New PUC net metering rules are unfairly discriminatory and retroactively applied

Backyard solar panels

Welcome to the Animal Farm, where all of the animals are equal, but some are more equal than others.

The state Public Utilities Commission (PUC) recently changed the rules for billing of residential and small businesses electricity customers who installed solar panels. This was done, it was argued, to be fair to those who did not spend thousands of dollars of their own money along with state subsidies funded by ratepayers to install photovoltaic panels.

Such customers are on what is called a net metering system. In the past, they paid the same connection fee to cover the cost of power lines and NV Energy infrastructure as everyone else. They paid the same per kilowatt-hour price for purchased power as everyone else and were credited at retail rates — about 11 cents per kilowatt-hour — for power uploaded to the grid.

The PUC in December approved raising the connection fee for small net metering customers and slashing to less than a quarter of retail the credit allowed for uploaded power. The new tariffs apply to all new solar panel users and all of those who previously installed solar panels, expecting to be able to recoup their costs under the terms outlined by the state. In other words, retroactively.

By law — according to an appeal of the new rules filed this week by the Bureau of Consumer Protection (BPC), a division of the state attorney general’s office — ratepayers shared the cost of subsidizing $255 million of those solar panels. Less than $9 million, or less than 5 percent, went to residential or small business power users — about 17,000 customers in all. The rest was used to erect solar panels on schools and public buildings.

The PUC totally exempted schools and public buildings from the new rates.

“Many of these school and public building customers paid little to nothing for installing systems worth tens of thousands of dollars and more, but rather were funded by ratepayers,” writes BCP Chief Deputy Attorney General Eric Witkoski and Senior Deputy Attorney General Michael Saunders. “So, the accusation of ‘subsidies’ and ‘cost shifts’ and assessing reasonableness or unreasonableness can be a slippery slope once their overall value is put into larger context.”

Some animals are more equal than others.

As for the retroactive nature of the PUC decision, the BCP appeal states, “This matter is larger than just one subset of residential customers getting a benefit that others do not. This is a matter of integrity and honor that will severely damage the reputation of Nevada’s government and its ability to persuade customers to engage in programs in the future. If the perception is created that the Commission will not honor or recognize deals prior Commissions or Legislatures once offered to encourage people to participate in programs that in many cases cost them thousands out of their own pockets.”

A typical rooftop installation could easily cost $20,000 or more for the homeowner and a like amount in ratepayer subsidies.

BCP asks that the PUC delay any net metering changes and grandfather current net metering customers for eight to 10 years to allow time for recovery of their investments.

The BCP further noted that Senate Bill 374, which authorizes the PUC to change net metering in order to lift the cap on the number of rooftop installations allowed on the NV Energy grid, prohibits the PUC from “unreasonably” shifting costs from customer-generators to other customers. The keyword is “unreasonable.”

SB374 does not repeal existing laws, which state:

1. Encourage private investment in renewable energy resources;

2. Stimulate the economic growth of this State;

3. Enhance the continued diversification of the energy resources used in this State; and

4. Streamline the process for customers of a utility to apply for and install net metering systems.

“The Commission’s rationale and logic is akin to an agency only applying the most recent law, rather than applying all relevant laws …” the BCP appeal states.

It also argues that current net metering customers were given insufficient notice of the pending changes. In fact, the NV Energy submission to the PUC flatly stated that current net metering customers would not be affected.

In addition to the BPC appeal, a group called The Alliance for Solar Choice (TASC), which includes solar panel installation companies, filed an appeal.

TASC noted that the rules have eliminated hundreds of jobs. “Indeed, the rates and rules adopted by the Commission forced the country’s largest solar installation companies to eliminate countless jobs and begin closing their Nevada operations,” their appeal states. “In effect, the Commission eliminated the Nevada rooftop solar industry and frustrated the Legislature’s stated goal to encourage private investment in renewable energy, stimulate economic growth in Nevada, enhance the continued diversification of Nevada’s energy resources and simplify the process for utility customers to install NEM (net energy metering) systems.”

TASC called the PUC action “an unprecedented bait-and-switch.”

Its appeal calculated that the connection fees for net metering customers are slated to increase 300 percent in four years, but could skyrocket 688 percent to $87 a month if NV Energy includes demand costs as the PUC has suggested. “At the same time,” TASC notes, “the Order slashed the value of electricity that is generated and delivered to the grid by 76%, from $0.11142 to $0.02649/kWh.”

