The Tennessee Valley Authority (TVA) has approved a new rate structure that allows power companies that buy electricity from it to impose new fees on solar customers, unless explicitly prohibited by an existing contract.
Similar fees have been tried in other jurisdictions where they have been met with disdain from renewable energy advocates, who describe such fees as discriminatory.
In documents first brought public by the Energy and Policy Institute, TVA officials outlined that the new rate could “lessen the potential decrease in TVA load that may occur through the adoption of behind-the-meter generation.”
Relatively little distributed solar capacity exists across TVA’s system, and instituting fees that target only distributed solar customers seems like an effort to keep it that way.
A representative of Southwest Tennessee Electric Membership Cooperative (STEMC), a local power company fed by TVA, put it more bluntly, saying about the fee: “We need to capture this early before we end up with too many solar systems already installed on our system.”
The Energy and Policy Institute reported that STEMC has proposed a $25 monthly fee. The power company said the fee represens an attempt to recover the system costs. The company claimed that all of its customers will eventually go solar and only use STEMC for supplemental and backup power.
STEMC isn’t the only TVA-fed power company that has already expressed interest in instituting a distributed generation fee. West Kentucky Rural Electric Cooperative Corp. has not formally filed for the fee, but suggested that,“If a residential customer desires to [install solar] then the rate they pay should be a more cost based rate and not a socialized rate.”
TVA has estimated that as many as two dozen local power companies would adopt a distributed solar bill in the “near term.”
Beating the charge
For current or potential solar customers of a TVA-supplied local power company, charges could be nullified by courts or state regulators before they’re even instituted.
In 2018, the New Mexico regulators struck down Rate 59, a “standby fee” that charged solar customers of Southwestern Public Service $28 a month, after the company requested a 14% hike on the charge. Prior to removing the charge, distributed solar development in Southwestern Public Service’s area had slowed almost to a halt, according to those who argued against it.
Also in 2018, Indiana regulators reached an agreement with Indianapolis Power & Light on the company’s proposed general rate increase petition that dropped the company’s attempted fixed charge increase on residential customers, from $17 per month to $27. Although that proposed charge wasn’t as directly discriminatory towards solar customers, low residential fixed charges are an important factor in keeping residential solar economically viable, as they cannot be reduced via net metering.
In 2020, the Kansas Supreme Court blocked a fixed fee for self-generating customers that had been proposed by Westar Energy and Kansas Gas and Electric, approved by state regulators, and affirmed by a lower court. The case cited a 1980 Kansas law which stated that customers using renewable energy may not be subjected to “higher rates or charges” or “any other prejudice or disadvantage.” The court also called the attempt to differentiate self-generating customers from others “simply price discrimination,” and ruled the rate design “unlawful.”
Currently, Sierra Club and Vote Solar are involved in a lawsuit with the Public Service Commission of Wisconsin over regulators’ approval of a rate settlement agreement between utility Madison Gas and Electric and intervenors, claiming that the utility’s monthly fixed charge imposes unnecessary costs on low-income customers and discourages investments in energy efficiency and rooftop solar.
The lawsuit alleges that the charge violates Wisconsin’s landmark Energy Priorities Law, which requires maximizing energy conservation, efficiency, and solar generation.
Update 2/5/21: This article has been corrected to reflect that Sierra Club and Vote Solar are involved in a lawsuit with the Public Service Commission of Wisconsin, not Madison Gas and Electric, and that Madison Gas and Electric’s fixed charge has not been instituted recently.
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