SAN FRANCISCO (CN) - In a key move on solar power, California regulators Tuesday issued a proposal rejecting the utility industry's quest to slash rates at which solar customers are paid for their excess electricity.
The California Public Utilities Commission's proposed decision would renew the net-metering tariff for solar customers at current rates, dealing a blow to utility companies that want major changes in the system.
Under the net-metering program, utilities compensate solar homeowners for power they export to the grid, to be used by other customers. The solar power-senders receive the full retail price for their electricity.
All of the state's major utilities - Southern California Edison, Pacific Gas & Electric, San Diego Gas & Electric Co. - want to slash the value of the power they receive from solar customers. They claim that solar customers are not paying their fair share to maintain the electric grid.
Under Edison's proposal, new rooftop solar customers would be paid 8 cents per kilowatt-hour for their excess solar electricity, compared to the 15 cents per kilowatt-hour they are typically paid today.
The utility companies also want to impose large new fees for solar customers.
Although the CPUC decided to keep the net metering system in place, the regulators proposed some changes that solar companies have opposed.
New solar customers would pay a one-time fee for connection to the electric grid that would likely range from $75 to $150 per customer, according to the 148-page document, "Decision Adopting Successor to Net Energy Metering Tariff."
Rooftop solar customers would also pay 2 to 3 cents per kilowatt-hour for electricity used from the utility companies, no matter how much power their solar systems generate. A typical solar customer would end up paying an extra $5 a month as a result, the commission said.
The proposal would require new solar customers to switch to time-of-use electricity rates, which charge more for electricity when demand on grid reaches its peak, in the late afternoon and early evening.
Existing owners are exempted from all the changes for 20 years from the date they installed their solar systems and connected to the grid.
Not surprisingly, the utility companies protested the proposal and vowed to change the commission's mind before a final rule is issued next year. PG&E said the decision falls well short of what is needed to ensure sustainable growth of solar power.
"Some solar company executives will say that the sky is falling if we make any changes, but the truth is that solar's bright future will only be assured by moving forward with smart energy reform," said Steve Malnight, senior vice president of regulatory affairs at PG&E.
Rules made nearly two decades ago allow rooftop solar users to pay effectively nothing to use the grid to buy and sell electricity, while getting paid more than market rates for excess electricity, PG&E said.
It claimed those incentives come to nearly $1 billion a year statewide, which must be offset by nonsolar customers. Maintaining the existing incentives for rooftop solar would increase bills for nonsolar customers by $45 a month by 2025, according to PG&E.
"Solar is too important to our state's energy future not to get it right," Malnight said.
San Diego Gas & Electric agreed.
"We are disappointed that today's proposed decision on the rooftop solar subsidy does not address the growing cost burden among our customers," SDG&E said in a statement. It said that Californians "shouldn't be penalized with higher electric bills just because they are unable to afford or accommodate solar on their rooftops."
SDG&E, the only utility in California to deliver 33 percent of its energy primarily from wind and solar, said Californians "deserve a program that balances the interests and needs of all utility customers while supporting and fueling the increased adoption of clean energy technologies."
It was no surprise that solar companies applauded the commission's proposal.
California Solar Energy Industries Association policy director Brad Heavner said the proposal rejects the utilities' "false numbers" while "clearing the pathway for solar to continue to grow."
"Although we don't like everything in the proposed decision, it is a fair compromise that will maintain the opportunity for customers to go solar," he said.
SolarCity CEO Lyndon Rive said the commission's decision to continue the state's successful metering policy is "consistent with California and Governor Brown's leadership on clean energy and recognizes the important role of rooftop solar in accelerating our transition to a clean energy economy and providing customer choice."
Solar City was not pleased, however, with the proposal to require new solar customers to be on time-of-use rates.
"As we saw in 2007 when time-of-use rates were briefly mandated for solar customers, they don't work for everyone who wants to go solar, and would reduce the motivation for installing solar. While these rates can send helpful signals about when to use electricity, we urge the PUC to closely examine the impacts of mandating time-of-use rates," Rive said.
The proposal, issued by Chief Administrative Law Judge Karen Clopton, needs the approval of the commission's five voting members to take effect. The vote is scheduled for Jan. 28, after a 30-day public comment period.
The new rules would take effect by July 2017.
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