It may not sound all that snazzy, but electricity rate design is one of the hottest topics in the solar industry right now. Because so much of a solar energy system’s value comes from the bill payments it is offsetting, exactly how utilities charge a customer for power can mean the difference between a good return on that solar investment – or not. As a result, this rather arcane and hugely complicated rate design process is critical to the continued success of customer solar adoption. So you can bet Vote Solar is working hard to establish and defend solar-friendly electricity rates in states from coast to coast.
Recently that’s meant protecting solar energy users from unfair fees on their electricity bills in San Diego, California.
In October 2011, San Diego Gas & Electric (SDG&E), San Diego’s main electric utility, proposed significant changes to the structure of their rates that will basically penalize customers for going solar. SDG&E wants to create a “Network Use Charge” that would add a fee to customers’ bills who install solar. SDG&E is claiming that solar customers aren’t paying their fair share for for the services SDG&E provides to them. Fortunately for solar customers in San Diego, SDG&E’s proposal appears to be clearly contrary to state law and policy. That’s right — what they’re proposing is probably illegal under Public Utilities Code § 2827(g), which clearly protects net metering customers from discriminatory fees such as the “Network Use Charge.”
At the heart of this issue is a policy known as net metering. Commonly known as the policy that allows your electric meter to spin backwards, net metering is a simple billing arrangement that ensures solar customers receive fair credit for the electricity their systems generate and deliver to the grid during daytime hours. It’s one of the most important tools we have for enabling energy consumers to generate their own clean, reliable electricity from the sun.
California is one of 43 states that allow solar energy users to net meter. There are over 100,000 net metered solar energy systems installed in the state, representing over 1,000 megawatts of solar energy. That’s the equivalent power generation to two utility-scale natural gas power plants – two power plants that ratepayers won’t need to finance. And did we mention that the industry that is installing these systems is now more than 25,000 employees strong in the Golden state? We’re talking about significant clean energy generation and real job creation, all in part thanks to net metering. (Sign our petition to support California net metering here.)
The program has empowered Californians to go solar, save on their utility bills, reduce harmful emissions, and support new economic growth across the state. It all sounds great, so where’s the controversy? Well, many utilities, including SDG&E argue that net metering is an unfair policy, and that the costs of providing net metering outweigh the benefits solar provides to the grid. Thus they are trying to curtail the full value of the credit solar customers receive when they export power to the grid, by introducing charges such as the “Network Use Charge.”
However, there’s plenty of fact-based analysis (see our favorite from Crossborder Energy here) showing that SDG&E’s perspective on the costs and benefits of net metering is rather narrow – that in fact having energy customers invest in valuable peak solar generation right when and where it’s needed most is a net benefit to the entire grid. Vote Solar, along with a broad coalition of advocates and the solar industry are working to counter the utility’s false claims in multiple venues.
To that end, Vote Solar filed a protest against SDG&E’s application to create a Network Use Charge in December. We will be actively intervening in their general rate case in the coming months to ensure that our members, and solar customers, are adequately represented in this important proceeding. We should know if we are going to have a big fight on our hands in February, once the PUC determines whether SDG&E’s proposed Network Use Charge is plainly illegal. Stay tuned. It’s going to be an interesting year (if you’re into hot/geeky things like electricity rate design).
The giant utility company is rapidly becoming an archaic structure. Adaptability is what ensures survival. If (substitute the name of your local giant) will see that what is needed now is a middleman to manage collection and distribution standards, store the excess power generated by all external power generating systems (PV, wind, etc.), and provide the accounting systems necessary to bill/pay all entities on the grid, it and all other utility companies can continue to provide a service to the American citizen (I’m guessing that was their original charter anyway).