Aug
16
2017

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.