Commission rejects proposed 'sun tax' for solar customers

Commission rejects proposed 'sun tax' for solar customers

(Laura Seitz/Deseret News)

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SALT LAKE CITY — Utah solar advocates and customers are hailing a decision Friday by the Utah Public Service Commission to reject Rocky Mountain Power's request of a monthly fee for rooftop solar homes.

“What a bright day for Utah’s future. This order protects energy choice in Utah and recognizes the potential solar has to benefit all Utahns,” said Sarah Wright, executive director of Utah Clean Energy.

Another advocacy group, HEAL Utah, was also pleased.

“We’re thrilled. Rocky Mountain Power tried to put up barriers to dissuade people from investing in solar, and Utah’s Public Service Commission didn’t let them," said Christopher Thomas, executive director.

“This victory belongs to the tens thousands of rooftop solar owners, community councils, faith communities, businesses, and Utah citizens who stood up for the freedom to choose clean solar energy."

The commission, in its order, said it could not rule that the fee was justified.

“We conclude under these circumstances the better course is for PacifiCorp and interested parties to gather and analyze the necessary data, including the load profile data that is foundational to this analysis, and present to us their results and recommendations in a future proceeding," the commission said.

Solar advocates said the decision that lingered before the Public Service Commission since July when public testimony concluded was about customer choice.

"This is an issue about the rights of individual customers; that is, the right to self-determination," said Rick Gilliam, with the national Vote Solar Initiative.

"We believe that electricity customers, the retail customers and residential customers in particular, have the right to use as much or as little electricity as they so choose."

The fee was wildly controversial and an issue which generated thousands of comments and a six-hour public hearing.

Utah stood to become the third state in the nation — behind Arizona and Georgia — to charge residential rooftop solar customers a monthly fee to help cover a utility provider's "fixed" costs.

'Taxing the sun'

We're thrilled. Rocky Mountain Power tried to put up barriers to dissuade people from investing in solar, and Utah's Public Service Commission didn't let them. This victory belongs to the tens thousands of rooftop solar owners, community councils, faith communities, businesses, and Utah citizens who stood up for the freedom to choose clean solar energy.

–Christopher Thomas

Jim French is a Salt Lake resident who had 14 solar panels installed on his home five years ago. In April, he added four more.

"I anticipate that will pretty much cover our electric usage over the course of the year."

He said his initial investment for the panels was $21,000, an amount greatly reduced by federal and state tax credits and rebates from Rocky Mountain Power.

"When we moved to Utah, we became aware that the great majority of power is generated from coal-fired power plants," he said. "I wanted to do what little I could to contribute to clean energy."

French says his home uses very little power during the summer, and he banks on his credits the rest of the time.

The way net metering works — Utah is among 42 states in the country with net metering policies on the books — is rooted in a simple exchange between the customer and the utility at the actual meter.

Net energy metering allows electricity customers who wish to supply their own electricity from on-site generation to pay only for the "net" energy they obtain from the utility. Alternatively, if the customer's system generates excess electricity, it is exported to the grid. The customer than gets a "credit" for those kilowatt-hours of generated energy — much like rollover minutes accumulate on a cellphone bill can be used to cushion overages in the future.

A month-to-month analysis in 2014 by Rocky Mountain Power shows that excess power generation from solar customers easily tops 100,000 kilowatt hours for several 30-day periods.

The fee would have impacted 2,500 households in Utah.

Mixed messages

Wright said the fee sent the wrong message to rate payers willing to make long-term investments in clean energy.

For Rocky Mountain Power, however, it was about recouping the costs of providing that grid — and everything that goes with it — for solar customers who are on the system regardless of how much energy they do or do not produce.

"This is not an attempt to single out net metered customers because they use less power," argued Matt Moscon, an attorney for Rocky Mountain Power before the commission. "It is because whether you use a tiny amount, a large amount, or a middle amount, you use that connection to the grid. Everyone uses it by simply being connected."

But solar advocates and customers insist the fee is punitive and makes little sense.

"I think with the majority of power from Rocky Mountain Power coming from coal-fired power plants, it is not right for someone who is putting clean power back in the grid to have to pay extra, bottom line," said French. "To charge people extra who are producing clean power is just wrong."

