Despite grandfathering, PUC rooftop solar panel rates still dampen innovation

While it is good to read that the Nevada Public Utilities Commission has reversed course and decided to grandfather the rates for existing rooftop solar panel owners, what is the future for home-based power generation?

Anyone contemplating installing such panels in the future still will face the much higher connection fees and much lower reimbursement for electricity uploaded to the grid. Though there is still that 30 percent federal tax credit, the chances of new solar installation ever providing a return on investment is nil.

The utility power companies in Nevada don’t want you to cut the cord. The rate schedule is an anti-innovation stance.

It is like taxing the oil well drillers to protect the whale oil industry.

If the market is to work, there ought to be a foreseeable avenue by which a savvy homeowner could put up solar panels and windmills, invest in batteries and hydrogen-powered fuel cells or other generators, as well as efficient appliances, to become free of the grid. But the disincentives created by the PUC make that a pipe dream.

The higher connection fee is ludicrous. There is no difference between generating your own power and simply being frugal by turning up the thermostat in the summer. As for the lower reimbursement rate for uploaded power, the PUC fails to take into account the power is uploaded during peak demand time when the power company must pay three or four times more on the open market and there is no transmission line cost or ohms drop.

Maybe there should have been a fee charged to those buying new fangled refrigerators to protect the job of the ice delivery man.

Backyard solar panels

Backyard solar panels

 

 

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NV Energy calls on PUC to grandfather rates for existing solar panel owners

Backyard solar panels

NV Energy filed an advice letter with the Public Utilities Commission Wednesday asking that the agency grandfather the rates charged to those who had installed rooftop solar panels prior to Jan. 1.

The PUC had ordered that over the next 12 years all rooftop solar owners, new and existing, would be charged higher connection fees and receive less credit for power uploaded to the grid.

The letter states:

NV to PUC

The PUC could act within a matter of weeks or months, while the legislative change sought by the task force could not come until after the 2017 legislative session.

The higher rates were at first supposed to be implemented in four years, but the PUC later stretched it out over 12 years.

“After a number of recent failed attempts to negotiate a resolution of this grandfathering issue with out-of-state private solar suppliers, it became clear that NV Energy needed to step up and act alone,” Paul Caudill, president and CEO of NV Energy, is quoted as saying in a company press release. “I have spoken with many of these net metering customers personally, and understand and empathize with their concern. We simply did not want to wait any longer to offer a solution on their behalf and believe our filing today represents the most efficient and timely way to do that.”

Of course, this does nothing to bring back the many hundreds of rooftop solar installation jobs that disappeared with the new PUC rates and will make any future residential installations fiscally impractical, because new installations might not achieve a return on investment over the life expectancy of the panels.

The new rates only cost me, a backyard solar panel owner, about $9 on my June bill but the future rates would push the added cost to nearly $45 for a typical June, assuming minimal decline in panel output.

In that same press release, Kevin Geraghty, senior vice president of energy supply, blamed solar panel installers for misleading customers into thinking their rates would be locked in.

Yes, the contract does say: “Utility’s distribution tariffs may be amended by the PUCN (Public Utilities Commission of Nevada) at any time.”

Amended, not abrogated. 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?

In addition to the NV Energy request to the PUC, a ballot initiative has been approved for this November’s ballot that would roll back the PUC’s new net metering rates. The state Supreme Court is scheduled to hear arguments Friday and whether it meets legal requirements to go forward.

To be fair, NV Energy did not seek to have the new higher rates apply to existing customers. That was the work of the PUC staff. But approximately 32,000 contracted angry customers is not good public relations.

Then there also is an initiative that qualified for the ballot that would end monopoly status for electric utilities in the state and allow customers to purchase from an open market. That would not be good for the bottom line of NV Energy and the other power companies in the state.

Check back Friday for this week’s newspaper column and a discussion of the power struggle.

 

 

 

 

Solar panel owners are subsidizing other power customers, not the other way around

Solar panels being installed on a Nevada home in 2015. (R-J photo by Jeff Scheid)

I never could figure out why, when NV Energy jacked up the rates charged to residential solar panel owners because they were somehow being subsidized by non-panel owners, the rates for non-panel owners were not concomitantly reduced and yet the move was somehow going to be revenue neutral.

