After announcing a settlement earlier this week, both Rocky Mountain Power and solar industry advocates heaved hard-won, if ephemeral, sighs of relief.
The resolution came after discussions lasting nearly all of 2017 about what to do with net metering rates and the rapid rise of rooftop solar installations. To date, the company has paid those customers the market rate for excess energy their panels return to the grid. That structure didn’t adequately reflect the true cost of rooftop solar to the system, the company said, causing non-solar customers to subsidize solar ones.
Solar advocates argued Rocky Mountain Power didn’t take into account the true cost-savings from renewable, home-grown energy sources.
On Monday, the power provider, solar industry leaders, clean energy groups and a few local governments struck a deal — pending the settlement’s approval by the Utah Public Service Commission on Sept. 18.
Looking ahead, though, things still look cloudy for Utah’s solar industry.
“Based on my cursory read, it looks like (the settlement) has given assurances and stability for the next two years or so, but it hasn’t given us much in terms of the long-term future of solar,” said Alex Jahp, commercial project manager for West Haven-based Gardner Energy. “All it’s done is push back the fight to another day.”
WHAT THE SETTLEMENT MEANS
Existing rooftop solar households are in the clear. The settlement would grandfather their existing net-metering rates until Jan. 1, 2036. For them, nothing changes.
Things get hazy for future rooftop solar customers who sign up after Nov. 15 or 60 days after the commission makes a decision, whichever comes first. Those customers enter the “Transitional Program.” For a residential system, instead of receiving market rates for excess energy, Rocky Mountain Power will pay 9.2 cents per kilowatt-hour. The transitional rates are grandfathered until Jan. 1, 2033.
Story continues below the photo.
For comparison’s sake, residential power rates during the summer are on a three-tier system. Households pay 8.85 cents per kwh for the first 400 kwh, 11.54 cents for use between 400 and 1,000 kwh, and 14.43 cents per kwh for power use above 1,000 kwh.
The transitional rate is about 10 percent less than current net metering rates, but Kate Bowman with Utah Clean Energy calls it a win.
“The thing we like about it is it provides stability for the next few years,” she said. “Someone thinking about going solar has a clear idea of what rates will be and how long they’ll have those rates ... a picture of (when) they can expect the system to pay off.”
New solar customers will also pay Rocky Mountain Power an application fee. It ranges from $60 for most residential customers up to $150 plus $3 per generated kilowatt for larger commercial arrays.
“The costs associated with managing net metering are significant,” said Dave Eskelsen, spokesman for Rocky Mountain Power. “All of this is based on a desire to fulfill a basic principle of utility rate-making — to ensure that all kinds of customers’ rates are as much as possible equivalent to the actual cost of service.”
The application fee applies to both transitional program customers and post-transition customers. Eskelsen said he was pleased diverse parties were able to reach an agreement on rates rather than taking the net-metering debate to court.
“Settlements in particularly contested cases are often preferable because they’re more durable than fully litigated outcomes,” he said. “Not only does this give a result that everyone can agree on, it also gives some stability for the future.”
WHAT HAPPENS NEXT
During the transition period, the Public Service Commission will work to evaluate the true cost and value of rooftop solar, which the settlement calls an Export Credit Proceeding.
Most parties figure the proceeding will take around three years, but there’s the rub — no one knows for sure how long the transitional program will last.
“We still don’t know what future is going to look like,” said Jahp, who has installed panels at Gardner for two years. “I think we’ll have that stability for a few years, then we’ll be right back where we were in a year or two.”
Jahp’s biggest concern is that installers like him will quickly burn through the settlement’s Transition Cap. During this limbo period while the commission deliberates over solar’s value, only 170 megawatt hours of solar can be installed for residential and small business customers and only 70 megawatts can be installed for larger commercial customers.
According to Bowman, around 25,000 homes will be able to install solar panels before hitting the cap.
“There’s about 20,000 homes and buildings in Utah with solar already, so we should have a little time,” Bowman said.
STATE OF UNCERTAINTY
Jahp, however, sees the amplifying demand for solar panels and feels less optimistic. Right around two-thirds of his customers are residential, but commercial installations are on the rise, he said.
“The commercial cap looks pretty small to me,” he said. “The 70 megawatts doesn’t seem like that much, and anyone beyond that goes into regulatory purgatory with no clue what they’re going to be getting.”
Story continues below the photo.
As an industry, Jahp said, solar installers need to help their customers calculate the long-term costs and benefits of panels.
“Without that, it’s hard for someone to pony-up half a million (dollars) for a commercial solar system,” he said.
Another point of uncertainty in the settlement is a new 15-minute netting interval for transition and post-transition customers. In the past, the company would check the amount of energy a household generated in a month and subtract it from the amount of energy used during that month. The net interval will instead be trued-up every 15 minutes if the commission approves the settlement.
“That’s very different,” Bowman said. “We agreed to it as part of the settlement, but we haven't seen evidence as to whether it’s a good idea.”
THE SETTLEMENT’S SILVER LININGS
On the bright side, the settlement means no peak demand charge for rooftop solar customers. That’s a prior and unpopular Rocky Mountain Power proposal that Utah Clean Energy figures could have cost solar households an extra $30 to $80 each month.
The parties agreed to work together on a neutral solar “Utah.gov” website as well. The goal is to creates more transparency on the murky net-metering proceedings, which have caused a great deal of public confusion to date.
“It’s a really strong settlement, we are really pleased to have gotten as many parties sign on as did,” Bowman said. “Something that’s important to note, though, is nothing goes into effect unless the commission signs on.”
The Public Service Commission will likely make a decision on the settlement during a hearing from 9 a.m. to 5 p.m. on Monday, Sept. 18. A PDF of the full settlement is filed on the commission website.