How Long Will Solar-Paneled Homes Keep Their Current Deals?

A Fair Price For Home Solar

For homeowners with solar panels on their roofs, one of the most tangible benefits is watching their electric meters spin backwards when they produce more power than they use — power that may allow them to zero out their energy bills under a key solar incentive known as net metering.

And under a proposed ruling from the California Public Utilities Commission, the current net metering rates for solar owners in the Coachella Valley and across the state could remain in force for up to 20 years, even after a likely reform that could cut incentive rates beginning in 2017.

At present, owners of rooftop installations pumping extra electricity onto the grid get a credit equal to the amount the utilities pay per kilowatt-hour to procure power at peak times. Those credits are used to offset the cost of the power the customers use after sundown and other times when their panels aren’t in operation, all averaged out on a yearly basis.

“It basically means we’re not paying any electricity bill, and we spend all summer here so our bills are large,” said Joan Taylor of Palm Springs, who’s had a 4.5-kilowatt system on her home for the past two years.

A recent bill from Southern California Edison shows Taylor’s system produced more power than she and her family used for six of the past 12 months.

Under a state law passed last year, Taylor and other solar owners could get a cut in their net metering credits triggered by reforms the PUC must approve by the end of 2015. The first step in that process is setting up a transition period for existing solar customers or for anyone who installs solar before the future rates go into effect July 1, 2017.

The law, Assembly Bill 327, requires the transition rules be in place by March 31, and the debate on the issue has provided a preview of the battles ahead among the conflicting interests of utilities, ratepayer advocates and solar supporters.

Commission President Michael Peevey, who authored the Feb. 20 proposed ruling, clearly intended the 20-year transition, as a compromise, but Taylor and other solar advocates think it’s not long enough.

“The systems are guaranteed for 25 years,” Taylor said. “For schools and public agencies that have made huge investments, it’s especially unfair. We’re providing cheap power or free power.”

Bernadette Del Chiaro, executive director of the California Solar Energy Industries Association, said 30 years would be a safer figure to ensure solar owners get a fair return on their investments.

“Net metering is a critical policy to keep the solar market growing and make the sunshine accessible for everyday Californians because without net metering, you can’t make use of the sun effectively,” she said.

But Southern California Edison and other utilities have consistently argued for a shorter transition period based on how long it takes for a solar system to pay for itself, a time frame that has been shrinking with the plunging prices of panels. In a Dec. 13 filing with the PUC, Edison proposed a six-year transition with all qualified solar owners changing over to the new, still-undecided rates on Dec. 31, 2023.

In an email to The Desert Sun, Edison said it was reviewing the proposed decision but continues to support a single 2023 transition date.

Transition compromise

The passage of AB 327 and the commission’s efforts to find a compromise on the transition period are part of a larger, nationwide debate over net metering itself, being played out on a state-by-state basis.

Utilities and ratepayer advocates have long argued that net metering results in a cost shift, with non-solar ratepayers picking up the tab for all the zeroed-out bills of rooftop solar owners. Opponents also maintain that the incentive also allows solar owners to avoid paying their fair share of costs for maintaining the grid.

Solar advocates have countered that rooftop installations deliver cheap power to the grid when it’s most needed, during summer or other peak demand periods, cutting the need for expensive natural gas plants and additional transmission to back up the power system.

In a Feb. 12 statement, the National Resources Defense Council and Edison Electric Institute — groups that generally find themselves on opposing sides of renewable energy issues — called for a collaborative approach to net metering and related concerns to ensure fair compensation for both solar owners and utilities.

Such calls for compromise reflect the complexity of the issues and the fact that people’s views of the market and social forces underlying the debate do not fall along neatly divided lines. The Utility Reform Network, a San Francisco-based ratepayer advocacy group, supports rooftop solar, but originally proposed a 2020 transition date, three years ahead of Edison’s.

“Solar customers should be paid at a fair price,” said Marcel Hawiger, a staff attorney for TURN. “Net energy metering ends up subsidizing them at too high a price. If we want to reduce greenhouse gas emissions to save the planet, then we’ve got to get the biggest bang for the buck.”

About 10 months ago, Rick Walsh of Palm Springs moved into a custom-built “zero net” house, designed to produce as much energy as it uses. So far, his two solar systems have generated about 830 kilowatt-hours more electricity than he and his partner Pat Dowd have used.

Walsh is also a software developer who specializes in designing customer-billing programs for electric utilities, so while he thinks the 20-year transition period is fair, he sees both sides of the net metering equation.

“I pay Edison $1.22 a month. It’s crazy that they supply all the wires and transformers,” he said. “The PUC should figure out what’s a fair price. One should compensate Edison for the distribution charges.”

AB 327 also allows the commission to establish a small monthly charge to be added to the electric bills of all ratepayers, solar and non-solar, to cover utilities’ transmission-infrastructure costs, another issue that will likely spark controversy in the coming months.

Like Walsh, Vincent Battalgia, CEO of Renova Solar, a Palm Desert installer, has a bifurcated view on net metering. He supports the 20-year transition period, but believes the incentive should be seen as something transitional. It is, he said, a way for solar owners to “store” excess electricity from their systems on the grid until actual energy storage technology can be developed for rooftop installations.

“Net metering was only supposed to be around for a decade so we could ignite this new phase of energy generation,” he said. “We need that until we get storage that is dependable, maintenance-free and can be managed in a small space.

“The grid is being redefined,” he said. “That is the phase we’re in right now.”