Two reports out this week say NV Energy’s subsidy contention is bogus, and, in fact, solar panel owners are providing a net benefit to power customers in general.

A report from The Brookings Institution notes that Nevada’s net metering rates — that change solar panels from being an asset to a liability — have caused the installation of new solar panels to plummet 92 per cent in the first quarter of this year.

The Brookings report, by Mark Muro and Devashree Saha, asks and answers what it calls the burning question:

Does net metering really represent a net cost shift from solar-owning households to others? Or does it in fact contribute net benefits to the grid, utilities, and other ratepayer groups when all costs and benefits are factored in? As to the answer, it’s getting clearer (even if it’s not unanimous). Net metering — contra the Nevada decision — frequently benefits all ratepayers when all costs and benefits are accounted for, which is a finding state public utility commissions, or PUCs, need to take seriously as the fight over net metering rages in states like Arizona, California, and Nevada.  Regulators everywhere need to put in place processes that fairly consider the full range of benefits (as well as costs) of net metering as well as other policies as they set and update the policies, regulations, and tariffs that will play a critical role in determining the extent to which the distributed solar industry continues to grow.

As I have said before the problem is that monopoly power companies have an infrastructure cost that remains no matter how much power it sells. The only difference between a solar panel owner and a customer who conserves and is efficient 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 month.

But solar panel installer SolarCity and the Natural Resources Defense Council calculate that rooftop solar provides a net benefit to all Nevadans of 1.6 cents per kilowatt-hour in actual costs and as much as 3.4 cents per kWh if you include benefits to the environment, which is admittedly hard to calculate.

NEMrates

The report by Brookings also notes that a 2014 study prepared for the Nevada Public Utilities Commission found that net metering provided $36 million in benefits to all NV Energy customers and over the 25-year lifetime of the panels the net benefit amounted to $166 million — just for the ones installed so far.

A 2015 study from Maine said the value of rooftop solar was $0.33 per kWh compared to the average retail price of $0.13 per kWh. “The study concludes that solar power provides a substantial public benefit because it reduces electricity prices due to the displacement of more expensive power sources …” Brookings concluded.

The report goes on to list numerous other studies that found solar panels benefited power customers in general rather than being a drain.

Brookings addresses the infrastructure cost issues by recommending decoupling. The NRDC says this is done by regulators of private utilities using “modest, regular rate reconciliations every year to compensate for under- or over-collection of fixed costs during the previous year. More than half the states have adopted decoupling mechanisms for either electric or natural gas utilities as a necessary (but not sufficient) part of the policies that allow utilities to invest in the cheapest and cleanest energy resource: energy efficiency.”

Though 15 states have adopted decoupling, according to Brookings, states like Nevada, which has not, are fighting net metering the hardest. “Typically, decoupling has been used as a mechanism to encourage regulated utilities to promote energy efficiency for their customers,” the Brookings authors say. “However, it can also be used as a tool to incentivize net metering by breaking the link between utility profits and utility sales and encouraging maximum solar penetration. Advocates of decoupling note that it is even more effective when paired with time-of-use pricing and minimum monthly billing.”

 

Mt. Wheeler Power Co., which covers all of White Pine County as well as parts of Nye, Elko and Eureka counties and parts of three counties in Utah, still provides net metering rates for its customers with solar panels. The current rate is 3 cents per kWh but that is expected to increase when the company’s wholesale provider is expected to increase rates, a company executive said.

Valley Electric Association, which services Nevada power customers along the California border from Mineral County to Sandy Valley in Clark County, shows on its website that it also provides net metering rates.

Rail car power storage facility proposed for Pahrump

At first it seems a bit counter-intuitive, you buy something and then sell back 85 percent of what you bought.

But it begins to make sense when you apply supply-and-demand pricing.

A company called Advanced Rail Energy Storage Nevada, or ARES, has been approved by the Bureau of Land Management to build a 50-megawatt electricity storage facility east of Pahrump that will use gravity-based railroad cars full of rocks. It has applied for approval of permits from the Nevada Public Utilities Commission.

