Sometimes the left hand doesn’t know what the right hand is doing.
Two years ago the Governor’s Office of Economic Development doled out $1.2 million to entice rooftop solar panel installer SolarCity to open an office in Nevada and create jobs.
This past week the governor-appointed Public Utilities Commission became the Governor’s Office of Economic Dismemberment, issuing rules that make SolarCity’s business model no longer viable in Nevada. The next day the company announced it is shutting down most operations and laying off workers.
“The people of Nevada have consistently chosen solar, but yesterday their state government decided to end customer choice, damage the state’s economy, and jeopardize thousands of jobs,” SolarCity CEO Lyndon Rive said in a press release. “The PUC has protected NV Energy’s monopoly, and everyone else will lose. We have no alternative but to cease Nevada sales and installations, but we will fight this flawed decision on behalf of our Nevada customers and employees.”
SolarCity is run by Elon Musk, whose Tesla Motors was given a $1.3 billion package of tax credits and abatements to build an electric car battery plant near Sparks. All in the name of creating jobs.
The three-member panel ordered NV Energy to start charging so-called net metering customers with solar panels an additional connection charge and to slash the credit for power uploaded to the grid from the retail rate of more than 11 cents per kilowatt-hour to the wholesale rate of about 5 cents — stretching out for years the length of time it will take for current solar panels to provide a return on investment and possibly making it impossible for new installations to ever pencil out. NV Energy must now provide the actual rates by Jan. 1.
According to Investor’s Business Daily (IBD), net metering is required in 44 states but is a thorn in the side of utility companies, which can buy renewable energy cheaper from utility-scale solar plants instead of giving credit for rooftop solar at the same rate as retail. Solar panel owners contend they are not “selling” power, but are banking it, uploading power to the grid when the sun shines and withdrawing power when the sun goes down.
The utility companies claim they make hundreds of dollars less each year providing service to net metering customers, and that is somehow unfair to other ratepayers.
Oddly, state law requires 25 percent of the state’s electricity to come from renewable sources by the year 2025, and the state has for years required NV Energy to provide subsidies to cover the cost of installing rooftop solar panels, a cost passed on in the form of higher power bills to all ratepayers.
Businesses that install rooftop panels had warned that this decision could cost the state 6,000 jobs. SolarCity itself has 2,000 employees here, according to a Nov. 30 press release announcing a new training center.
Bryan Miller, a vice president of solar panel installer Sunrun and head of The Alliance for Solar Choice (TASC), told IBD there will be litigation challenging the PUC decision because state law requires Nevada to encourage renewable energy investment.
“We believe the (Nevada Public Utilities Commission), appointed by Governor Sandoval, has done the exact opposite today,” he said. “In a similar situation in Wisconsin, the commission acted without evidence and attempted to eliminate the solar industry. TASC sued and TASC won, and TASC expects to do the same here.”
There are an estimated 17,000 net metering customers in Nevada.
SolarCity’s Rive said of those customers, “Most disturbing is the PUC’s decision to retroactively sabotage existing solar customers’ investments by changing the rules on them. The Nevada government encouraged these people to go solar with financial incentives and pro-solar policies, and now the same government is punishing them for their decision with new costs they couldn’t have foreseen. These actions are certainly unethical, unprecedented, and possibly unlawful.” Actually, NV Energy did not initially propose to make the changes retroactive. That came from the PUC staff.
Net metering customer Louise Helton told the Las Vegas newspaper the rate change will cost her more than $600 a year and will add more than $12,000 to the cost of her solar system over the useful life of the system.
This is what happens when the state picks winners and losers and keeps changing the rulebook.
NV Energy is owned by billionaire Warren Buffett’s Berkshire Hathaway Energy, which cut nearly 10 percent of its Nevada jobs after acquiring the company in 2013.
It is all about jobs, right?
(Disclosure: This writer is a net metering customer of NV Energy.)
A version of this column appears this week in the Battle Born Media newspapers — The Ely Times, the Mesquite Local News, the Mineral County Independent-News, the Eureka Sentinel, the Lincoln County Record and the Sparks Tribune — and the Elko Daily Free Press.
Update: On Wednesday the PUC posted a 104-page filing that outlines the new net metering tariffs it plans to impose. It immediately raises the connection fee for the residential and small business owners of solar panels from $12.75 to $17.90 today and to $38.51 in 2020.
It immediately cuts the credit for each kWh of power uploaded to the grid from 11 cents to 9 cents and slashes it to 2.6 cents in 2020, half the daily levelized rate NV Energy says it pays for wholesale power now. And never mind that the power is uploaded in the heat of the day when wholesale power costs many times more.
A back of the napkin calculation suggests that new rates will add about $60 to $70 to a net metering bill for a 5-kilowatt array by 2020, wiping out more than two-thirds of the monthly savings or more.
By 2020 some owners of older solar panel arrays, which lose generating power over time, might have a liability instead of an asset on their hands, costing more to haul the panels to the dump than they save on power bills.
Yes, the standard net metering contract contains this clause: “Utility’s distribution tariffs may be amended by the PUCN at any time.” Who could have anticipated this kind of bait and switch when the powers that be were all preaching green energy all the time to save the planet?