California power companies trying to slow solar adoption

I would not assume that Gov. Brown is rolling over and giving up on this issue. He strongly believes in renewable energy. It is a complex situation and he cannot tell the CPUC what to do.

The PG&E NEM tariff already has language that will lead to a phase-out of the existing net metering rules. That is the more serious issue.

The existing NEM Tariff will be closed to new customers at the earlier of:
* July 1, 2017
or
* The total generating capacity of NEM customers exceeds 5% of aggregate peak demand or exceeds 2409 Megawatts.

Those customers who are interconnected under the current NEM tariff will be allowed 20 annual true-ups from initial PTO during the NEM Transition Period.
Existing interconnected systems may be modified or repaired during the Transition period as long as they do not increase generation by more than 10% or 1kW, whichever is greater.

So, there will have to be a lot of lobbying to set the terms of the "Successor Tariff", meaning the terms for grid interconnection for future solar systems in PG&E territory.

You can reach out to the California Public Utilities Commission at 415.703.2782 and show your support for solar and wind power system owners. You can also contact Governor Brown at 916.445.2841.

FWIW, Maine is in a similar situation. Net metering is up for review when solar hits 1% of load (yeah, *one* percent), which milestone was just reached by the largest of the state's utilities, Central Maine Power (a sub of Spain's Iberdrola). The Maine PUC commissioned a study on the value of distributed solar resources, and the Office of the Public Advocate has proposed a replacement tariff, which would replace net metering with a defined-rate feed-in tariff. The level of the FIT is up in the air: the utility wants it set at the wholesale price of power (6¢/kWh), and solar advocates want it set at the level of the value of distributed solar (about 20¢/kWh). There's a big gap there!

One key concession that seems to be generally accepted (we've had a half-dozen stakeholder meetings on this issue) is that net metering will remain within the hour or, more precisely, within the timestep of the smart meter's readings. Residences will not be required to install two meters, so power used when generated is not subject to any extra charges or credits. Personally, I think this is the right way to think about the problem: if I grow my own strawberries and eat them, there's no market transaction to price. OTOH, if I grow strawberries one week, sell them to the market, then buy strawberries two weeks later, I'm definitely using the market's infrastructure.

A key insight I've developed from the discussion in Maine has been this: net metering creates a physical hedge against the electricity commodity, while a defined FIT allows bank financing of solar.

I'm in favor of shifting to the FIT because it removes the ability of the utility to change its retail tariffs in a way that disadvantages solar. Today's residential rates in Maine, as in most other states, have nearly all the cost piled onto a per-kWh rate. This makes net metering look good: lower the kWh usage, and you lower your bill. Utilities can easily justify charging mostly on a fixed or demand-charge basis and, with smart meters in more and more homes, these more sophisticated tariff designs are feasible. If CMP were to change from charging 14¢/kWh to a fixed $40/month charge + 7¢/kWh, residential solar installations would be DOA.

Robert, you said a lot of good things above. You are way more up-to-speed and intelligent than I (and likely most of the American public as well) in this particular endeavor. Here in PG&E territory, our net metering readings are every quarter-hour. In fact, there is no reason that the utility could not reduce this period even more. It seems to me that the shorter the period, the better the likelihood that the utility would be able to increase their billings because of the spread of the purchase price from us and the sales price to us. This would especially be true from November through April when we actually have clouds in the sky! Many times I have seen the production chart on my solar go from 2,200 watts and drop precipitously to around 400 watts as a large cloud drifted by, only to increase 30 minutes later when the cloud blew away.

Compounding the situation for us in the interior valleys is the fact that time-of-use metering is wa-a-ay more expensive that tiered rates. Many coastal areas don't even need air conditioning, or can get by with a wall unit or two, as their summer temperatures rarely exceed 85. Not so here. From mid-June to late August frequently our overnight lows are 72-78 degrees, and the high around 4:00-5:00 can easily reach 105-112. My wife and I do all we can to cool the house down overnight to delay cranking up the HVAC as long as possible. We cannot shift our usage of the HVAC to "off-peak" like we can with our dryers and dishwashers. It just seems to me that whatever is ultimately decided by the CPUC that those of us in the middle of the state are going to get you-know-what and not get kissed. We are supposed to move to T-O-U metering in 2019, but are told that we can opt out. We fully plan on opting out. I just hope the tiered rates that will be offered are not going to be rapacious.

I think this FIT is a grand idea, and I think it makes a lot of sense. The price we receive credit for needs to be fair (not the six cents requested.) And it should drop the more we generate over a period of time to discourage overbuilding of rooftop solar. And lastly, whatever is ultimately decided needs to be simple and clearly understood by the average consumer, and not arcane and technical.

Robert.Boston said:

If CMP were to change from charging 14¢/kWh to a fixed $40/month charge + 7¢/kWh, residential solar installations would be DOA.

Click to expand...

