Net Metering: Will Utah Choose a Smarter Way Forward?

Last month, PACE released our new report, “Net Metering: Costs, Customers, and a Smarter Way Forward.” The report provides policymakers and other stakeholders with current snapshots of net metering approaches in several states, including Arizona, California, Mississippi, and Nevada.

Net metering and related solar discourse is live in dozens of states, in addition to those covered by our report. In Utah this summer, a long-simmering debate seems poised either to boil over or come to a conclusion that works better for consumers.

Utah currently has full retail net metering for rooftop solar customers, a policy PACE has identified as problematic. Rocky Mountain Power (RMP), a division of PacifiCorp, estimates that about 20,000 customers have chosen to install residential, or private, solar systems. As RMP discovered that net metering was causing it to pay private solar customers nearly three times the cost of other generation, it filed a rate case seeking to re-align net metering charges and ease the cost-shift estimated at $6.5 million for grid operation and upkeep.

In mid-2014, the Utah PSC denied RMP’s request and established Docket 14-035-114, Investigation of the Costs and Benefits of PacifiCorp’ Net Metering Program, which remains open to this day, now containing hundreds of documents representing every interest and argument under the sun. 

Solar advocates began by questioning the utility’s well-established load research methodology.  Others characterized private solar customers as “better” customers, positing that they are more efficient in their approach to overall energy usage than other electricity customers.  Another advocate maintained that surplus electrons flowing out of the wires at a private solar home and into neighbors’ homes are part of a $1.3 million benefit that private solar generation brings to the grid.

In early 2015, Utah’s Division of Public Utilities (DPU) observed that private solar customers were shifting distribution system costs to other customers, and that payment to private solar customers above the retail rate gives them incentives to size up their systems above what’s needed. This is a consequence that PACE has warned about a number of times. The Office of Consumer Services (OCS) commented that net metering costs and benefits must be limited to those that are quantifiable and that RMP shouldn’t have to quantify benefits the utility doesn’t believe are real, even if solar advocates claim they are.

In November of 2016, RMP asked the Utah PSC to establish a new net metering customer rate structure and provided a new net metering study. RMP proposed: 

  • grandfathering existing solar customers
  • increased customer charge for new private solar customers up from $6 to $15.
  • one-time installation fee, ranging from $60 to $150 based on private solar system size.
  • peak demand charge of $9.02 per kilowatt during peak demand periods
  • 3.81 cents per kilowatt-hour charge for energy used.

In support of its request, RMP offered evidence that the average private solar customer’s utility bill of $55 per month utility bill would rise to $74, still lower than the average $114 monthly bill for non-solar customers. RMP observed that private solar customers use the grid more than “regular customers,” as they send power back out over the lines. RMP also noted private solar customers typically experience a sharp rise in evening usage as the sun goes down. Finally, RMP highlighted that private solar customers enjoy a $400 annual subsidy each year, shouldered by other customers, adding up to $6.5 million.

So, where does Utah stand now, after three plus years of debate? The good news is a settlement could be around the corner. All summer, RMP, DPU, OCS, and some more moderate solar interests have purposefully negotiated on reasonable changes to Utah’s net metering policy.

While details are confidential, according to media and observer reports the current net metering program could be retired and replaced with a system that progresses toward an accurate valuation of rooftop solar and away from cost-shifts to non-solar customers. Not surprisingly, more extreme solar interests have continued to push out public messaging pitting utilities against consumers and reacting strongly to any notion that it’s inherently unfair to ask non-solar customers to shoulder extra costs. 

When and if the parties bring a negotiated settlement to the Utah PSC, policymakers and other observers can turn to the foundational principles that inspired PACE’s net metering report.  PACE believes the best policies take the interests of all consumers into account, whether they choose private solar or not. Those policies should:

  • treat all customers fairly by avoiding cost-shifting;
  • accurately reflect both the benefits and costs to the grid;
  • avoid distorting the energy marketplace by paying excessive rates for rooftop generation.

PACE and many others have eyes pointed west this week. Here’s hoping Utah decision-makers can step forward and create another example of data-driven, carefully considered approaches that accurately measure private solar costs and benefits. The parties have a chance to move Utah and the nation closer to a future where more consumers can decide whether and how solar fits their rooftop, while proceeding with the knowledge that if adopting private solar, they are being good neighbors to all.


Powering America with Jobs and More

This week, the PACE blog is coming to you from a beach house on the Georgia coast. In this relaxed setting, I had the chance to sit on the porch swing, iced tea in hand, and reflect in the relative quiet of August recess.

This house has quietly gone about its work since 1880, serving first as headquarters for the Chatham Artillery Club and then generations of those needing a respite from the modern world. It has withstood hurricanes and extreme temperatures. Its features combine the new (wi-fi, Roku, air conditioning) and the traditional (original louvered shutters, cypress paneling, a 1940s era GE refrigerator).

Like the electric power industry, this house is capital intensive, but I feel confident it will be here years from now when my daughter, as an adult, needs a break and some front-porch time. And like this house, the electric power industry has quietly gone about its work for well over a century (Thomas Edison founded the first electric company in 1881) and is now undergoing needed transformations to do its job in a reliable manner for the coming century. The benefits electric power brings us all are too often taken for granted, but here on the porch I reviewed a study that deserves more accolades and attention.   

The Edison Electric Institute, the National Rural Electric Cooperative Association, and the American Public Power Association collaborated over several months on an in-depth study, “Powering America: The Economic and Workforce Contributions of the U.S. Electric Power Industry”. The report is a detailed study of the role that electric utilities play in the nation’s labor force and economy.

Put another way, “[b]ehind every wall outlet or light switch, there is a dedicated workforce focused on powering the lives of millions of Americans who rely on electricity for nearly everything they do.”

