Utah net metering debate raises question of fairness in energy costs
Utah utility regulators are weighing a proposal from Rocky Mountain Power (RMP) that seeks to manage the growth of rooftop solar on the electric grid without unfairly shifting costs onto its other non-solar customers.
On Wednesday, Utah regulators are overseeing a public witness hearing and oral arguments that offer an opportunity for stakeholders to address the Public Service Commission regarding the utility’s proposal to change net metering rates.
Under net metering, rooftop solar customers are paid for the surplus power they send back to the electric grid. Utilities like RMP are required to credit the solar customers for that power.
According to RMP, however, that relationship is not a profitable one — neither for the utility, nor for the bulk of its customers. RMP pays both residential rooftop solar customers and solar farms full retail electric rates for their excess power, but in the case of rooftop solar, RMP notes it would cost the utility less to produce the electricity itself or to buy it from larger-scale operations.
As the numbers of rooftop installations have risen, RMP says solar customers aren’t paying their fair share.
“We currently pay three times as much for rooftop solar as for large-scale solar,” Jon Cox, spokesman for RMP, told Daily Energy Insider. “The price point has come down on the one side with energy from solar farms, but not on the other due to the state-mandated metering program. Solar is showing significant growth. We want to be part of that growth, but that above-market payment costs our non-solar customers.”
The issue has been brewing for more than three years, ever since the state’s Senate Bill 208 was signed into law. That bill amended provisions related to net metering and directed the Public Service Commission to determine costs accrued by other customers and guarantee that rates between the two remained competitive.
Since then, Cox notes, the solar industry in Utah has only continued to grow, which adds to the contentiousness of the issue. Solar companies like Vivint Solar have testified against the proposal, claiming it would eliminate thousands of jobs and stifle competition.
The utility’s net metering proposal filed with the Utah PSC in 2016 would result in new net metering customers being charged $9.02 per kilowatt during designated high-demand periods. Beyond that, solar customers would also pay an additional 3.81 cents per kilowatt hour for energy used.
Opponents have argued those charges could increase prices for solar customers by as much as $85 a month, but RMP has said the proposed new rate structure would still allow new rooftop solar customers to save about 35 percent on the their bills on average.
Ultimately, all consumers would benefit from the proposal.
“Our study that we put together analyzing this issue show average rooftop solar consumers gain around $400 in reimbursement from non-solar customers,” Cox said. “If we reduced that, and over time eliminate that, that would benefit all of our customers.”
With over 20,000 solar customers operating under RMP’s umbrella, though, especially in southwestern and rural Utah, opponents worry the change could result in a case not so far off from what transpired in Nevada in 2015. In that case, a rising solar industry faltered in the wake of the enactment of rate structuring plans.
But Cox said RMP’s plan differs significantly from Nevada’s on the key issue of who exactly is affected.
In addition, rooftop solar has grown significantly, helped in part by federal and state-level subsidies, and is now an established industry. Many states are reassessing what is an appropriate levels of support for the industry going forward.
Furthermore, nothing is yet set in stone.
“We’re still looking for a path forward, but even in the initial proposal, the most prominent difference was the issue of grandfathering,” Cox said.
RMP’s plan applies specifically to new solar customers, while exempting those that have benefited for years.
“In the testimony we filed almost 2 and a half weeks ago, we did indicate we’re open to other ideas, so long as our non-solar customers are not paying for a product used by other customers,” Cox said.
Director Michelle Beck of the state Office of Consumer Resources previously testified that both the state consumer advocate and the PSC’s Division of Public Utilities have made transition proposals that would also phase out net metering and move to a new design.
While opponents fear that penalizations for using less of RMP’s own power could lead to penalizations of energy efficient non-solar customers, RMP said its goal is not to seek the stifling of solar or energy efficiency growth, but to even the costs.
“If someone would like to sell us their extra power, we believe we should pay the current market price for that power,” Cox said. “Large-scale solar and rooftop solar both create jobs, both help the environment, but one costs three times as much as the other and we believe that ought to be addressed.”
