Sacramento Municipal Utility District (SMUD) staff recently released a proposal asking its elected Board of Directors to adopt large and punitive fees for rooftop solar customers. These new solar fees would undermine SMUD customers’ basic right to reduce and control their own utility bills. If adopted by the SMUD Board of Directors, these unjustified fees would strongly discourage families and businesses from investing in solar and storage, undermine SMUD customers’ ability to reduce global warming emissions and air pollution, and set a bad precedent for utilities around the state and country.
Photo Credit: Solar Industry Mag
SMUD’s Board of Directors is scheduled to vote on the staff-proposed solar fees by June. SMUD customers must raise their voices now and tell their elected Board members to stop this mistaken policy!
SMUD serves over 1.5 million customers in the Central Valley and has a long history of solar leadership. Sacramento is one of the nation’s leading cities on solar, ranked in a 2018 report as 12th in the U.S. for megawatts of solar.
But if accepted, SMUD staff’s proposed solar fees would be the highest solar fixed charges in the country. This would be a huge step backward for clean energy and would be out of step with the rest of California working toward a modern, clean, and efficient grid that ratepayers want. As Californians move to a 100% clean energy future, we need to help SMUD’s Board of Directors avoid an embarrassing and destructive mistake.
What is the proposal in a nutshell?
SMUD staff have proposed new monthly charges based on the size of the customer’s solar generating system.
For residential solar customers, SMUD staff propose a charge of $8/kW per month starting Jan 1, 2020, and increasing to $11/kW per month by 2025. For an average SMUD customer’s home solar array of 4 kW, that’s a new monthly charge of $32/month in 2020, increasing to a monthly charge of $44/month by 2025. This would be on top of the $20/month fixed charge that all SMUD residential customers already pay.
For businesses and other commercial customers with solar, the proposed charge starts at $4-$8/kW per month in 2020, depending upon customer type and service voltage, and increases annually through 2025. For a typical 500kW agricultural customer, for example, SMUD’s proposal would amount to a new charge of about $4,000 per month in 2020.
What’s worse is that even customers who already have solar would be subject to the fee down the road. Solar customers who submitted their interconnection application prior to January 2018 would avoid the fee for 20 years from their first solar billing period but would pay the fee monthly for at least five years, since solar is expected to last 25 years or more. Systems that were installed in 2018 or submitted their interconnection application by March 31, 2019, would avoid the fee for 10 years from when they were installed, meaning they would pay the new fee for an estimated 15 years. And if interconnection is requested after April 2019 or if a home with an existing solar system is sold, the homeowner would start paying the fee immediately.
Why should we oppose SMUD’s staff-proposed solar fees?
Fixed charges targeting only solar customers are problematic because they punish customers simply for reducing their dependence on the utility. SMUD customers deserve the right to choose clean energy and reduce their dependence on utility-produced power without facing punitive fines. SMUD’s solar grid access charge applies regardless of how much solar that customer uses onsite vs. sends back to the grid. This is the equivalent of the utility charging someone who buys an efficient refrigerator for the monthly “lost” revenues that result from their energy efficiency - effectively penalizing them for doing the right thing. SMUD is not proposing this kind of fee for energy efficiency, and they should not do so for solar either. Solar fees that apply to clean energy used behind the meter are the wrong path forward for any utility or commission considering whether and how to revise net metering.
Solar grid access fees discourage solar customers from including storage as part of their clean energy system. A solar system that includes storage allows families and businesses to store their clean energy and use or export it when that energy is most valuable to the grid, which in California is often during the evening when energy demand is high and solar production is low. Solar + storage is fast becoming the standard for solar, and makes solar more valuable for the entire utility system. But SMUD’s staff-proposed fee applies regardless of when the solar energy is used or exported, thereby deterring the installation of storage with solar. Forward-thinking utilities and policymakers are designing rates that reward customers for making their clean energy more flexible and valuable to the system, while SMUD’s proposal fails to move us toward the flexible, modern, 100% clean grid of the future.
New fees of this size will effectively destroy the solar market in SMUD territory. These are very large proposed solar charges and if approved would be the largest solar fixed charge of any utility in the country. SMUD has supported clean local renewable energy in the past, but if it approves this plan it will become one of the most anti-solar utilities in the U.S. Not many solar fixed charges have been approved by regulators, but Arizona regulators approved a proposal from Arizona Public Service, a notoriously anti-solar utility, of $0.93/kW/month, and Alabama Power’s proposal for $5/kW/month was recently approved. SMUD’s proposed fees would prevent rooftop solar from being cost-effective for new customers and would reduce bill savings for existing solar customers.
The analysis supporting the fees is inadequate. Any proposal for changes to customers’ electric rates, including those for rooftop solar, must include a full and fair analysis. The SMUD staff failed to examine both the costs and the benefits of customer-sited solar, including grid impacts as well as other economic and environmental impacts. Without such an analysis, the staff proposal cannot be properly assessed by the public and by the elected Board of Directors. SMUD staff has not provided a comprehensive cost-benefit analysis to the public. Instead, it appears from staff’s presentation that the only solar benefit considered was the avoided energy cost, leaving out all the other proven benefits of customer-sited solar including capacity savings, transmission and distribution savings, O&M cost reductions, line loss savings, ancillary and grid services benefits, fuel hedging value, demand reduction induced price effects, locational benefits, and societal benefits including environmental/climate value, jobs and other economic benefits. Unless the SMUD staff provides a factual and quantitative analysis, the utility’s process will fail to meet the most basic standard of fair ratemaking.
SMUD customers can make their voices heard!
SMUD’s elected Board of Directors plans to vote on this and other rate proposals in June 2019. The utility plans to hold public workshops and hearings on the proposed rate changes:
4/23 Public workshop #1 - 10 AM
5/9 Public workshop #2 - 6 PM
6/4 Public hearing - 6 PM
6/20 SMUD Board of Directors vote