Top level findings include that the “electric power industry directly provides nearly 2.7 million jobs across the U.S. through its employees, contractors and supply chain, and investments.”  Additionally, more than “4.4. million jobs are supported through the induced effects of these jobs.” The report’s scope includes investor-owner utilities (IOUs), municipal utilities, co-ops, merchant power, and all major forms of generation (yes, wind and solar are there, too). Transmission and distribution are also taken into account. 

Growing up in Georgia, I was always aware of the friends and relations who either worked for Georgia Power, the city utilities department, or the EMCs (that’s Georgia for electric co-op), but even I was pleasantly surprised to learn that the combined industry supports over 7 million jobs, or nearly five percent of all jobs in the United States. As well, the electric power industry contributes five percent of the U.S. GDP, to the tune of $880 billion annually. 

I knew my cousins, friends, and professional colleagues had good jobs, often among the best in their rural communities. “Powering America” backs up that long-ago impression with data. Describing direct employment, the report finds that:

“The electric power industry requires a highly skilled workforce to build and maintain the energy grid and the electric power system. To attract and retain the necessary skills and talent, median annual wages for direct electric power industry employees are double the national median.17 In 2015, median annual wages for direct electric power industry workers were $73,000. … Including benefits, the median annual compensation exceeds $100,000.”

So, while we can always use good news, why is this report so significant now? Reading through it, there’s a great deal more than a good-news report about the quality and quantity of jobs in the electric power industry.

First of all, the report underscores the industry’s commitment to transformations needed to keep providing affordable, reliable, and clean power for future generations. Projections of increased job growth in the sector are tied to significant investments in making the grid smarter and more resilient.

Second, the study also can serve as a benchmarking tool for other assessments of job creation in the energy sector. When renewable advocates make claims about workforce contributions of rooftop solar or smaller wind farms, policymakers can asses for themselves whether those claims are based on research with methods and data as rigorous as those used to compile “Powering America.”

Finally, the report provides a dose of perspective about how intertwined the electric power industry has been and will continue to be with our economy and workforce. Major changes to electricity policy have a ripple effect across a large pond. This report helps remind us that hasty decisions and one-size-fits-all policies don’t work. The smarter approach involves decision-making grounded in rigorous research and facts that works to the benefit not just of power providers, but to workers, related industries, and consumers of all types. 

Here’s hoping you get your own front-porch time this August and take the chance to toast, whether with iced tea or other beverage, the employees who keep the air conditioning and the ice-makers going.


American Wind Week Offers Chance for Reflection

Over the years, PACE has written often about the deployment of new energy sources, advocating for the location of those sources where they work best and the integration of those sources in a way that serves both customers and the grid. Our work, for example, led us to Oklahoma in the most recent legislative session to discuss the significant contributions of wind power in that state. We’ve written similar encouraging reviews of utility-scale solar projects in places like New Orleans and Montgomery, Alabama.

As the American Wind Energy Association (AWEA) celebrates its first-ever American Wind Week, running August 6th to the 12th, it’s important to recognize the role the wind industry has played – and will continue to play – in the future of American energy production. According to AWEA’s press release, it started the week to “honor the American innovators who taught the world how to harness the wind for large-scale electricity generation.” AWEA also wanted to highlight that modern wind turbines are a U.S. invention. (Confession – even after my 15+ years in the energy industry, this was a new and welcome fact.)

AWEA reports that over 52,000 wind turbines in 41 states are now supplying more than five percent of U.S. electricity. Like AWEA, PACE believes that wind power, when deployed thoughtfully with customers and the grid in mind, can be a “source of affordable, reliable electricity in the United States.” Consider how far wind power has come in recent years –

  • on average, 10 more new turbines go up every single day;
  • there are 100,000 jobs in the wind industry;
  • 500 domestic factories make wind parts.

The U.S. Department of Energy (DOE), through the Office of Energy Efficiency and Renewable Energy, led by Acting Assistant Secretary Daniel Simmons, is also celebrating American Wind Week with new reports that provide useful details about how, where, and why wind energy is growing.

The 2016 Wind Technologies Market Report by DOE’s Lawrence Berkeley National Laboratory sheds light on the important and growing role of utility-scale wind installations. There are now over 82 GW, enough to “meet about 6.2 percent of U.S. end-use electricity demand in an average year.” Forty states, with North Carolina as the most recent addition, now have utility-scale wind projects. Combined with baseload sources of power such as coal, natural gas, and nuclear power, these wind projects are providing affordable electricity through long-term power purchase agreements.

While rural landscapes are most commonly the host of utility-scale projects, wind is increasingly headed out to sea with projects such as the nation’s first commercial offshore wind project at Block Island, Rhode Island. There are 20 additional potential offshore projects totaling over 24,000 MW. You can read more about these efforts in the National Renewable Energy Laboratory’s 2016 Offshore Wind Technologies Market Report.

Distributed wind power, while only representing 992 MW nationwide currently, is also a sector worth watching. You can learn more about distributed wind in the Pacific Northwest National Laboratory 2016 Distributed Wind Market Report.

American Wind Week and these helpful DOE resources are coming at an important time in national and state energy conversations. As policy makers look to the future, attempting to balance energy demand with reliable supplies, finding the proper role of complementary power sources like wind is an important task. In the case of offshore wind, whose development will likely require public subsidy, it is critical that policy makers have all the facts at hand when weighing costs, benefits, and consequences to the grid of new projects. In the case of other, more traditional wind projects, lawmakers also deserve access to facts that cut through myths and offer clarity for decision-making. That’s because the best decisions are the ones that are best-informed. Here’s hoping American Wind Week and the discussions it generates can help blow away the clutter and reveal the smartest path forward.