Solar Response to RMP Info Sheet

 

SOLAR INDUSTRY’S RESPONSE TO ROCKY MOUNTAIN POWER AND THE PROPOSED RATE FOR ROOFTOP SOLAR CUSTOMERS INFO SHEET

Key: RMP original content in this text, Solar Industry Response in italics

 What does this mean for customers?

Here is the difference for a typical customer who uses 1,000 kilowatt-hours per month and has a private rooftop solar system that offsets half of the household energy use:

  • $55/month – Average bill under current net metering rate
  • $74/month – Average bill under new net metering rate

The average energy bill without net metering is $114 per month.

A typical new residential net metering customer would still save about $40 per month (or 35%) compared to an average customer who isn’t on net metering. By doing this, the subsidy paid by non-solar customers would be eliminated.

 

Solar Industry’s Response:

Rocky Mountain Power (RMP) has failed to take into account the costs associated with purchasing a rooftop solar energy system. For example, if an RMP customers wants to install a 7 kilowatt rooftop solar system, that customer will pay about $30,000 with the hope of achieving (i) energy independence, (ii) long-term savings for their family, and (iii) improved environment/air quality in Utah.

If an RMP customer finances the cost ($30,000) of the 7 kilowatt rooftop solar system, over 20 years, that customer will pay about $95 per month, which RMP has neglected to include in their customer impact analysis.

An average rooftop solar customer with a 7 kilowatt system, which offsets 80% of their annual energy usage, will see an increase of more than $31 per month on their RMP electric bill. This amount will be higher if their average 60-minute peak demand goes above 3.4 kilowatts, which is possible in the middle of summer or dead of winter.

Simply put, an increase of $31 per month will add up to nearly $15,000 of additional costs over the life of the solar system (with standard utility escalation) and more than doubling the payback timeline of the system from up to 13 years to nearly 30 years.

For additional information please refer to the Fact Sheet and FAQ provided by the Utah Solar Energy Association located at http://utsolar.org/net-metering/.

 

Won’t this change kill solar in Utah?

No. Customers with rooftop solar will still save money on their energy bills—about 35% compared to non-solar customers.

 

Solar Industry’s Response:

Please see response above. RMP is not taking into account the cost of financing or the cost of capital on the rooftop solar customer.

If these new fees go into effect, they will:

  • Treat solar customers, who make a smart customer choice, as a separate class of customer
  • Create a significant disincentive for Utah consumers from making the choice to use solar to reduce their reliance on Rocky Mountain Power and improve Utah’s air quality
  • Eliminate thousands of jobs in Utah
  • Devastate the solar industry, which is one of the fastest-growing industries in the state.

RMP’s proposal discriminates against ratepayers that chose to invest in solar by singling them out as a rate class separate from all other residential customers. The 3-tier rate structure RMP proposed to the PSC is punitive and, if adopted by the PSC, will encourage customers to invest in off-grid solutions. Rate design should not encourage people to go off the grid.   This proposal by RMP does exactly the opposite.

Solar provides benefits today – see list below.

  • Peak demand:
    • An east-facing solar array offset’s RMP’s winter time morning peak. 
    • A west-facing solar array offset’s RMP’s afternoon peak.
  • Batteries + Solar = emergency preparedness – Utahns continue to invest in rooftop solar as a means of self-reliance in the event of power outages and other calamities.
  • Solar provides grid stability and smart grid demand response tools.

Currently, batteries will allow for load-shifting.  This will allow a customer to charge a battery during the day, and then the household can consume the stored energy during RMP peak periods in the evening. 

In a short time, batteries will become cost effective enough to allow ordinary customers to go off the grid.

For additional information please refer to the Fact Sheet and FAQ provided by the Utah Solar Energy Association located at http://utsolar.org/net-metering/.  

 

(RMP) In addition, the vast majority of solar in Utah is from large solar farms and not from private rooftop systems. Twenty solar farms built in Utah over past two years generate more than 8x the solar power of all rooftop systems in Utah.

Energy from large solar farms is the most cost effective way to add solar to the grid. Here is a comparison of how much it costs to purchase solar energy from different sources:

  • From large-scale solar farms: 3-4 cents per kilowatt-hour
  • From rooftop systems (at current net metering rate): 5 cents per kilowatt-hour
  • From rooftop systems (at new proposed net metering rate): 1 cents per kilowatt-hour

Rocky Mountain Power’s Subscriber Solar program allows customers to buy solar even if they rent or can’t afford rooftop solar panels or don’t want them on their homes.

  • For customers who are already signed up, solar power will begin coming to the grid in 2017. The power comes from a new solar farm near Holden, Utah.
  • The program is currently sold out, but we are planning to build additional solar farms which will open more opportunities for Rocky Mountain Power customers to sign up.

 

Solar Industry’s Response:

The price paid to utility-scale solar vs. residential solar production cannot be compared. Power is a locational product and the value of electricity produced and consumed at a resident’s home is very different from the cost.

Both rooftop solar and utility-scale solar play an important role in Utah’s energy future. The difference is that RMP can control and profit from utility scale solar while killing customer choice, energy independence, and economic development in Utah by attacking rooftop solar.

