Ramon Torres, who lives in a subdivision between Madera and Fresno, used to pay hundreds of dollars a month for electricity in the summer. Lately, his summertime monthly bill from PG&E runs closer to $40.
The difference: Torres had solar panels installed on his roof three years ago. The rooftop array generates much of the power he needs to air-condition his home. Whatever he doesn’t use, he feeds into the state’s electric grid, and PG&E is required by law to compensate him with a credit on his bill. The combined savings are adding up quickly.
“It pays for itself,” Torres said. “It’s the best investment anybody can do.”
But as far as PG&E is concerned, rooftop solar is more than just a good investment: It’s a sweetheart deal for homeowners.
PG&E and California’s other major utilities, Southern California Edison and San Diego Gas & Electric, have petitioned state regulators to slash the bill credit they must pay to solar customers by more than half. Not only that, if their proposal is accepted by the Public Utilities Commission, the utilities would be allowed to charge these solar-using homeowners a monthly flat fee — around $70, in PG&E’s case.
These dramatic changes would only affect new rooftop solar installations. Customers who’ve already installed solar panels, such as Torres, would continue under the current arrangement.
Nonetheless, the utilities’ plan is infuriating solar-power advocates at a time when California is pushing more aggressively for renewable energy as a means of fighting climate change. State law says California’s electric grid must be completely fossil-free by 2045, and the California Energy Commission requires the installation of solar panels on most new homes and low-rise apartment buildings.
The solar industry says the utilities’ proposal would dramatically stall out California’s progress on carbon-free energy — while burying an industry that the electric companies view as a competitor.
“What they’re proposing would kill the rooftop solar market in California,” said Bernadette Del Chiaro of the California Solar & Storage Association, a lobbying group. Del Chiaro acknowledged that it’s likely the PUC will alter the price structure, at least to a certain degree.
The utilities deny their plan would ravage the solar industry. Instead, they argue that their plan would transform an overly generous arrangement for solar customers into a system that’s fairer for everyone.
As it stands now, the utilities say they’re being forced to subsidize their rooftop solar customers — heavily. The credit these customers receive for their excess power is much higher than the true cost of the electricity. This subsidy effectively shifts some of the cost of operating the utility — everything from power poles to tree-trimming — to the millions of customers who don’t have rooftop solar.
In PG&E’s case, the cost-shift translates into $170 a year in higher bills for non-solar customers, said utility spokeswoman Ari Vanrenen.
“Our proposal is really about modernizing the structure while reducing the burden on non-solar customers,” she said. “We’re just trying to make sure we’re balancing it out more.”
She also rejected the claim that solar will suffer, saying the industry has outgrown the need for such subsidies. “The solar industry is strong and it’s mature,” she said.
The proposal pending before the PUC doesn’t affect SMUD, the Sacramento utility, which isn’t regulated by the state. However, the utility released a report last year that echoes PG&E’s complaints that solar customers are getting compensated too generously. The utility’s staff plans to submit a proposal for a new financial structure to the SMUD board of directors in May, said spokeswoman Lindsay VanLaningham.
A SUBSIDY FOR CALIFORNIA SOLAR
An array of rooftop solar panels can cost $20,000 or more, and for years California officials have been pursuing policies designed to make solar more enticing for homeowners and commercial property owners.
In 1995 the Legislature passed a law mandating “net energy metering,” requiring PG&E, SMUD and other California utilities to offer bill credits to customers for the surplus electricity they fed into the grid. The compensation is equal to the retail prices those customers would be paying if they didn’t have rooftop solar. AT PG&E, that comes to an average of 25 cents per kilowatt-hour, Vanrenen said.