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SALT LAKE CITY — Rocky Mountain Power is proposing decreasing the compensation rate it pays to new rooftop solar customers for the excess energy they generate, dropping it from 9.2 cents per kilowatt hour to as low as 1.56 cents per kilowatt hour.
That retail rate of 9.2 cents was never intended to stay in place, Rocky Mountain Power officials say, because it creates an “intraclass subsidy” and instills inequity for those without rooftop solar.
“The company’s proposal will better provide customers more accurate price signals to inform a decision on whether to invest in private generation facilities,” wrote Joelle Steward, vice president of regulation for Rocky Mountain Power, in a filing last week before the Public Service Commission.
“The company’s proposal also minimizes impacts to other customers by not paying customer generators for exported energy in excess of its value. The company’s Net Billing Program offers a fair and balanced approach to support energy choices.”
The decreased rate does bump up on a differential scale depending what time of day excess generation takes place and what time of year, but it does not come close to the retail rate.
If approved, the new compensation rate would affect only those customers who get rooftop solar after the Public Service Commission directs the change.
A multiday hearing is scheduled before the commission in October, which could issue an order to make it effective then or sometime next year. Rocky Mountain Power has set a placeholder date for Jan. 1, 2021.
The new rate would not affect existing rooftop customers, or those who invest in solar power generation systems this year before a cap has been reached of 170 megawatts. That customer base could still lock in the 9.2 cent rate until 2032.
Kate Bowman, Utah Clean Energy’s renewable energy program manager, said Rocky Mountain Power failed to adequately assess the value of excess solar energy in its proposed rate change and instead applied an analysis extremely narrow in scope.
“When we add more clean, locally produced energy to the grid, everybody wins. Rooftop solar creates thousands of local jobs, improves energy resiliency in our communities and reduces risk from increases to fuel prices. Rocky Mountain Power’s assessment of what solar is worth doesn’t reflect any of these long-term or communitywide benefits,” she said.
Bowman pointed out that investment in rooftop solar has already dropped in Utah because of changes in compensation rates.
“When Rocky Mountain Power first proposed changes to rooftop solar rates, it was on the basis that rooftop solar in Utah was growing so rapidly that rates needed to change to stay ahead of the curve. Since the first decrease to rooftop solar rates took effect over a year ago, installation of rooftop solar in Utah has already dropped significantly. If these new proposed rates are approved, it will decimate our solar industry,” she said.
But Rocky Mountain Power says the decrease in the export credit is about fairness.
“The company does not propose paying customers less than market value for their exported energy. At the same time, the company does not believe that nonparticipating customers should subsidize customers with on-site generation,” Steward wrote. “A fair and balanced solution is achievable while maintaining Utah’s energy rates, which are among the lowest in the nation.”
Sean Gallagher, with the Solar Energy Industry Association, countered that if Rocky Mountain Power wants to reduce its export credit rate for excess solar generation, there are better ways to go about it.
In Nevada, for example, the export credit drops according to the increase in rooftop solar generation penetration — on a graduated scale, he said.
“The amount of rooftop solar in Utah is so small, you don’t get into this intraclass subsidy,” said Gallagher, who is the association’s vice president of state affairs.
“Even if you believe the retail rate is not the correct way to value the export credit, there are much more rational ways to go about this than what they seem to be doing in this filing,” he said.
He added that the utility company failed to account for the benefits of solar in its value calculation, including avoiding having to invest in other energy sources to boost capacity, avoided distribution costs because the energy is produced locally and avoided fuel risk costs, such as increases in the cost of coal or natural gas.
Correction: An earlier version incorrectly said the cap to lock in a higher solar energy compensation rate is 170 kilowatt hours when it is 170 megawatts.