Solar advocates saw the fee as an attack on a brand of renewable energy that is just starting to blossom in a sun-rich state like Utah.

In the last couple of years, the popularity of solar has taken off in Utah's fledgling market, propelled in part by better technology, lower costs and community purchase initiatives that reduce some of the scariness of embracing an alternative energy source.

This is not an attempt to single out net metered customers because they use less power. It is because whether you use a tiny amount, a large amount, or a middle amount, you use that connection to the grid. Everyone uses it by simply being connected.

–Matt Moscon, attorney for Rocky Mountain Power

"The world is changing. It is much different than it was when we started regulating electricity nearly a hundred years ago," said Wright.

Wright, testifying at the Utah Public Service Commission hearings on the fee, said instead of deterring investment in clean energy, Rocky Mountain Power should be at the forefront of encouraging a more diverse portfolio that serves all its customers.

"Now is the time to transition to a cleaner more resilient energy future and the decisions we make today will have a lasting impact. We need to reward smart energy investments like energy efficiency and rooftop solar,” she said later. “To add a fee for rooftop solar without accounting for the benefits it provides to our energy system, economy, and health will stifle rooftop solar doing a disservice to all Utahns.”

Part of the grid

Rocky Mountain Power and proponents of the fee said it is not that simple, and the proposed charge has nothing to do with deterring an individual's choice to invest in solar.

"Without such a charge, net metering customers do not contribute fully toward the distribution system, as well as potentially other fixed costs," testified Artie Powell, energy section manager with the Utah Division of Public Utilities.

Powell said that the monthly fee over the course of 25 years would still only represent less than 1 percent of a customer's investment in a $10,000 system.

"So no, I don't think that the net metering fee is going to have any substantial impact on people's willingness to adopt rooftop solar," he said, before the ruling was issued.

Richard Waltje, president and chief executive officer of Rocky Mountain Power, told the commission that regardless of the amount of electricity generated by rooftop solar customers, the costs of importing and exporting that energy from user to user do not decrease.

"Ironically, without connection to the system, net metering is not even possible."

Moscon compared a rooftop solar customer to a home in a subdivision with nine other residences. All homes have a transformer and power lines, but even if the rooftop solar customer "unplugs," the costs don't go away.

"Even if that house had solar when the subdivision was built, it would not change what the company would have to do."

The net metering fee was not a battle isolated to Utah. Last November, a 70- cent per kilowatt-hour fee was approved in portions of Arizona, amounting to roughly a $4.90 monthly fee to customers within that power provider's service area.

In Washington, several legislative proposals assessing the fee were killed after advocates that included the Sierra Club launched an aggressive campaign targeting the measures' defeat.

An analysis by the Pew Charitable Trusts said the battlegrounds for a so-called solar tax have been forged in sun-rich states like California and less likely areas like New Jersey.

Campaigns that involve politically conservative organizations and big utility companies want to institute the fees or put new thresholds on the number of qualifying households that can take advantage of net metering.

Growing power

Nationally, solar installations were up 76 percent in 2012 over the year before. In 2010, there were 151,000 customers across the country with net metering and 323,000 in 2012.

"Investing in rooftop solar is saving people money and benefiting communities," said Amy Hojnowski, a national leader in the Sierra Club's Beyond Coal Campaign.

"As we've seen more homeowners and businesses go solar, we've simultaneously seen big utility companies across the country like Rocky Mountain Power attempt to impose monthly fees on rooftop solar users to protect their monopolies and stamp out energy choice. At every turn, homeowners, faith leaders, businesses, and elected officials are fighting back."

But Waltje said Rocky Mountain Power is trying to address the problem sooner, rather than later, so there is less immediate impact to the utility's customer base.

"We have observed the passion and controversy surrounding the determination of the value in net metering in states where the number of solar net metering installations is large," he said during testimony before the commission. "As in other states, we believe the number of installations in Utah is likely to grow significantly, so now is the the time to address the issues associated with it."

Waltje said that the costs of that system will not decrease over time, even as solar customers increase.

"We do want customers to understand the impacts on the distribution system and because of our current rate design, net metering customers are not fully paying for the cost of the infrastructure."


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