To say that the battle over net metering payment schemes is getting heated is an understatement. But nearly 2 years after I wrote about how the net metering debate was playing out globally (see those blogs here, here, here, and here), what troubles me most is that little progress appears to have been made in terms of finding an equitable, transitional solution that promotes solar adoption without unfairly affecting the business models of regulated power utilities.
In the United States, the state-level regulation of utilities means that 50 different public utilities commissions (PUCs) are considering proposals from numerous utilities, and no two proposals are exactly alike. But nationwide, solar supporters are still doing their best to make utilities look like the bad guy—and inflammatory solar tax headlines still dominate in the media.
War in the Great Lakes State
This summer, a bill before the Michigan State Senate has created more sturm und drang because, as written, the bill would not grandfather in existing solar customers. I found article after article where homeowners who’ve invested tens of thousands say that rather than a 10-year payback, it will now take 20, 30, or more years for their solar system to pay for itself. Why? Because the proposal would make solar customers sell their power to their utility at wholesale rates, then buy back what they need at retail.
As in most net metering battles, solar advocates argue that the incentive for consumers to install solar will be eliminated under such rules. Combine that with that the expiration of the federal solar tax credits at the end of 2016, and solar supporters imply the end of their industry (and jobs) is nigh.
On the other side of the table are utilities that typically rely upon the cross-subsidization argument to defend their efforts to implement higher fixed fees or reduced net metering payments for solar customers. Their argument is that, in order to pay for the grid that everyone—even solar customers—still needs, those customers should pay a connection fee so that fixed grid maintenance costs aren’t unfairly shouldered by non-solar (often lower income) customers.
Both sides of the argument have merit. Increased fees or reduced net metering payments to solar customers will make a potential customer think twice before committing to a $20,000 (or much more) investment. But utilities do have to maintain and operate their power plants, distribution grids, billing systems, etc. whether a customer buys $200 worth of power in a month or $20. Today, solar penetration in the United States is still low, but it’s growing rapidly. There’s no reason to think that growth will slow—especially if the federal tax incentives are extended, as has been proposed by New York Senator Charles Schumer.
What’s harder to understand is why more utilities and solar companies aren’t working together to create a plan that allows solar investment to continue growing—creating jobs, reducing carbon footprints, and taking stress off of the grid—without creating abrupt, unfair financial stresses for these utilities that have been bringing power to Americans for more than a century.
Yes, the business is changing. Yes, regulatory action often comes too slowly while business forces can shift rapidly—just ask the old school telcos that still had more customers than mobile carriers less than 10 years ago. But there ought to be enough creative juice among advocates on both sides to imagine a transition plan that works for all. Industry-driven compromise would be embraced and emulated by regulators nationwide. Let the mudslinging end and productive dialogue begin, I say.
Tags: Grid IT and Communications, Policy & Regulation, Solar Power, Utility Transformations
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