In recent weeks, debate between between utilities and the residential solar industry has reached fever pitch and escalated to a full-throated public standoff in several states. Across the country, utilities are renewing efforts to roll back or address net metering (NEM) policies; in particular, APS in Arizona and Xcel Energy in Colorado both submitted plans effectively raising rates on solar customers to their respective public utilities commissions.
The first commandment for all utilities – “thou shalt protect thy rate base” – isn’t a new phenomenon. In fact, utilities have been addressing distributed generation issues with commercial customers for more than two decades. In its nascent stages, when residential solar was not contributing to dwindling customers and revenue, utilities encouraged and supported NEM as part of a generous solar landscape mandated at the federal and state level. However, as residential installations continue to grow year-over-year due to new financing models and a structured marketplace, the NEM issue has become much murkier. Utilities in states like Arizona – poised to meet its renewable portfolio standard (RPS) target ahead of schedule – are essentially trying to put the genie back in the bottle while the solar industry staunchly defends its central adoption incentive.
So what was once a regulatory mandate has now become a voter issue where consumer choice is weighed against utility concerns over lost revenue after significant infrastructure investments as well as unduly burdening non-solar customers. Politicians on both sides of the aisle have been drawn into the fight and with politics so enters a slew of vitriol and misinformation. Last month, a television ad aired in support of the APS plan claiming the average home solar system added $20,000 in costs for non-solar customers, which APS later clarified was their estimate as to what each solar customer would pass on to the rest of the rate base over a 20-year period . With such gross distortions of truth, unsubstantiated campaigns like this one achieve little except protecting entrenched interests.
If we are going to continue this debate on a public stage, the discussion has to be transparent, civilized and – above all – supported by significant quantitative research. Bottom line: we do not yet definitively know what the true cost-benefits of rooftop solar are to the grid as a whole. Some studies are finding that residential solar growth actually lowers rates for all electricity consumers; in fact, a recent study sponsored by the Solar Energy Industries Association (SEIA) found that the benefits for APS ratepayers will outweigh any costs by an estimated $34 million annually by 2015.
Ultimately, we cannot resolve this debate using data points from one side or the other. In every state, regulators have a real opportunity to step up, marshal their resources and lead the effort to conduct impartial cost-benefit analyses of NEM policies. It may be easier to debate issues in the press, but ultimately in order to affect good public policy for the future, both utilities and the solar industry need to let cooler heads prevail and ensure they are not erecting barriers to achieving what the majority of Americans say they want – a clean energy future rooted in solar power.
David Field is the Chief Executive of solar financing provider One Roof Energy.
