up paying more directly for power generated by their neighbors’ solar panels, under the terms of the company’s recent settlement with the solar industry.
The settlement has been praised for preserving, at least for now, most of the financial credits that customers with rooftop solar arrays receive from Rocky Mountain Power when they generate surplus electricity.
Solar industry leaders and other clean-energy advocates cut the compromise deal with the state’s largest utility in an effort to replace an earlier Rocky Mountain Power proposal. Advocates feared that plan to introduce a three-part billing structure for solar households had the potential to halt the industry’s growth.
But the fine print of the new agreement — which hinges on how solar residential customers get reimbursed under what is called “net metering” — also includes a provision letting Rocky Mountain Power to pay those power credits with money raised by increasing the power bills of all Utahns.
The settlement’s authors say the charge is only temporary and would amount to a few cents on customer’s monthly bills at most. But representatives from the few groups opposing the settlement argue it is unfair to non-solar customers.
“Utah customers will have to pay additional charges that would not exist in the absence of the [settlement],” Steven Michel, chief of policy development for environmental group Western Resource Advocates, wrote in testimony submitted to Utah’s Public Service Commission. And yet, Michel said, there is still no evidence that Rocky Mountain Power needs this income to cover the costs of services associated with residential rooftop solar arrays.
The state Public Service Commission (PSC) is set to review the settlement later this month.
If the current terms are approved, solar customers who have signed up for Rocky Mountain Power’s net metering program before Nov. 15, 2017 will be grandfathered into the utility’s existing pay-back program for nearly 20 years. That would bring them credits on their bills worth about 10 cents per kilowatt hour of surplus power their rooftop panels generate.
Those who sign up after that deadline will be considered “transition” solar customers. For the next three years, they will receive a credit worth a little over 9 cents per kilowatt hour of surplus power.
Rocky Mountain Power argues it could buy solar power on the open market for just 3 cents per kilowatt hour — were it not for a state law that effectively requires the utility to buy its residential customers’ surplus power at a higher rate.
So, under the proposed settlement, to recoup those added costs from paying above market rates for electricity, Rocky Mountain Power would be allowed to charge additional fees to all its Utah customers — in effect, some argue, forcing non-solar customers to subsidize higher prices paid to solar customers.
Those charges would be applied to customers’ power bills via something called the Energy Balancing Account, a mechanism previously allowed by state regulators to let Rocky Mountain Power add surcharges to customers’ power bills when it gets hit with unexpected expenses, such as a sudden spikes in the cost of natural gas for its power plants.
Rocky Mountain Power spokesman Spencer Hall said it makes sense to use the Energy Balancing Account to charge these new fees because the amount of surplus power that residential solar panels generate tends to fluctuate and is difficult to predict.
“When we buy something, our customers buy it,” Hall said, “and this is a mechanism that enables us to recover unexpected costs.”
Hall said if the Public Service Commission approves its proposal, customers could start seeing solar-related charges on their bills as early as May 1, 2019.
Not surprisingly, Utah consumers and businesses have mixed feelings about the deal.
In principal, the national Consumer Energy Alliance, which advocates for power customers, said it opposes policies that shift costs from private power generation onto utility customers who do not have solar panels.
But James Voyles, policy counsel for the Washington D.C.-based group, said its Utah members haven’t come down strongly on either side of the recent settlement. Some of Utah businesses within its ranks approve of the new charges, Voyles said, while others oppose them.
Voyles nonetheless praised attempts to negotiate the settlement. “It is our hope,” he said, ”that all parties involved keep the most important stakeholder in mind — families and businesses.”
Others involved in closed-door negotiations that produced the settlement declined to discuss its details, including the proposed use of Energy Balancing Account charges. Western Resource Advocates, which participated off and on in the settlement talks but ultimately did not sign on, declined to discuss the charges, referring instead to its written testimony submitted to the PSC.
Clean air and energy advocates at HEAL Utah, one of the parties that did sign the agreement, called the Energy Balancing Account provision “concerning.” But the group declined to discuss the issue further.
Sara Wright, executive director of Utah Clean Energy, another party to the settlement talks, said that the new charges weren’t meant to be permanent and would be reconsidered in coming years.
“It’s not a done deal. It’s not permanent forever and eternity,” she said, declining to comment further.
The state Office of Consumer Services has also signed onto the settlement. Its director, Michele Beck, said parties to the settlement do not all agree about whether households with rooftop solar panels actually cost Rocky Mountain Power more money than other customers. But, Beck said, the compromise will allow the new charges only temporarily, until a new study of Rocky Mountain Power’s rates is completed, sometime around 2020.
“Solar advocates believe that there aren’t current subsidies, and this is a partway solution,” Beck said. “This is an important interim step that moves toward removing the subsidy, but some remains.”
Technically, Beck said, the utility’s customers already pay for net metering credits through their power bills, just not directly. But by assigning a specific monetary value to those credits, the proposed settlement lets Rocky Mountain Power apply those costs to power bills in a more direct way.
“They’re already having to pay, it’s just not quite so explicit,” Beck said. “Will it raise the rates? That’s not clear, because there are hundreds, maybe thousands of moving parts behind the Energy Balancing Account.”
But any increase, Beck said, would likely be so small that when spread over all the utility’s customers, “it’s going to be lost in the rounding.”