In aggregate, would that be revenue neutral to the utility? In California, we have rate plans that were originally designed to be progressive, ie. low income, low quantity users have an artificially low bill. I think ratepayer advocacy groups would be all up in arms about the high fixed cost.

miimura said:

In aggregate, would that be revenue neutral to the utility? In California, we have rate plans that were originally designed to be progressive, ie. low income, low quantity users have an artificially low bill. I think ratepayer advocacy groups would be all up in arms about the high fixed cost.

Click to expand...

I haven't run the numbers, but I think the $40+7¢ tariff is approximately revenue-neutral to the utility. It also better reflects the true cost to serve: at least in the short term, the actual cost of producing and delivering an extra kWh of power is not 14¢, at least in most hours. You raise an excellent point, though, which is that utility rates also play a redistribution role (or, if you prefer, a "progressive" role). Economists like myself don't generally believe that prices should be progressive (or regressive): prices should reflect the marginal cost (ideally including externalized costs). Price discrimination by income or wealth is a tactic that every merchant would love to accomplish (which is why weekday matinees are cheaper than the evening showing), but it's unusual to have a commodity like electricity with such a skew.

(To be clear: yes, everyone pays the same tariff rates, but higher income people tend to use more power, so when the rate collects a disproportionate amount of the pot from high-use customers, it's effectively a "progressive tax".)

Any word on the vote yet? I believe their meeting was to commence at 9:30 Pacific.

Robert.Boston said:

I haven't run the numbers, but I think the $40+7¢ tariff is approximately revenue-neutral to the utility. It also better reflects the true cost to serve: at least in the short term, the actual cost of producing and delivering an extra kWh of power is not 14¢, at least in most hours. You raise an excellent point, though, which is that utility rates also play a redistribution role (or, if you prefer, a "progressive" role). Economists like myself don't generally believe that prices should be progressive (or regressive): prices should reflect the marginal cost (ideally including externalized costs). Price discrimination by income or wealth is a tactic that every merchant would love to accomplish (which is why weekday matinees are cheaper than the evening showing), but it's unusual to have a commodity like electricity with such a skew.

(To be clear: yes, everyone pays the same tariff rates, but higher income people tend to use more power, so when the rate collects a disproportionate amount of the pot from high-use customers, it's effectively a "progressive tax".)

Click to expand...

I can see 7¢/kWh as being reasonable for distribution and transmission, but what does the $40/month cover?

In terms of the changes proposed by utilities in CA, I can't see how the utilities can claim that bill credits below 10¢/kWh are reasonable for exports when the average price is 17¢/kWh and the average on-peak price is much higher than that. I can see them crediting an owner for the amount they're being charged per kWh less distribution costs and costs for low income programs, which is ~4-5¢/kWh according to the CPUC, plus some credit during high load times when local distribution lowers the stress on transmission, but anything less than that is practically theft.

- - - Updated - - -

TheTalkingMule said:

Any word on the vote yet? I believe their meeting was to commence at 9:30 Pacific.

Click to expand...

It went well!

California regulators preserve retail rate net metering in 3-2 vote | Utility Dive

There will be new interconnection fees, but it's very minor in the scope of a complete residential solar installation. This will all be re-visited again in 2019 after the Energy Commission completes some other studies that are analyzing the actual costs and benefits of distributed generation. They hope to use that analysis to make some sensible justification for changing the rate structure of distributed generation billing. I read most of the Proposed Decision before the vote and was surprised at how frankly they refuted and rejected some of the Utilities' assertions regarding new fees like demand charges.

The utilities have another arsenal planned. They will change the peak hours to the time when the sun is not shining. So the credits in summer will substantially go down. Currently summer credits offset winter debits. There will be not much credit in summer, if any at all, once the peak hours are changed.

Blue_Model_S said:

The utilities have another arsenal planned. They will change the peak hours to the time when the sun is not shining. So the credits in summer will substantially go down. Currently summer credits offset winter debits. There will be not much credit in summer, if any at all, once the peak hours are changed.

Click to expand...

This is not some underhanded plan. It actually reflects the peak grid demand. The forecast peak today is roughly from 5pm-10pm. Schedule EV's Peak period is 2pm-9pm. I don't think it's at all unreasonable for them to adjust the rate schedules to reflect actual peak periods. Of course, this will naturally drive people to energy storage, but that's a good thing for the grid too.

miimura said:

This is not some underhanded plan. It actually reflects the peak grid demand. The forecast peak today is roughly from 5pm-10pm. Schedule EV's Peak period is 2pm-9pm. I don't think it's at all unreasonable for them to adjust the rate schedules to reflect actual peak periods. Of course, this will naturally drive people to energy storage, but that's a good thing for the grid too.

Click to expand...

Currently E6 is 5-8pm, part-peak in winter, which basically matches the peak, so no change is required. I think, the summer usage peak also matches the current utility E6 peak times. However, utilities don't like that it also matches the solar generation peak. So, last I saw they were trying to show two different graphs - one for residential and one for commercial - all in order to confuse people and get what they want.