One constant in the solar industry is attempts by utilities to either kill rooftop solar outright or at least claw back revenue from their customers who adopt solar. And from our work in covering this subject, we’ve seen it apply to publicly owned utilities as well as those owned by investors.
And while utilities are largely moving towards more indirect, subtle routes like higher fixed charges, from time to time they still do attempt to impose discriminatory charges on PV systems, which are hard to justify as anything but an attempt to stop rooftop solar dead in its tracks.
This was the route which was recently pursued by the Sacramento Municipal Utility District (SMUD), which had proposed a per-kilowatt monthly charge on its customers who had the audacity to install rooftop PV under net metering.
And it was not a small charge either; as estimated by California Solar and Storage Association (CALSSA), SMUD’s Grid Access Charge would have added $44 – $77 each month to the utility bill for the typical residential customer with solar.
However, yesterday SMUD abruptly withdrew the charge, and says that it will now go through a stakeholder process and develop additional studies and analysis in 2019, including an effort to “further engage” with solar customers.
In an addendum explaining the change, SMUD alludes to receiving “public input and feedback on this item”, which is the utility’s way of delicately saying that this proposal angered and mobilized large numbers of their customers.
According to Solar Rights Alliance (SRA), which organizes consumers who own solar, want to go solar or simply support the right of residents to install and generate their own electricity, more than 1,200 SMUD customers sent emails in to protest the charge over a five-day period.
SRA mobilized its members, and Executive Director Dave Rosenfeld says that once word got out the movement spread on its own. “They started spreading the word next door, and then we had people who went door to door to solar homes with fliers,” Rosenfeld told pv magazine. “This was being discussed at the kitchen table, and on various online forums.”
This culminated in an estimated 30 SMUD customers showing up to a workshop that the utility held today, even after the Grid Access Charge had been cancelled.
Not out of the woods yet
But while SMUD has withdrawn the Grid Access Charge, its language suggests that it will still attempt to impose charges on its customers who go solar, as the utility is claiming $30 million in “cross subsidies” between its customers who adopt solar and other customers.
However, it is not clear that this number has been generated using a robust analysis of actual costs and benefits of distributed generation. Instead, CALSSA Executive Director Bernadette Del Chiaro describes a “simplistic” analysis that went into justifying the proposal, including the assumption that power generated by rooftop solar is a burden and not an asset to other ratepayers.
It is unclear how much SMUD will modify its approach through the resulting stakeholder process, however the utility’s leaders have a motivation for reaching consensus that the executives and boards of investor-owned utilities do not: the potential of being voted out if they anger their customers.
“It’s the only utility in California that is truly democratically elected,” Del Chiaro told pv magazine. She contrasts the election of SMUD board members with that of other public utilities such as the Los Angeles Department of Water and Power (LADWP), whose board is appointed by the mayor and confirmed by the council.
Solar bill of rights
Utility proposals to impose discriminatory charges on their customers would be illegal if SB288, dubbed the Solar Bill of Rights, passes the state’s legislature. The bill passed the Senate Energy Committee two weeks ago, and will now go to the Senate Appropriations Committee, which should be its last stop before the Senate floor.
SMUD argued against the legislation in the committee hearing, however it may have unwittingly built support for the bill by its attempt to impose the Grid Access Charge. “It underscores why we absolutely need the solar bill of rights – that a utility could get away with a discriminatory fee like this,” stated SRA’s Rosenfeld.
Rosenfeld says that not only does this attempt at a fee strengthen SRA’s case, but that it has alerted many SMUD customers to this issue, and the danger that they could be subject to discriminatory charges if the bill is not passed.
He notes that the large majority of the 52 people who attended the Solar Bill of Rights hearing in Sacramento were utility customers and solar workers, some of whom were from SMUD’s territory. And he says that this is just the beginning.
“We will see lawmakers hearing a lot more from citizens in the next weeks and months,” predicts Rosenfeld.