The concept is to obtain electricity when it is plentiful and cheap, such as when windmills and solar power plants are producing at their peak, and use it to drive railroad cars six miles and up 3,000 feet on a hill in Carpenter Canyon east of Highway 160. When the wind dies down and the sun isn’t shining, there is still a high demand for power so the price goes up. When this happens the rail cars will be released so that gravity will propel them downhill at 18 miles per hour and the electric motors that drove them up the hill become generators producing electricity to upload to the grid.

Valley Electric Association, which serves the Pahrump area, plans to build power lines to connect to the project.

The cost of the project is $55 million and the company still needs to come up with the financing, according to Green Tech Media.

The company has built a pilot project in Tehachapi, Calif., near a massive wind farm.

ARES CEO Jim Kelly has been quoted as saying the system can “be deployed at around half the cost of other available storage technologies. Just as important, ARES produces no emissions, burns no fuel, requires no water, does not use environmentally troublesome materials and sits very lightly on the land.”

Francesca Cava, vice president of operations for ARES, writes, “It’s a wonderfully simple idea, a 19th century solution for a 21st century problem, with some help from the abundant natural resource that is gravity. When the local utility’s got surplus electricity, it powers up the electric motors that drag 9,600 tons of rock- and concrete-filled railcars up a 2,000-foot hill. When it’s got a deficit, 9,600 tons of railcar rumble down, and those motors generate electricity via regenerative braking — the same way your Prius does. Effectively, all the energy used to move the train up the hill is stored, and recouped when it comes back down.” Or at least 85 percent of it.

Kelly also said, “Fifty megawatts doesn’t get us to economies of scale. We are more efficient as we get larger.”

Similar concepts, but using closed loop water pumping, have been proposed by Eldorado Valley and Blue Diamond, but nothing has developed.

Subcommittee of energy task force agrees rooftop solar panel rates should be grandfathered

Perhaps there is hope for rooftop solar panel owners yet to save their investments.

According to an article posted on the Las Vegas Sun’s website Thursday afternoon, but not deemed worthy of being printed today, the Governor’s New Energy Industry Task Force Technical Advisory Committee on Distributed Generation and Storage agreed in principle to allow current residential solar panel owners’ rates to be grandfathered until 2035.

The agenda for the meeting of that panel Thursday included a presentation by solar panel installer SolarCity and discussion of the value of distributed solar generation, as well as a review of alternatives to the net metering rates passed by the Public Utilities Commission at the beginning of the year.

The PUC voted to “transition” to new net metering rates over 12 years and eventually increase the connection fee for solar panel customers from $12.75 to $38.51 a month and cut the credit for power uploaded to the grid from 11 cents per kWh to 2.6 cents — to the point some solar panels owners could be paying more for power than neighbors without solar panels.

The PUC swallowed NV Energy’s bogus argument that it is paying rooftop solar power generators 11 cents per kWh for excess energy, which is more than twice the 4.4 cents per kWh the utility company pays for energy on the open market. But that 4.4 cents is the 24-hour average. Solar panels generate extra power during the peak period when rates can easily exceed 30 cents per kWh.

The Sun article said Thursday’s agreement is a first step toward possible legislation repeal of the PUC action, so any change probably won’t come until June 2017 at the close of the legislative session in Carson City.

SolarCity told the panel that it plans to release a report in the coming weeks showing that solar panel owners are not being subsidized by non-panel owners to the tune of $52 a month, as NV Energy contends, but rather benefit all ratepayers by at least two cents per kWh.

In February, The Alliance for Solar Choice told the PUC that each residential solar panel owner provides a net benefit of $12.08 per month to NV Energy customers.

The technical panel is to continue discussion of the topic at a May 18 meeting.

 

State hands out more money for hiring people to company that is laying off workers

Just open the window and throw money into the wind.

This past week the Governor’s Office of Economic Development gave another $400,000 to SolarCity for creating jobs in Nevada — two months after the company laid off 550 employees and stopped doing its primary function, installing rooftop solar panels, because the Public Utilities Commission so screwed up the rates for solar panels as to make them financially unfeasible.

In March 2013 the GOED promised SolarCity $1.2 million if it would open operations in Nevada — to be paid in $400,000 increments. This past week’s check was the second.