Rooftop solar and utility-scale solar are not mutually exclusive, both provide tremendous value to all RMP customers and Utahns. Utility-scale provides economies of scale, with lower unit costs, but that power must be transmitted to end users hundreds of miles away at a tremendous cost. Rooftop solar provides the following benefits:

  • avoided energy costs
  • reduced line loss
  • avoided capacity investment
  • no transmission costs
  • lower distribution costs
  • offset peak demand
  • reduced financial risk (energy at a fixed price for 30+ years)
  • grid resiliency
  • sales tax revenue (about $1,000 per solar system)
  • property tax revenue (about $3,500 per solar system)
  • home value increase
  • environmental benefits, including air quality
  • jobs and economic benefit impact in Utah

These benefits more than make up the difference between 3-4 cents per kilowatt hour RMP is proposing to credit solar customers and the 10.5 cents per kilowatt hour RMP currently credits customers.

RMP is trying to kill consumer choice by only giving RMP customers one option, RMP’s Subscription Solar program, however Utahns are purchasing rooftop solar for other reasons, such as energy independence.

For additional information please refer to the Fact Sheet and FAQ provided by the Utah Solar Energy Association located at http://utsolar.org/net-metering/.  

 

How does the current rate create a subsidy?

A subsidy is occurring because private rooftop solar customers do not pay enough on their energy bills to cover the costs of all Rocky Mountain Power aspects of serving customers through the poles, wires and other important infrastructure of the electrical grid. Other customers who do not have private solar are paying instead.

All net metering customers depend on the grid for 23.99 hours out of the day to receive power when their solar systems are not generating solar energy, and to return excess energy that they do not use.

System costs for providing service to net metering customers are still similar to non-solar customers, even though solar customers use less power from the grid.

The current energy bill subsidy for solar customers (which pays out at 3-4 times the market rate for energy) means they don’t pay for fixed system costs like wire and pole maintenance. Instead, other customers pick this up.

 

Solar Industry’s Response:

The only fair way to determine if there is cost-shift or subsidization from Utah net metered solar is for the Utah Public Service Commission to perform a robust and independent cost-benefit study.

  • In 2014, the Utah Legislature mandated that the PSC look at the cost and benefits of net metering before determining if there is a charge credit, or other ratemaking structure that would be fair and reasonable for Utah ratepayers (SB 208).  This hasn’t happened yet.
  • In November 2015, the PSC ordered RMP to study the cost and the benefits of residential solar in Utah.  RMP has not performed a study that looks at all benefits with a statistically significant sample size.
  • We believe the PSC erred in the 2015 proceeding in two ways: (1) it did not ask RMP to look at the external benefits of rooftop solar as part of the framework, and (2) it limited the time period to 12 months rather than a customary long-term view of generational costs and benefits.
  • RMP’s analysis in the 2016 Compliance Filing is an incomplete analysis.
  • Utah deserves a true, open, and transparent cost-benefit study that looks at all of the benefits and costs relating to rooftop solar.

In performing the cost-benefit study, the PSC and RMP must consider the following:

  • avoided energy costs (considered in RMP’s 2016 analysis)
  • reduced line loss (considered in RMP’s 2016 analysis)
  • avoided capacity investment
  • no transmission costs
  • lower distribution costs
  • offset peak demand (considered in RMP’s 2016 analysis)
  • reduced financial risk (energy at a fixed price for 30+ years)
  • grid resiliency
  • sales tax revenue (about $1,000 per solar system)
  • home value increase
  • environmental benefits, including air quality
  • jobs and economic benefit impact in Utah

What have other states/commissions determined when performing a cost-benefit study?

  • Mississippi (2014) – study found that the benefits of solar outweigh the costs.
  • Nevada (2014) – study found that solar customers provided $36 million in benefits to all NV Energy customers and confirmed that solar energy can provide cost savings for all customers.
  • Missouri (2015) – study found that solar customers provide a net benefit for all customers.
  • Texas (2013-2016) – both Austin Energy in Austin, Texas and CPS Energy in San Antonio, Texas have found that the value of solar is higher than the retail rate, meaning the benefits outweigh the costs.
  • Maine (2015) – study valued solar energy produced at $0.33 per kWh compared to the average retail rate of $0.13 per kWh.
  • Massachusetts (2015) – study found that value of solar exceeded $0.22 per kWh which exceeds the retail rate.
  • Minnesota (2014) – study found that the value of solar was at $0.14 per kWh, compared to the retail rate of about $0.11 per kWh.
  • Utah (2014) – study found the value of solar for RMP customers to be $0.118 compared to the retail rate of $0.116.
  • Environmental American Research and Policy Center – did an academic review of 11 net metering studies:
    • 8 of the 11 studies found that the value of solar was higher than the average retail rate, and
    • the median value of solar across all 11 studies was nearly $0.17 per kWh, compared to the average retail rate of about $0.12.

The cost of service analysis performed by RMP is improper:

  • For this 2016 docket, RMP studied only 52 out of 8,000 net metering customers, which is only a 0.65% sample size. This is not a statically significant sample size and the results of the study provided no reliable conclusion.
  • In comparison, in the 2014 general rate case, RMP performed a similar cost of service study filed with the PSC, which studied about 2,000 customers over a 12-month period.  There, RMP proposed that the total cost shift from solar residential customers to non-solar residential customers wasonly $4.65 per month not >$30 per month.

Both cost of service studies ignore the tangible benefits to the grid and the external benefits to all ratepayers.

For additional information please refer to the Fact Sheet and FAQ provided by the Utah Solar Energy Association located at http://utsolar.org/net-metering/.