Utah’s Rocky Mountain Power, a publicly managed monopoly electricity provider, has proposed a new rate for net-metered solar electricity that will effectively destroy the value of the program.
The Warren Buffett-owned utility, in a docket filed with the state’s public service commission, has proposed that net-metered solar electricity is worth between 1.1¢ and 3.8¢/kWh – with annual averages being just over 2.0¢/kWh. The values vary based upon month of the year, and whether the electricity is generated during an on- or off-peak period.
The current value for net metered solar electricity is 9.2¢/kWh. The utility charges between 10.7¢ and 14.5¢/kWh for residential electricity.
The utility has also requested that two new fees be implemented – an interconnection application fee of $150, and a meter fee of $160.
In the filing, the utility noted that roughly 52% of all electricity generated by an individually-owned solar system was exported to the power grid. If 52% of a solar system’s electricity is dropped by 80% in value, the total revenue generated will fall by around 30% based upon current tariff rates.
The billing structure was calculated based upon the utility’s varying summer and winter electricity demand, as well the daily use profile. During the winter, both a morning and evening peak is seen, while summer electricity shows a massive evening electricity peak.
Utah’s duck curve is a natural occurrence, not caused by solar power, as the state’s total distributed solar generation is well under 1% of all electricity.
Marching Orders
This type of action, aggressively attacking the value paid to individual’s exporting electricity to the power grid, is a Buffett marching order to combat a potentially existential threat – the “death spiral.”
This phrase was coined in an Edison Electric Institute report from 2013. The term was used to describe how rates might increase as more individuals effectively defected from the power grid by generating their own electricity via solar power. This increase in rates would then lead to more defections, which would spiral upward — much like the land line telephone business experienced as mobile phones took over.
Buffett has argued that in regulated markets, like Utah, where electricity generation is fully monopolized by the utilities – this spiral can be managed via aggressive anti-net-metering lobbying. He has stated that in deregulated markets this could be a challenge against long-term predictable earnings.
Buffett is not against renewable electricity. NV Energy, a Buffett-owned utility in Nevada, has recently pushed forward some of the largest solar and energy storage projects in the country. Another Buffett-owned utility, MidAmerican, will be the first utility in the U.S. to be 100% renewable electricity powered sometime in late 2020.
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I don’t understand why everyone is so concerned with pricing of electricity and federal energy tax credits under light of climate change .. Because of that, we are scrambling about storing electricity instead of simply shutting down fossil generation as much as we can while allowing clean energy sources deliver as much as 100% during the day and then let the fossil generation resume after the sun is down or the wind stop blowing.
it is too expensive to store electricity unless really necessary so not to waste it..
All utilities have to be mandated to stop fossil generation until it is needed again for streetlighting , etc..
We are squandering our capital on wasteful storage spending that is not needed right now. We simply cannot expect to run fossil generation around the clock. We have to yield to clean energy whenever wind blows and the sun shine 100% and pay fair price.
We can develop reversible hydrobatteries as the cheapest storage .
How does one bring down the cost of a technology, YOU use it and stop talking about how much it ‘costs’ to store energy while pondering “…why everyone is so concerned with pricing of electricity…”
You’ve missed the point on so called, wasteful storage spending. Energy storage is generation neutral, distributed along the grid can regulate the grid during high demand times of the day and store energy making online generation more efficient. Energy storage can be scaled to use in the local community as a micro-grid, in switching stations to help island an entire community during high demand or weather events that some times take down the grid with surges or sags.
“We simply cannot expect to run fossil generation around the clock. We have to yield to clean energy whenever wind blows and the sun shine 100% and pay fair price.”
Do you know how a utility uses its coal and sometimes natural gas fired generation plants? These are prime examples of a heat cycle generation facility, one that loses about 40% of the fuel BTU input to heat dissipation. These fueled facilities are set up to run in modes of operation. Because one can’t shut down the boilers, they have to be kept at or near full steam when power is needed. So, pretty much these mechanical heat cycle generators are running in what’s called “spinning demand” or spinning reserve” mode of operation most of the day, until the grid demands require the generation to go “online”. Energy storage will be generation neutral and one could actually put the “spinning” generation resource online and actually send a product to the ratepayers that helps amortize the old generation asset sooner than later. There are plenty of hydro or pumped hydro energy storage, but it is very site specific, there are many places one can put an energy dense energy storage system and use it for stacked ancillary grid services. YOU say energy storage costs more, it is actually more bang for the buck when installed and used properly.