In a press release, in which the company’s name is misspelled through out, the GOED never mentions the PUC action or its resulting consequences.

Steve Hill, the director of the GOED, said, “The grant dollars are exclusive to the hiring of full-time workers at the Company’s financial services division, and are not related to the installation side of the Company’s business.”

Though what they will finance, if they are no longer installing solar panels, is unclear.

The money comes from a $10 million so-called Catalyst Fund.

The Center for Justice and Constitutional Litigation, a division of the Nevada Policy Research Institute, has sued the state, saying such handouts violate the Gift Clause in the state Constitution.

The Nevada Constitution specifically states: “The State shall not donate or loan money, or its credit, subscribe to or be, interested in the Stock of any company, association, or corporation, except corporations formed for educational or charitable purposes.”

There were already several tax-paying solar panel installing companies in the state when the state handed tax money to SolarCity to come here and compete with them — until the PUC derailed the gravy train.

Throwing good money after bad?

 

 

PUC draft order just stretches out the pain for solar panel owners

From PUC draft order

From PUC draft order

The Nevada Public Utilities Commission has decided to screw over the suckers who were enticed by the state to install solar panels on their rooftops — at considerable expense — over 12 years instead of four, jacking up connection fees and lowering credits for uploaded power every three years until 2028, instead of every year until 2020.

The decision dismisses calls to grandfather rates for current owners of rooftop panels who purchased them under the presumption that state policy was to encourage renewable energy. A draft order posted online continues to embrace the bizarre and illogical premise that somehow non-solar panel owners are subsidizing solar panel owners. The draft is peppered with denigrations of solar panel owners such as: “Ignorance of the law is no excuse …”

But, apparently, ignorance of math is.

It also points out again that contracts always stated that rates were subject to be amended. Amended not abrogated.

From PUC draft order

From PUC draft order

There is absolutely no difference between the owners of solar panels and those who choose to reduce their power consumption by being frugal and efficient, except that the power company can meter the solar panels and readily identify the dirty culprits who refuse to increase the profits of Warren Buffett, the billionaire owner of NV Energy.

A white paper titled “Shining Rewards” by the Environment America Research & Policy Center claims that residential solar panels provide a net benefit to the power companies and are not being subsidized by other customers, as NV Energy claims.

Here a couple of its findings:

Solar energy creates many benefits for the electricity grid:

• Avoided energy costs: Solar energy systems produce clean, renewable electricity on-site, reducing the amount of electricity utilities must generate or purchase from fossil fuel-fired power plants. In addition, solar photovoltaic (PV) systems reduce the amount of energy lost in generation, long-distance transmission and distribution. These losses cost the country millions of dollars every year.

• Avoided capital and capacity investment: By reducing overall demand for electricity, solar energy production helps ratepayers and utilities avoid the cost of investing in new power plants, transmission lines and other forms of electricity infrastructure.

• Reduced financial risks and electricity prices: Because the price of solar energy tends to be stable over time, while the price of fossil fuels can fluctuate sharply, integrating more solar energy into the grid reduces consumers’ exposure to volatile fossil fuel prices. Also, by reducing demand for energy from the grid, solar PV systems reduce its price, saving money for all ratepayers.

While NV energy claims somehow that solar panel owners are being subsidized by others at a rate of $52 a month, The Alliance for Solar Choice calculates that each residential solar panel owner provides a net benefit of $12.08 per month to NV Energy. (TASC subsidy filing)

The PUC draft order also dismisses the arguments that the new rate structure is a Fifth Amendment taking by saying every investment is a risk. In this case the risk is that you were being defrauded by the state with a bait-and-switch scheme.

The PUC is now set to “transition” net-metering rates over 12 years and eventually increase the connection fee for solar panel 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 — to the point some solar panels owners could be paying more for power than neighbors without solar panels.

Another bogus argument is that NV Energy is paying rooftop solar power generators 11 cents per kWh for excess energy, which is more than twice the 4.4 cents per kWh the utility company pays for energy on the open market. But that 4.4 cents is the 24-hour average. Solar panels generate extra power during the peak period when rates can easily exceed 30 cents per kWh.

(Disclosure: I am one of those dirty cheaters.)

From "Shining Rewards"

From “Shining Rewards