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The reality, unfortunately, is that peak demand for a house with solar panels is exactly the same as peak demand for one without solar panels, and the cost of transmission and distribution is based on this peak demand, not how much power we use. The only way to erase these costs (and not push them onto others) is to stop using the grid for backup power and invest in energy storage as well, or pay for peak demand (which makes more sense than standard fees on solar panels and pushes everyone to shave peak load) alongside per-kWh charges.
I think we should stop lying to ourselves and others and just proudly admit it: of course others are subsidizing our solar houses! SOLAR IS BETTER, and our per-kWh bills do not cover the cost of transmission and distribution of our peak demand to our homes, and somebody’s gotta pay for it. This is fair, and is a great mechanism for pushing non-solar homes into solar.
The real question, and the reason for the 77 bucks, is this: What happens when distributed solar reaches full penetration? Who will pay for the grid transmission and distribution infrastructure then? Mark my words and factor it in to your solar cost calculations – if you expect an always-ready electric back up to your solar system, you will pay a fee. But it will just push non-storage houses into energy storage purchases, the same way higher rates for non-solar houses will push them into solar. If no one pays for it, there will be no grid, and maybe that’s just better anyway.
I think you make some good points here, but I also think that you miss some important details. Yes – most of the time the solar on residences is not serving demand at that house (except on weekends). But it often is serving the nearest business that is open. So while it may use local distribution infrastructure, it usually serves demand without going through a substation & involving the transmission system – and thus defers the very significant costs of that system.
The amount of deferred T&D due to distributed generation in California has been massive and is documented: https://pv-magazine-usa.com/2018/03/27/distributed-solar-and-efficiency-saves-california-2-6-billion-on-power-lines/
As to whether or not there is a cost shift: I don’t know. The solar penetration is high enough in CA that it is no longer peak shaving. You’d need a credible study that weighs all relevant factors to determine if there is a cost shift and at what level, and it doesn’t sound like that is what happened here.
As for full penetration: we aren’t there yet, and so no it doesn’t make sense to levy a fee based on those conditions. But I agree that we will need rate and incentive structures that at a minimum support the deployment of energy storage along with solar, because we can use solar to meet round-the-clock demand if we include sufficient storage.
If SMUD residential rate schedule is similar to most, then this subsidizing rhetoric is false. If you examine most rate structures of monopoly power companies without considering solar at all, you will see that demand rates on commercial subsidize residential and residential folks in a city subsidize folks in rural areas and folks that are very conservative with their energy usage are being subsidized by everyone. The monopoly utility company here in Utah used the same flawed talking points as SMUD. And any study that is conducted regarding the value of solar kilowatt-hours, cannot be conducted by the very monopoly company that is competing against solar. These studies must be conducted by creditable third-party sources.
How times do change. SMUD was THE pioneer in solar, installing 10 MW of solar in the 1990s. Their strategy known as “sustained orderly development and commercialization” was the only significant utility solar program in the country in those days.
Here’s a 2002 case study on it from Berkeley Lab: http://eta-publications.lbl.gov/sites/default/files/case-study-bulk-purchases.pdf
I received the request for comments on the SMUD proposed surcharge to solar users. I don’t have solar & even I did a double take thinking it was some kind of parody political flier of some type.
This board seems to beholden to large & wealthy users while not giving a single thought to average & poor ratepayers. We are already suffering thru this time of day scam that is a direct exchange of money from the working poor & middle class to the wealthy. The cancer in this board goes far beyond this one anti solar proposal.
The entire board should step down & let new blood take over and steer SMUD in a direction that doesn’t penalise 90% of it’s ratepayers to benefit the large wealthy 10%
@ Craig Allen
What a ludicrous notion that time of use benefits rich rate payers… you don’t give a single evidence as to how that could possibly be true. SMUD charges more because 5-8 is when the majority of people are using power, that means they either have to buy more power or set up more power plants, so if they can get people to shift their usage that keeps costs lower. Rich people don’t care… they will use as much electricity as they want because they can afford the higher rates, so they’re effectively subsidizing your usage. Your class warfare diatribe is boring and entirely off the subject.
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