Various fossil-fueled generating stations are “shut down” during those time periods where renewable energy floods the grid unless additional load is needed to meet demands. There are geographical locations and conditions that require generation to ensure grid stability that can’t be met by renewable energy at this time. Energy companies have changed operating models significantly over the past 10 years, looking at opportunities to move resources and operate the most economical units available. Companies that provide T&D services, substations, etc., have to replace old infrastructure, especially in consideration of liabilities associated with climate change (think California + fires + someone needs to pay). There are also other energy companies that push their electrons through the same lines, more wear and tear on the infrastructure. All of these resources have a cost associated with them. Those costs roll up into the rate that customers pay.
I’m familiar with Nevada’s structure, stable rates for 10 years, net metering, additional renewable energy projects. In fact, NV Energy has reduced rates throughout the state in recent PUC filings, despite reimbursing home solar customers in the 90% range of high demand pricing. That means on a 120F day, a kW on the open market could be astronomical in price and by legislation, a home solar owner gets paid 90% of the astronomical price. In reality, the utility could generate the same power for pennies on the dollar. Therefore, a home solar owner gets paid while the non-home solar folks and businesses are the ones paying. Here’s an example: Everyone pays the DMV to register their car, as well as taxes to upkeep roads, bridges, etc. I drive an electric car. Per many comments on this string, I should get 100% of the amount I register and taxes back into my pocket. In NV, I would get 90% range back. Those who have gas or diesel vehicles still have to pay the full amount, no refunds.
In relation to power, why should the non-home solar folks and businesses have to pay all of that and the solar folks pay nothing? That means my dollars aren’t supporting the infrastructure, they’re supporting you with your rooftop solar. Everyone who uses the infrastructure has to pay.
You’re probably thinking “Easy, install your own solar”. I’ve read the contracts of these solar PV providers. I don’t want to invest in the capital of the PV, or rent them, I don’t want to be stuck in a contract with the solar PV supplier for 20 years. The fine print says my heirs have to continue paying the contract or pay the entire cost of the PV. Nope.
Any for-profit company will charge more money for their product versus the cost they pay to make it themselves. As a utility customer, I want power when I flip the switch in my house. If no one is responsible to pay for the infrastructure, my stable reliable power may not be there. As long as the utility is moving towards a renewable energy future and the costs are stable, I’m good.
I still contend that solar should be compensated at the highest price asset that the utility has to run. That would be incentive for the utility to get rid of that asset.
Net metering should also be something like a 15 year guarantee. No utility would put a generation asset in place without at least a 15 year guarantee. Should be the same for all generation.
“This type of action, aggressively attacking the value paid to individual’s exporting electricity to the power grid, is a Buffett marching order to combat a potentially existential threat – the “death spiral.””
Here it comes, the push to nationally change net metering to net billing. It seems like Rocky Mountain Power has determined solar PV pushed back onto the grid is worth “on average” $0.02/kWh getting ‘rid’ of taking care and quantifying what the actual “avoided costs” RMP is NOT paying to those who pay it forward and install solar PV to their homes or businesses. Buffet like many other “captains” of industry want the Dire Straights solution to “their” problem : “….money for nuthun, the chicks are free, look at dat, look at dat…” Time for folks in RMP territory to get set up with solar PV and smart energy storage. IF RMP wants to ‘graciously’ give you 2 cents per kWh and charge you 10.7 to 14.5 cents per kWh, then use your own energy from the ESS and present a foot print of a 2,000 square foot home’s energy use more like the energy use of a 1,000 or 500 square foot home. IF enough people adopt ESS, more odious utilities will align or fail.
“Buffet is not against renewable energy”. Of course not, he’s just against citizens benefitting from it.
Another way of saying, Buffet isn’t against money, as long as it’s his, and not ours.
