How to be fair in setting rates for electric power … or not

Oh, what a tangled tariff the bureaucrats weave when they attempt to be abundantly fair.

The Public Utilities Commission and NV Energy have decided that those who actually did what state lawmakers wanted them to do — go green and install residential solar panels — are now unfairly cost shifting by not buying enough kilowatt-hours of electricity to cover the base costs. A portion of the cost of each kWh is basic infrastructure such as power plants and transmission lines as well as salaries and other overhead. The rest is the cost of actually generating or purchasing electricity.

In the arcane argot of the PUC these are called Base Tariff General Base (BTGR) and Base Tariff Energy Rate (BTER). The cost breakdown is about 7 cent a kWh for BTGR and 4 cents for BTER.

Apparently, the PUC has decided that those with solar panels aren’t paying their fair share of the BTGR because they buy fewer kWh than those who don’t own solar panels. Thus 7 cents of those unused kWh must be paid by non-panel owners.

How owning solar panels differs from merely being frugal and using fewer kWh differs only in the fact solar panel output can be quantified and frugality can’t. How dare some people not pay their fair share and opt to sweat in the summer heat instead of turning on the air conditioner. Get the torches and pitchforks.

The PUC answer is new tariffs for solar panel owners who are on a net metering system. Over four years the PUC will raise the basic connection fee for those customers from $12.75 to $38.51 and cut the credit for power uploaded to the grid from 11 cents per kWh to 2.6 cents — turning what is currently an asset into a liability, driving down the value of a solar equipped home instead of increasing it. Might that be a taking under the Fifth Amendment?

And the PUC is being completely disingenuous about it. In its recent tariff order they had the audacity to say:

The Commission notes that the NPC (Nevada Power Company) single-family residential class average annual bill increase in the first year of the new NEM rates is $20.15, which equates to just $1.68 per month on average. This will not cause irreparable harm, especially when put in the context of a total average bill of $2,156.54 for a residential non-NEM ratepayer. By adding a rooftop solar system and taking service under the new NEM rates, a residential ratepayer will still save 51% on their annual electric bill, compared to 52% under the old NEM rates.

By their own calculations (see page 5) the “typical” residential solar panel owner will see power bills increase 2.1 percent in the first year and 45.2 percent in 2020. But that is for the “typical” solar panel owner. I’m told that those who installed photovoltaic arrays that generate nearly as much power as their homes use — arrays that produce more than 100 percent are not allowed, of course — may see their power bills increase as much as 300 percent.

But, to be fair, shouldn’t everyone pay for the BTGR?

Let’s say the “typical” customer uses 1,000 kWh per month. Then it would be fair to charge 7 cents for BRGR or $70 and 4 cents for BTER or $40 for a total of $110. That’s 11 cents per kWh.

But the person who uses only 500 kWh would get a bill for $90 or 18 cents per kWh, and the person who uses 2,000 kWh would pay $150 or 7.5 cents per.

Someone’s ox is always gored.

Of course, speaking of fairness, public buildings and schools will not have their net metering tariffs changed.

The power company does not make money by selling power. It makes money by getting a return on equity of about 10 percent, lately higher for NV Energy. The more equity — power plants and transmission lines — the greater the profit.

The aforementioned page 5:

Net metering rates

And here is a “simple” explanation for your current power bill:

 

 

 

 

 

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22 comments on “How to be fair in setting rates for electric power … or not

  1. Why isn’t there a ratepayer advocate on the PUC board and not just in the Bureau of Consumer Protection? Until there is…there will be no fairness.

  2. […] How to be fair in setting rates for electric power … or not […]

  3. Rincon says:

    Amazing that you consider the reduction in use of electricity to be such a disaster, but do not consider the increased use by electric automobiles to be a major benefit. Selective blindness perhaps?

  4. Steve says:

    Rincon’s being funny.

    The topic is rates, not consumption.

  5. Rincon says:

    Consumption doesn’t affect rates? Steve is being funny.

  6. Steve says:

    Of course it does, but the current state of oil is all supply side.

  7. Rincon says:

    I’m not talking about oil. I’m talking about electricity. You consider it to be horrendously more expensive if households use less electricity because some generate their own power. Shouldn’t the converse be true if people use electric power to charge their cars, especially since most of it would be done at night?

  8. Steve says:

    Oil is effecting all energy pricing.

    And, think of like this, as people disconnect from the grid, it doesn’t lower the cost of maintaining and delivering that lower amount of current, those costs all remain the same. So fewer people will have to pay more. Or, those who benefit the most from lowering their consumption by installing private generation while relying on the grid to back it up, will have to pay higher rates for the dual service provided by the utility.

    The only way to guarantee an investment in private power generation is to completely disconnect from the grid. Otherwise those people will need to realize they are at the mercy of the utility.

  9. Rincon says:

    “…it doesn’t lower the cost of maintaining and delivering that lower amount of current, those costs all remain the same” Since those costs remain the same, then increasing the use of electricity by charging cars should lower the average price of electricity per kwh, right? Is this so hard to understand?

  10. Steve says:

    “if households use less electricity because some generate their own power”

    qualifier, yours.

  11. Rincon says:

    Obfuscation, yours.

  12. Steve says:

    Concession, noted.

  13. Rincon says:

    No concession given. Qualifier is irrelevant, thus the obfuscation.

  14. Steve says:

    You just called your own words irrelevant.

    Noted concession, obvious.

  15. Rincon says:

    The word if, by itself, was indeed, irrelevant to the statement. I could have easily said since or because. This was obvious to anyone with a glimmer of intelligence. Quit baiting me and stay on track. I’m quickly tiring of this juvenile game..

  16. Steve says:

    “glimmer of intelligence”

    And you double down on calling your own words irrelevant.

    Concession, by insult, noted.

  17. Rincon says:

    As I said, I’m not interested in sophomoric discussions. Count me out of this one.

  18. Steve says:

    You counted yourself….from the start.

  19. […] panels, effective Jan. 1, it did so based on NV Energy calculations that solar panel owners were avoiding paying their fair share of infrastructure costs — to the tune of about $52 a month. Thus, the PUC raised […]

  20. […] editorial is based on the NV Energy calculation that solar panel owners have been avoiding paying their fair share of infrastructure costs — to the tune of about $52 a […]

  21. […] is that the solar panel output can be measured. NV Energy calculates that solar panel owners were avoiding paying their fair share of infrastructure costs — to the tune of about $52 a […]

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