TVA proposes rate structures to hobble rooftop solar

Across the United States, utilities are continually attempting to implement rate structures that disadvantage rooftop solar and other forms of customer-owned distributed generation – when not trying to directly kill net metering and the other policies that create an economic basis for its deployment.

However, utilities usually attempt to disguise their plans with the claim that they are acting in the interests of fairness to all ratepayers, and it is rare that a utility comes out and openly declares that the intent of its rate changes is to lessen deployment of customer-owned solar.

However, the Tennessee Valley Authority (TVA) is not any utility. Created by President Roosevelt during the New Deal, the TVA’s model of a government-owned independent corporation is unique in the U.S. utility space, and gives TVA not only an immunity to state regulation, but also considerable weight to throw around politically.

And while TVA does repeatedly make the thoroughly debunked “cost shift” claim in its latest proposal to change its rates to lower the energy charge and introduce a fixed “grid access fee”, the power authority has not bothered to hide its intent to reduce the rate of solar deployment.

According to the draft environmental assessment of its proposed rate change, the current system (Alternative A) could lead to what the utility considers too much distributed generation, which by its own estimates would be 2% of its customers having distributed energy by 2030 – which isn’t allowing TVA to build enough large-scale generation.

Another drawback of Alternative A in the event of additional DER investment is that small-scale DER investments reduce the future incentive for utility-scale investment in renewable energy generation (including solar). DER marginally increase current grid capacity and reduce the need for additional generation resources.

In the document, TVA is proposing one of three changes. All of these lower the per-unit energy charge, with the amount of reduction varying across the three proposals from .25 cents to 2.5 cents per kilowatt-hour, while imposing a “grid access charge” of a currently undisclosed amount. In any case this would not increase revenues to TVA, but would aid in its goal to kill customer-sited solar in its service area, despite the paltry volume of installations.

TVA customers have until April 8 to weigh in on these changes.


Update: This article was modified on April 2 at 10:45 AM EST to clarify the amount of the reductions proposed in the three cases presented by TVA.