How many thousand of peoples goneing to lost thear jobs because of climate.i dont want this crap in my back yard maybe you do.if you climate change people destory our farm land where we goneing to get our food from china
.
Until there is a steep price on carbon or have a carbon free electricity grid, retail net-metering should remain. Utilities have been granted monopolies and have maintained the status quo while our planet has heated, pollution has poisoned us, and they filled their pockets.
Build solar everywhere. Let utilities figure out grid stabilization. Let them build storage.
Utilities like solar that they own because its a cheap power source that increases their profits. That benefit needs to be returned to the people.
If RMP gets what they want from the utility commission I suspect they will actually start their own death spiral. Policies like these incentive people to install storage along with solar. They may find more people will be able to completely cut the cord. Once their neighbors see that it can be done they will want to cut the cord as well. RMP should be careful what they ask for, they just may get it.
I agree with this. I thought to write it in the article.
The price that RMP pays for exported power is most likely passed directly to the other customers. That should be kept in mind when there’s a conversation about how much rooftop solar generators should get paid for exported energy. And if a decrease in the price paid for exported energy spurrs technology and innovation that stores energy, aligns customer energy needs to generation and actually reduces a “solar” customer’s reliance on the grid… GREAT. Go for it. That will likely happen someday no matter what for those that want it. At least in that scenario, the other customers won’t be asked to overly subsize a solar adopters continued dependence on the grid.
Most research suggests solar decreases the cost of electricity for others up until solar is 20% of the grid. Utah is no where near that.
“Most research” – Have anything in particular to share other than the same tired trope of unverified “system benefits” that may or may not accrue in the distant future? I haven’t heard of any actual evidence of electric rates going down because of rooftop solar… are Hawaii and CA about to lower rates? And isn’t that exactly opposite your premise of a potential “death spiral” that is apparently motivating this move? You honestly believe that utilities are attempting to pay fair (lower) rates for exported solar because they’re afraid of having to lower their rates?!? Hah. Meanwhile CA is paying other states (maybe Utah?) to take the surplus of solar generation in the middle of the day. In addition, nearly every utility with any rooftop solar penetration is trying to figure out how they must modernize their grid (aka spend money) in order to accommodate 2-way power flow that leads to phase imbalance and voltage instability. The bottom line is this – rooftop solar is not a critical path for decarbonizing the grid. Especially in a state like Utah with plenty of land for utility-scale. Why pay 8, 9, 14 cents for something you can get for less than 3 cents and that largely flows in the same direction that the grid was designed for and is approaching “dispatchable”, being paired with storage? So that customers can pretend to be “independent” because they arbitrarily generate electricity, of which OVER HALF (52%) IS EXPORTED, causing stress to the distribution system and necessitating further investment? Did you even look at the graph in your article? The solar exports are the highest when the load curves for winter and summer are the lowest – ie. no one needs the energy, including your own customers apparently, and certainly not at 9 cents per kWh. Utilities will continue “the march” towards fair compensation for wholesale exports from rooftop solar customers because it is the right thing to do in every aspect and NOT because they are anti-solar or anti-customer.
Did you look at your own “duck curve” analogy? CAISO has “determined” that the best way to run the grid in California is to “curtail” solar PV and wind generation while contracting with fueled generation entities in other States for the energy to ramp around California’s grid needs during the day AND the night. So, not so much power dumping anymore, it just curtails solar PV and wind generation during over generation and uses the premium priced fueled generation from other States, Utah, Arizona, Nevada, Wyoming are the usual suppliers. So, it’s all about control of the grid and the power that flows through it. California at least could bring electric rates down by installing and using energy storage facilities distributed along the grid infrastructure, non-fueled generation will always be more cost effective than commodity fueled generation. Your claim of 52% of this ‘arbitrary’ generation is exported causes stress to the distribution system is the lie you tell yourself. A neighbor’s solar PV system over generates electricity and pushes it back onto the grid, it goes a short distance to the house next door, across the street and is used there. Just HOW does this “stress” the distribution system? This is small scale (distributed) generation, the stress is your own invention and doesn’t fit the physics of electricity and path of lease resistance.
