By Craig A. Ruark
The Public Utilities Commission of Nevada ended the ten-month controversy on the Net Energy Metering (NEM), with a final decision last Friday, February 12th. Most feel that the decision also killed the rooftop solar industry—at least for the time being.
With Friday’s decision, the new rate structure that went into effect January 1, 2016, will remain with one change. Instead of yearly incremental changes, the rates will change every three years until the year 2028. According to the PUCN, this every three-year cycle will be consistent with the general rate case cycles of both Nevada Power and Sierra Power, both of which are subsidiaries of NV Energy.
Beginning January 1, 2016, NEM customers of Nevada Power saw their monthly service charge climb from $12.75 to $17.99, where it will remain until the next increase on December 31, 2018. By the year 2028, that charge will reach a rate of $38.51.
While the service charge went up, the amount that NV Energy will pay for excess energy generated by NEM customers went down from 11.6 cents per kilowatt hour about 9 cents from January 1, 2016, through December 31, 2018. That amount will decline to 2.6 cents by Jan. 1, 2028.
The reason for the change in NEM rates is the $315 million cost subsidy that non-net metering customers have been paying to support the rooftop solar customers. That equates to $1,544.11 per month for each NEM customer. NV Energy claims that there are two causes for the increase in NEM costs, fully dedicated employees and the Renewable Energy Department.
NV Energy has three customer service representatives in the south, and 1.5 representatives in the north, to plus one supervisor allocated to handle phone calls and manually review NEM ratepayers’ bills. As for the Renewable Energy Department, 94 percent of the internal labor costs are allocated to the NEM ratepayer.
In addition, NV Energy stated that the company receives less revenue from NEM customers while the fixed and demand costs incurred by the utility to serve the NEM customers largely remain the same.
However, many opponents of the change say that the subsidy numbers are inaccurate when you take into consideration the saving afforded to NV Energy by having over 17,000 rooftop solar customers connected to the grid.
Distributive generation, as it is called, is far more efficient than building more centralize power plants. And when calculating the contribution made by residential and commercial rooftop solar the PUCN needs to take a number of things into consideration.
- Rooftop Solar reduces the need for expensive new power plants and transmission lines;
- less energy is lost in transmission because much of the power generated by rooftop solar is used within the neighborhood where it’s generated;
- Rooftop solar requires no fuel, and so it provides a hedge against future fossil fuel price increases;
- NV Energy does not have to pay environmental fees associated with the burning of fossil fuel
- The energy produced by rooftop solar does not require water
- Rooftop solar allows NV Energy to close in on state renewable energy and greenhouse gas emission goals without paying for utility-scale solar and wind farms.
A study by Energy + Environmental Economics (E3), was present to the PUCN, which demonstrated that NEM policies do not result in NEM ratepayer free-riding and unreasonable cost-shifting. It further points out that NEM ratepayers create an estimated total net present value to the non-NEM ratepayer of $36 million per system during their lifetime. With an average lifetime of 25 years, that equates to a benefit of $1.4 million per year for each NEM customer. E3, founded in 1989, advises utilities, regulators, government agencies, power producers, energy technology companies, and investors on a wide range of critical issues in the electricity and natural gas industries.
However, the staff of the PUCN rejected the E3 study on the basis that it included “alternative analysis of key drivers,” some of which are listed above.
Regardless of whether the PUCN is right or wrong, their decision has sent the rooftop solar industry into a tailspin. Solar installation sales have decreased dramatically since the December 22 decision on the new rate structure that took effect on January 1st of this year. Massive layoffs have been made, and some of the smaller companies are shutting down operations completely.
Meanwhile, across the country and around the world, energy experts are convinced that distributive generation is the way of the future. One such company who agrees is Duke Energy, the largest electric power holding company in the United States. Duke is actively changing their business model to include distributive generation and has recently purchased a majority interest in REC Solar, a rooftop installation company.
Here in Nevada, the battle is not over. On January 25th, several solar companies held a press conference to announce the kickoff of a drive to gather 55,234 signatures from registered Nevada voters. If successful, a ballot initiative that would require NV Energy to revert to the 2015 Net Energy Metering payment and grid connection fees and eliminate a cap on the number of net metering systems that can be brought online.
Backing the signature gathering campaign is former Nevada Governor Robert List who told the media; “As things now stand, the residential solar industry has just basically been destroyed, and with it the opportunity for Nevadans to sign up and participate and help save our environment, and save money, and do the right thing.”
In addition, John Bamforth and Stanley Schone, represented by the law firm of Jolley, Urga, Woodbury & Little, have filed a class action lawsuit against NV Energy and are demanding a jury trial.
Talk among small solar installation companies after the PUCN decision on Friday indicates that there are more lawsuits coming.
“Three years is the best we are going to get for now,” said Louise Helton, Vice President of 1 Sun Solar, a locally owned solar company that has been selling and installing solar systems in Las Vegas since 2009. “This will give us time to follow through with the lawsuits and approach the legislature about changes to the PUCN’s decision.”