Rooftop solar industry, NV Energy take fight over proposed tariff to regulators

The issue before the Nevada Public Utilities Commission pits the rooftop solar industry and its allies against NV Energy over a net metering tariff proposed by the utility, doing business as Nevada Power in Southern Nevada. Net metering allows rooftop solar customers to receive credits for excess electricity they generate.

Rooftop solar industry officials say the proposed tariff will kill the industry and its 6,000 Nevada jobs. NV Energy argues the current policy requires nonsolar ratepayers to subsidize rooftop solar customers and needs to be adjusted to reflect the 2015 Legislature’s intent. The net metering program is currently being offered under an interim tariff that the rooftop solar industry would like to see continued permanently.

There are 15,341 net metering customers statewide, with 13,268 in Southern Nevada. They generate just over 150 megawatts of electricity. The numbers do not include those who are awaiting an installation or connection.

Three days of hearings have been scheduled and begin Wednesday.

A decision is expected in early December on the net metering tariff that would take effect Jan. 1.

There is the potential that any new rate structure could be applied retroactively to cover existing net metering customers.

Dan Chia, director of policy and electricity markets at SolarCity, which has created 2,000 jobs in Nevada, called the NV Energy filing anti-competitive.

“In their own filing, NV Energy admits their proposal would increase solar customers’ utility bills by up to 40 percent, at the expense of consumer choice and competition — but it has not demonstrated that its discriminatory and confusing fees are justified,” he said.

Chia said filings by expert witnesses on behalf of the rooftop solar industry, called the Alliance for Solar Choice, provide evidence “that solar customers are less costly to serve because they serve themselves, and they benefit all ratepayers by providing clean, reliable energy to the grid when it is needed the most.”

But NV Energy Senior Vice President Shawn Elicegui, in testimony filed last week in rebuttal to the alliance and others, said net metering customers are being subsidized under the current tariff, which provides 11.6 cents per kilowatt hour in credits. The proposed tariff would provide 5.5 cents per kilowatt hour.

A customer who installs renewable distributed generation and becomes a net metering customer, on average, reduces his or her Nevada Power electric bill by $1,181 to $1,081 a yearwhile the utility avoids, at most, $519 in fuel and purchased power costs, Elicegui said.

“The resulting shift in cost responsibility is about $661 per (net metering) customer, annually,” he said.

All other customers pick up these increased costs, Elicegui said.

The proposed tariff would increase the typical net metering customer’s bill from $1,081 a year to $1,522, recovering $441 of the cost shift. The rate does not cover all the costs because it “reflects the possibility that the installation of renewable distributed generation might defer future transmission and generation costs,” he said.

But rooftop solar officials point to a comment in the original filing where NV Energy acknowledged that those who install rooftop solar under the proposed rate structure could end up paying more in energy costs when the cost of buying or leasing a system is taken into account.

The solar industry wants the current tariff to continue, and points to polls showing strong consumer support for such a decision by the PUC.

Alliance witness Thomas Beach of Crossborder Energy of Berkeley, Calif., said the bill savings must offset the cost of the solar system, with reasonable payback if it is to be a viable investment for the customer.

He also said that a new element of the proposed rate, a demand charge, will confuse potential customers. With the demand charge, solar customers could incur large charges on a cloudy, low-demand day that did not account for electricity generated by the customer during peaking capacity on hot, sunny, high-demand days in the same month, Beach said.

The industry is not alone in its position.

The state Consumer Protection Bureau, which initiated a move to create a separate rate structure for net metering customers last year, has testified that only minor changes to the net metering tariff, if any, are needed at this time. The proposed demand charge should be rejected, and the discussion of a net metering tariff should wait until the next general rate case, economist William Marcus said on behalf of the bureau.

Another concern for current solar customers is whether the proposed rate, if approved by the PUC, would apply retroactively. Lower rate of savings on a bill could affect a customer who is leasing or paying for a rooftop system over time.

In his filing, Elicegui said the PUC should not grandfather current net metering customers “to protect the industry from the consequences of poor contracting decisions.”

Critics of the NV Energy proposal say it is designed to eliminate competition. NV Energy is owned by Berkshire Hathaway whose CEO is Warren Buffett.

Sen. Harry Reid weighed in on the issue earlier this year, saying he respects Buffett but that NV Energy needs to embrace rooftop solar technology and not try to operate as if nothing has changed in the past century.

“I have not hidden my feelings about this,” he said of the controversy. “I believe they have got to get with modern times. I think they have a monopolistic attitude there and it just won’t work. They might as well do something now because they cannot stop consumers from having their own electricity produced.”

Contact Sean Whaley at swhaley@reviewjournal.com or 775-687-3900. Find him on Twitter: @seanw801.