Now let’s talk about ‘fair’ pricing of electricity. When a residential solar PV system pushes excess generation back onto the grid, does the non-solar house next door have the T&D and the generation fuel charge removed from each kWh of non-fueled generation used? NO, of course not, so the utility once again is enjoying “avoided costs” without ‘fairly’ sharing those savings with non-solar ratepayers. But, what the electric utility will DO, is file a rate case with the PUC to increase electricity rates because they are not selling as much electricity as they used to. So, basically by law it is proper for the utility to file a rate increase for “lost revenues”, your electric rates will go up no matter what. You can and have pointed at the adopters of solar PV as “the problem” and yet refuse to point at yourself and your personal adoption of solar PV and energy storage as the solution. For kids, talk is cheap, for men, opening their wallets, installing and using the technology IS the answer.
Wow. I’m in Seattle where the output per panel is worse and the cost of grid energy is lower, and I’m still doing well on my solar panels. I can’t imagine what economics lead to Utah having such low solar penetration. I would be jumping at solar (and looking at a storage option) if I was in Utah just to get out of that rate.
Big business is always going to be psychopathic (and people like Buffet who consistently prioritize money above all else are going to keep doing that). Instead of being constantly surprised, we need to just stop feeling bad about doing what is right for ourselves and our planet, be that putting in solar panels or writing regulators to demand grid updates, and firing our elected representatives when they put money over people.
Thanks for that input Charles. Folks that DO adopt the technology and use it have been rewarded by having the technology online. Folks that like excuses, pundit things like “doesn’t pencil out”, solar PV burdens your neighbors, “because” you don’t pay your “fair share” of operations and maintenance costs. All utility lies based on half truths and their inability to react to technology changes in a timely manner.
This would be the reason Berkshire Hathaway and Warren Buffett are looking to buy up existing solar PV and wind farm assets in the West and Southwest and are pushing for more natural gas pipelines in the East and Northeast. These electric utilities want disparately to ‘own’ the generation asset and the distribution network. The partnership of the bi-directional grid is anathema to their well established business model for the last 100 years. They refuse to imagine that distributed energy generation and energy storage can make the grid more robust, but perhaps less profitable for them unless they control all assets feeding the grid 24/7. If there’s a micro-grid handling the average energy needs of a housing tract, the utility doesn’t want to try and compete with solar PV stored and used when rates have typically been spiked by utilities using the excuse of “duck curves” and the “need” to curtail solar PV and wind generation during the day while still using commodity fueled generation that is inefficient and costly to operate.
For these electric utilities, it’s O.K. for them to excuse themselves and blame those who pay it forward that buy their own systems to power their homes as the (reason) electric rates have to be increased. The sad fact is these utilities are “allowed” to file rate cases to the PUC of the State for “lost revenues” when the utility doesn’t sell as much electricity as they used to. Guys like Warren Buffett like to stand in the middle of the teeter-totter and leans towards the direction of the money stream.
It’s interesting that as the planet begins awakening to the predicament that runaway consumption has left us with that there are those now trying to spin new and advancing technologies to keep everyone just still “consuming”. Unless I am misunderstanding it, at the end of the day, Buffet’s strategy is still more about profitability for him (energy / $,…) than it is a better and more efficient technology.
For those of us that studied what we called Energy Conscious Design in the 70’s, before “green” or “sustainable”, much less LEED certification were even terms, integration back with natural energy sources was always coming. We’ve always known it would eventually happen and change is hard. We are now entering the phase where transition from the brilliant-but-now-ancient systems that Edison and others gave us to new and inventive methods will revolutionize everything.
We will engage people like Christine here who just “want power when I flip the switch in my house” and just want the utility to do that, whatever the price to your wallet or the environment. And to those of us who are willing to invest to save both $ and resources they will say as she does, “why should the non-home solar folks and businesses have to pay all of that and the solar folks pay nothing?”. The analogy to her electric vehicle is a good one though and I agree with her on that. But, in the case of power it is much worse as the deliver of energy to one’s home is infinitely less efficient as most of it is lost in the transmission whether it be through cable loss or gas pipe leakage. Imagine overall how much less overall energy is required when it is developed at or much nearer the point of service (POS)? So, a different way of stating her point from our perspective is: “Why would we want to subsidize your waste?”
