Just days before their first face-to-face hearing before state regulators on a controversial rate overhaul, Rocky Mountain Power and Utah’s rooftop solar advocates appear to be losing their will to fight.
Last November, the state’s largest utility company revealed plans for a three-part billing rate for residential homeowners who add solar panels that sometimes generate surplus power, often called net-metering customers. Advocates for Utah’s growing solar industry denounce the plan and its fees as, among other things, “the most regressive rate structure we have seen in any state.”
Nine months later, as regulators prepare to wade into the dispute, an alternative approach introduced by third parties this summer is gaining support. Though bound by confidentiality agreements, several sources told The Salt Lake Tribune a near-term settlement may be brewing.
A spokesman for Rocky Mountain Power confirmed alternatives were on the table, adding late last week that it is nonetheless prepared to defend its original plan before the Public Service Commission in hearings set to begin this week.
But if last-minute talks succeed, the new, two-part proposal could supersede Rocky Mountain Power’s controversial proposal and avert a major clash, just as critics of the utility continue to warn of a future in which only the very wealthy could afford to go solar.
Breakthrough?
The new proposal, introduced by the Utah Office of Consumer Services and the state’s Division of Public Utilities in June, hasn’t been completely fleshed out. But the gist: Rocky Mountain Power would would ditch its net-metering program entirely in lieu of a proposal to pay residents with solar panels directly for surplus power they push onto the grid, treating them like mini power-generating contractors.
Any electricity generated and used entirely within the household would be treated as though it were similar to the energy savings a resident might see if they installed efficient windows or LED lights — which is to say, Rocky Mountain Power wouldn’t charge or pay anyone for it.
And when those households needed to buy electricity they would pay for each kilowatt hour used, just like any other customer.
In return, the rates Rocky Mountain Power charges its customers to cover costs of operating its grid might be adjusted during the next review of its pricing.
So if the utility is indeed losing millions on its net-metering customers — as it has repeatedly claimed — state regulators could address financial losses, said Michele Beck, director of the Utah Office of Consumer Services.
“Looking at rates in the full context of the rate case is the right thing to do,” she said. “We’ve argued that from the very beginning.”
Should Rocky Mountain Power open a rate case, essentially asking to charge more, Beck said, the Public Service Commission’s review would take into account falling fuel prices in recent years. More importantly to solar customers, for it to raise prices for solar-panel users, the company would have to prove its grid costs for solar outweigh new savings and earnings.
Beck said there was some evidence that Rocky Mountain Power may be earning more than it’s allowed.
Although ongoing settlement negotiations prevent the company and other parties from discussing the working details, Jon Cox, a spokesman for Rocky Mountain Power, said the utility is seriously considering the new route.
“We would be supportive of the framework put forward by other parties,” Cox said Friday, “and we are hopeful that we can find a path forward that is sustainable for all of our customers.”
Ryan Evans, president of the Utah Solar Energy Association, an industry trade group, also backs the idea.
But any deal, he noted, will hinge on the details: Will current net-metering customers be grandfathered into the old program, and for how long? Exactly how much will Rocky Mountain Power pay for power generated by residential customers? Will solar customers be treated fairly in future rate cases?
“It’s a matter of getting all those little levers right,” Evans said, “which is not easy.”
Unfair disadvantage?
If the deal falls apart, Rocky Mountain Power would fall back on its proposed three-part billing structure, and the most controversial aspect of that is known as a demand charge.
Now, residential customers pay for power on a per-kilowatt hour basis — essentially, for the total amount of power they used over time.
The demand charge, on the other hand, would be based on peak power use. Rocky Mountain Power would look at the single hour in which the household used the most power and then bill the customer approximately $9 per kilowatt used during that hour.
The charge would only apply during high-demand daytime hours set by the utility. In addition to that fee, net-metering solar customers also would pay a flat service fee, and a per-kilowatt hour use fee, although the price for power they used would be significantly less than for customers who do not have solar panels.
Opponents argue the demand charge amounts to an unprecedented price hike that makes it all but impossible for the average homeowner to understand their power bill.
On top of that, Rocky Mountain Power’s original proposal penalizes energy efficiency, they say, with disproportionate impact on low- and middle-income households that might invest in solar power.
Estimate your power bill under Rocky Mountain Power’s original solar rates proposal
Sarah Wright, executive director of Utah Clean Energy, used an electric car to illustrate the problem.
Charging a Nissan Leaf, Wright said, draws 6.6 kilowatts per hour. Other general electric use throughout the house might total about 3 kilowatts.
If a resident happened to plug in their Nissan at time when the demand charge applied, their bill that month would be hit with more than $80 in fees for that single hour of use — and make any solar savings a tiny percentage of the total bill.
“Because you have so much in that fixed fee that is based on one hourlong period of use in the month,” Wright said, “it doesn’t send the right signals to conserve energy.”
A few years ago, most of the residents who installed solar were wealthier Utahns with larger homes and higher electrical consumption. But as the price of solar panels has decreased, more middle and lower-middle income households have installed panels on their roofs. These new customers would be prone to the steepest rises in their bills if the demand charge took effect.
HEAL Utah partnered with Westminster College — former executive director Matt Pacenza’s wife, Julie Stewart, is a professor there — to conduct a more current survey of Utah’s rooftop solar owners. While the majority — 61 percent — of respondents made more than $100,000 a year, nearly 40 percent were on the other end of the spectrum, and 7.5 percent made less than $50,000 per year.
“It‘s definitely becoming an option for middle income families and perhaps lower middle-income families,” Pacenza said, “and if the utility gets its way, it won’t be any more.”
Cox, with Rocky Mountain Power, said the demand charge wasn’t designed to price Utahns out of the solar market; instead, it more closely mirrors expenses incurred by the utility.
This discussion, though, appears to be melting into new settlement negotiations as the parties fall mum and, appear, for the time being, to be working out on a new, mutually agreeable model.