This would be tantamount to ordering the contract for power from the Crescent Dunes Solar project be cut from 13 cents per kWh to less than 5 cents, which the PUC has not done and would never do.

TASC also notes that the credit for uploaded power totally ignores the fact power costs vary with the time of day, but is computed by averaging costs over 8,760 hours of the year. “The product is an inaccurate average value that is artificially depressed by the inclusion of nighttime hours when energy costs are low but the sun is not out and solar systems are not producing or exporting electricity,” they point out.

The group also argued that the PUC action is a violation of the Fifth Amendment’s Takings Clause that prohibits reducing property value without compensation.

BCP Petition net metering

TASC Petition

PUC proposal:

What are we doing to deter the catastrophe that would be caused by an EMP attack?

Do you live in an all-electric home? Dependent on electricity for heating and cooling, cooking, refrigeration, lighting, hot water, communications, security, to open the garage door?

What if the grid melted down for say a week? The water would stop flowing. Fuel pumps at the corner gas station would not work. Even if you had natural gas that would eventually cease to flow. The banks would be closed. Sewage would back up in the streets.

If the power remained off for months, as much as 90 percent of the population might die from starvation, disease and social tumult.

WSJ illustration

There are a number of things that could cause such a scenario — terrorism, solar flare or an electromagnetic pulse (EMP) caused by the detonation of a relatively small nuclear bomb in the atmosphere.

I’ve been writing about the potential for the latter event since 1980. A year ago I discussed a bill in the House of Representatives, H.R. 3410, that would begin the process of hardening the nation’s grid against both solar flares and mad-man-caused EMP. Rep. Joe Heck was a sponsor. It passed the House on a unanimous voice vote, but languished untouched, unnoticed, ignored by the Harry Reid-run Senate.

The cost to do this grid work has been placed at somewhere between a half a billion dollars and a couple of billion. Washington spends three times that in one minute.

Rep. Trent Franks, R.-Ariz., who introduced H.R. 3410 in October, said, “It strikes at my very core when I think of the men, women, and children in cities and rural towns across America with a possibility of no access to food, water, or transportation. In a matter of weeks or months at most, a worst-case scenario could bring devastation beyond imagination.”

Harry Reid was unmoved, unconcerned, unavailable.

Today, Henry Cooper and Peter Pry again are warning of the threat of EMP and just how near it is. Writing in The Wall Street Journal, Cooper, the former director of the Strategic Defense Initiative, and Pry, executive director of the EMP Task Force on National and Homeland Security, point out the megalomaniacs who run both North Korea and Iran are both probably capable of and likely willing to order such a devastating strike.

They report that the headquarters for the North American Aerospace Defense Command is being moved back into Cheyenne Mountain near Colorado Springs. The site was largely abandoned a decade ago, but is being reactivated precisely because of the threat of EMP. Cheyenne Mountain is hardened against both blast and EMP.

In addition, the nation’s defenses are still pointed toward a Cold War enemy only capable of striking from the north, while our southern flank is completely exposed. Pry and Cooper report that both North Korea and Iran put satellites into south-polar trajectories “that appear to practice evading U.S. missile defenses, and at optimum altitudes to make a surprise EMP attack.

“The U.S. has no ballistic-missile early-warning radars or ground-based interceptors facing south and would be blind to a nuclear warhead orbited as a satellite from a southern trajectory.”

While U.S. senators sit on their collective arses and twiddle their thumbs while humming an oblivious happy tune, several states are pushing ahead with hardening their intrastate grids against EMP, Cooper and Pry tell us. These include Maine and Virginia, which have enacted legislation. Florida’s governor is considering executive action. Colorado, Texas, North Carolina, South Carolina, Indiana, Idaho and New York are looking into ways to deal with this threat.

But not Nevada. Our lawmakers are too busy squabbling and quibbling.

But perhaps the Nevada Public Utilities Commission could pick up the slack. After all, one of its duties by law is to “provide for the safe, economic, efficient, prudent and reliable operation and service of public utilities.” All it would have to do is tell Warren Buffett to spend the money to harden the grid and then reap a 10 percent return on equity from ratepayers.

Spending a little now to put locks on the house is cheaper than paying the price for the eventual break in.

Of course, this threat is nothing compared to climate change. Just ask Hillary Clinton. Or Barack Obama. Or John Kerry.

So, if you see a flash of light in the sky, followed by a loud boom, thank God you bought a Prius and the latest edition of the book on the caveman diet.