Sharp shift stiffs solar as CPUC approves later TOU peak time

In the titanic clash over California’s Time-of-Use (TOU) rates, the scoreboard now reads Utilities 1, Solar Advocates, 0.

Yesterday, the California Public Utilities Commission (CPUC) decided to allow San Diego Gas & Electric (SDGE) to shift its peak usage time to 4 p.m. to 9 p.m. from 12 p..m. to 6 p.m., leaving solar customers producing energy at an off-peak time. In essence, they would be compensated for less on-peak energy (at higher rates) because the solar PV systems would be producing energy for a much shorter percentage of on-peak time.

In an odd non sequitur, CPUC President Michael Picker talked about the importance of solar to California’s grid and how well it performed earlier this week during the solar eclipse which, it should be noted, did not take place during either the old or the newly approved peak time. So the relevance of how well solar performed during the eclipse is unclear. Then Picker addressed the CPUC’s reasoning behind approving the SDGE shift.

“During hot summer months, our peak period during late afternoons has also changed significantly,” Picker said in a statement. “The best evidence shows that the optimum time to avoid using electricity is now from 4 p.m. to 9 p.m. That’s why we move to shift SDGE’s time of use rate structure to meet that same span of time.”

From the wording of the CPUC press release, it appears the shift came as part of a deal over how SDGE distributed its rates. The release reads in part (emphasis added):

In adopting an uncontested settlement agreement that allocates SDG&E’s revenue among its different customer classes (residential, small business, commercial, industrial), the CPUC also adopted an on-peak TOU period of 4-9 p.m.

While the settlement may have been uncontested, the shift in TOU rates was not. Both the Solar Energy Industries Association (SEIA) and the California Solar Energy Industries Association (CALSEIA) blasted the decision before the ink was even dry on Picker’s signature.

“The commission spent more than a year examining how to develop time-of-use rates for the purpose of ensuring that this once-in-a-generation change to new periods was based on facts,” said Brandon Smithwood, director of California state affairs at SEIA. “Earlier time periods would also help reduce consumption during hours of declining solar generation when the California system operator (CAISO) needs to ramp up gas plants to meet energy needs.”

“The Commission has decided not to apply its new TOU methodology in this rate case,” said Brad Heavner, policy director for CALSEIA. “It is shocking that the Commission purposefully avoided considering data that was solidly on the record.”

The process surrounding this decision has been mired in controversy. Initially, the proposed TOU rate shift was expected to be to 3 p.m. to 9 p.m., but three days before the originally planned vote on SDGE’s proposal, the CPUC appeared to shift the start time to 4 p.m. at the behest of the utility. Then, in response to strong pressure from the solar industry, the CPUC delayed the vote until yesterday, when they approved the shift.

Solar advocates worry the decision will set a precedent for other TOU rate proposals from the state’s other utilities, which could further harm a solar industry in some turmoil from a switch to Net Metering 2.0 as well as mandatory TOU rates.