Solar subsidies flowing from the poor to the rich?
A long-awaited analysis of “net metering,” the policy that allows homeowners, school districts and businesses to offset the cost of their electric use with the rooftop solar power they generate and export to the grid, finds the policy will cost California’s nonsolar customers $1.1 billion a year by 2020.
The lengthy “California Net Energy Metering Evaluation,” released Thursday by the California Public Utilities Commission, will strongly influence discussions among state regulators about how to restructure electric rates.
The solar industry is already crying foul, saying the study design was stacked against solar. Others say it’s time for net metering to be overhauled.
“There’s no question that there’s a subsidy to solar customers,” said Marcel Hawiger of TURN, the Utility Reform Network. “Net metering was a policy designed to jump-start the solar industry in California, but it’s not a sustainable policy.”
Large utilities like PG&E have a four-tiered rate system: The more electricity you use, the more you pay. Tier 1 customers pay 13.2 cents a kilowatt hour for electricity, while at Tier 4 it’s 35.1 cents. The tiered rate structure has been a big driver of rooftop solar in California, since many homeowners who go solar do so to cut down on high monthly bills. Solar customers are reimbursed for the electricity they generate and export to the grid at the retail rate.
Utilities have argued that under the current rate structure, customers using net metering do not pay their fair share of the costs of the transmission and distribution grid. And since solar customers tend to be more affluent, utilities argue that lower-income, nonsolar ratepayers are subsidizing solar customers.
The solar industry is already fighting back against the report, noting solar is increasingly being adopted by middle-income consumers, creates jobs for installers and that everyone benefits from “avoided costs,” or the need for utilities to build additional power plants.
“The study design was stacked against solar,” said Susannah Churchill, solar policy director at Vote Solar, a solar advocacy group in San Francisco. “To do a cost-benefit analysis and not include benefits like public health and jobs just inflates utility claims. Rooftop solar is a threat to the utility business model, and they are doing everything possible to stop its momentum.”
The report, by the San Francisco-based consulting group E3, found that most homeowners who have solar systems are high energy users with an average household income of $91,000, well above the state average of $54,000, and that the savings that solar customers achieve on their own bills is shifted to other ratepayers who must make up the difference.
PG&E has more than 93,000 customers on net metering and adds roughly 2,000 more each month at a pace that, from a utility perspective, is not financially sustainable.
“PG&E has long supported solar for its environmental benefits,” said spokeswoman Lynsey Paulo. “We are the largest buyer of solar energy in the nation, and lead the nation in the number of customers who have installed solar on their rooftops. We look forward to working with lawmakers, regulators, industry and our customers to chart a path to a bright and sustainable solar future.”
E3 will present the results of the NEM study in the PUC auditorium Friday, and is accepting public comments until Oct. 10.