Utilities seek greater fees on customers who go solar

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More and more states across the nation are undergoing changes in their policies for rooftop solar, which are often driven by utilities using a variety of means to attempt to claw back revenue from their customers who go solar and/or kill the progress of distributed solar.

North Carolina Clean Energy Technology Center’s (NCCETC) Q3 2018 50 States of Solar report, released yesterday, found the greatest number of states involved in policy action over distributed solar in at least a year, with only five U.S. states where nothing substantial happened.

And while the type of action varied, some clear patterns emerged, and one of the biggest trends is utilities attempting to increase fixed charges or minimum bills. As previously documented in EQ Research’s quarterly rate case review as well as previous editions of the NCCETC 50 States study, most of these efforts fall short of what utilities want, but the repeated pushes are slowly ratcheting up fixed charges.

Equally concerning, NCCETC also observes that a second utility was permitted to impose a demand charge on its residential customers during the quarter. Kansas regulators have allowed Westar Energy to impose a demand charge on residential customers who install solar, which follows on Massachusetts regulators approving a similar charge for utility Eversource Energy earlier this year.

Demand charges can be hard to predict and confusing for residential customers, which is why they are usually rejected by regulators. In fact, the decisions in Massachusetts and Kansas are the first two times that pv magazine knows of regulators permitting demand charges on residential customers, although Salt River Project, an unregulated utility cooperative, imposed a demand charge in 2014 which decimated the rooftop solar market in its service area.

But the area of the greatest activity was compensation rules for distributed generation, with 27 states plus Washington D.C. taking some form of action. And here the results for the industry were mixed. While Michigan utilities are filing successor programs to net metering which represent a major step back for solar, Duke Energy has agreed to extend its net metering program in South Carolina through next March, despite hitting the aggregate cap set by state law.

This is set against the bigger picture of more and more utilities deciding how to value solar beyond the simple retail rate compensation that net metering offers. And along with more and more states studying the value of solar, structures are getting more complicated.

“The future of solar compensation is trending toward increasingly complex structures,” said Autumn Proudlove, lead author of the report and Senior Manager of Policy Research at NCCETC. “Some states are identifying the locational value of DERs, while others are piloting time-varying credits or considering demand and grid access charges.”