Take a moment and look at the work of firms like Onion Flats http://www.onionflats.com whose location in the relatively cold, northern climate of Philadelphia still produces well-designed, cost-effective, low-energy consumption homes through a blend of better insulation techniques, passive (orientation) design and just plain common sense. Their work extends to affordable housing and is just one example of how good design paired with progressive energy systems is one of many positive directions being taken. I’m not promoting them but, rather that through methods like these that our future need not be tied to the utility companies whose intentions are anything but philanthropic.
In our lifetimes there will likely always be a need for a “grid” delivering energy to communities for many reasons so, sadly it’s unlikely that the unsightly and inefficient forest of poles and cables will disappear anytime soon. But, as more people begin lessening their own requirement through better design and POS production the transition to better and more efficient / less wasteful production and delivery systems will be made. That much even Berkshire Hathaway can’t change.
Firewood is the biggest joker of all. We cannot even figure out how to heat our living space without polluting smoking firewood that harms our lungs and hearts.. We flare gas that can be captured and sold in competition with $300 cords of firewood .. People are willing to burn money so there is a huge opportunity for anyone who capture flare gas for free from wasteful oil producers.. We can easily trot up the steps to the Supreme Court and make the claim that flare gas are free for us to capture without oil producers doing anything about it.. Unless they capture it themselves and sell them . All the business about climate change is still geared toward tax breaks instead of licking climate change. Some people are trying to maximize employment despite higher costs.. while others are trying to take rooftops away .. etc etc.. Our air is still as polluted as ever! Air is still free to spoil in the name of damn liberty for all!
It is hard to understand how Utah lost the independent mindset of Brigham Young who did not want to be chained by outside forces and encouraged the local production of goods and services. Utah is big on food storage but seems to have missed the boat on energy independence.
This article makes it clear that Warren Buffett wants to profit from our dependence on his services. Perhaps the real issue is protecting the 418 Million dollar investment of Berkshire Hathaway stock that the Church owns. Let’s be clear. Killing Net-Metering has almost destroyed rooftop solar market in Utah. Levels of rooftop solar investment is 1/3 of what it was in 2017. The latest proposal by RMP if enacted will be the final death blow.
If you as an individual want cleaner air to breathe for yourself and your children, then oppose those who want to enslave its citizens to fund their private wealth.
The irony is that Utah’s geography uniquely allows its citizens to obtain maximum benefit from wind and solar installations. Yet we allow our leaders to prevent affordable access to these resources for the majority of its citizens. The recent experience of the Harmon effort which caused the governor to repeal the hasty tax code revision that our leaders thought they could get away with shows that if we raise our voices loud enough we can stop their bad behavior.
In the words of Greta Thunberg “we have simply run out of time… entire ecosystems are collapsing”. The question is do you care enough about the environment to demand that our leaders set this right? If roof top solar is affordable for the majority Utah citizens, then investments will be made that will dramatically improve air quality.
I incurred substantial debt to invest in solar panels, 27kWh of battery storage, and a PHEV. My carbon footprint is pretty small. The $300 month that I used to pay on Gas and Electricity, I now use to pay off that debt. These solutions do work. My PHEV doesn’t idle when stuck in traffic. I get over 100mpg during the winter and over 200mpg in the summer.
EV and PHEV are now being levied tax penalties for helping air quality because they don’t get poor enough gas mileage. Our leaders don’t show any inclination enact measures to protect our health. Instead they appear to only desire to enrich their government gravy train.
@Christine Hinshaw: You pontificate on those who pay it forward and (purchase) their own solar PV systems for their own energy generation and use, then go off on a tangent about (leased) solar PV systems the and the effects on your heirs. Do you rent your hot water heater? Do you rent your air conditioning unit(s)? Why rent a solar PV system and instead use the “excuse” to leave your heirs the legacy of electric utility usury, instead of a functioning self generation system that can last decades in operation.
“Buffett is not against renewable electricity.”
…he’s just against people other than himself profiting from it. It’s really ironic that so many billionaires are so petty in their greed.