Utah is one of many states where the debate over net metering has raged. Earlier this fall, the Utah Public Service Commission (PSC) approved a settlement on the issue between utility Rocky Mountain Power (RMP) and solar advocates. The settlement was designed to end a long-simmering fight between the two sides, but the result has left concerns over the agreement’s long-term consequences for Utahans’ solar rights, particularly a new measurement system that may harm their ability to receive fair compensation for the electricity their systems generate.
The net metering deal will allow current solar customers, and those who submitted their application for connection prior to November 15 of this year, to retain their net metering credits through the end of 2035. This provision was inserted to avoid the kind of outrage sparked in Nevada, where the Public Utilities Commission gutted net metering credits (and added fees) without grandfathering in existing customers under the old rates.
The Utah settlement allows for a three-year Transition Period for new customers. During the Transition Period, these new customers will receive net metering credit at a rate that is about one cent per kilowatt-hour less than the retail rate RMP residential customers pay for their electricity. After this Transition Period, new solar customers will be credited based upon the results of a value-of-solar study performed by the PSC.
Solar advocates have expressed concern about several elements of this agreement.
During the three-year transmission period, new generated solar is capped at 170 MW for residential and small business customers and 70 megawatts for larger commercial customers. Kate Bowman, Solar Project Coordinator for Utah Clean Energy, pointed out in this article that there are already about 20,000 solar homes in Utah, which would represent approximately 135 MW. She believes that about 25,000 solar homes can be added before reaching the cap.
Bowman also pointed out that, although solar power growth as in the rest of the country has been rapid in Utah, there now exist a number of factors that are expected to slow it down.
“We hope the cap is high enough that a new rate paradigm will be finalized before we reach it,” said Bowman.
The new rules also change how solar customers’ electricity usage is calculated under net metering. The new rules, rather than netting energy by solar customers on a monthly basis – the norm in most states with net metering – now allow for netting of energy by solar customers in 15-minute intervals. This proposed change could significantly lower the value that solar homeowners can generate from their system.
To understand why, think of normal net metering as a math problem where you solar customers take all of their consumption and subtract all of their production. What they pay the utility is the “net” or the difference between those two numbers. With net metering the goal is to produce as much as the system can during the day, and generate enough “excess” so that it covers some of the nighttime usage as well. Under normal net metering, it doesn’t really matter whether the energy produced is used by the home use the energy or if that energy is transmitted a few feet to a neighbor. As far as the utility is concerned it is energy that they didn’t have to buy or transmit, an barely distribute (except the few feet to the neighbor). Now, with RMP’s tricky new approach, the utility carefully measures any energy that goes off site by measuring every 15 minutes. Solar homeowners can no longer produce an excess during the day and use it up at night. Any energy that leaves their house is measured and credited at a lower rate than what they are paying for the electricity you use. The very idea of net metering is eliminated if homeowners are no longer getting credits against their own consumption. The imposition of a 15-minute measurement makes it essential to figure out what is a fair value for the electricity solar customers produce if they are to be fairly compensated for the electricity their system generates. Fortunately, Utah is conducting a detailed value of solar study to determine all of the costs and benefits your solar brings to the system.
Bowman predicted that netting imports and exports on a 15-minute rather than a monthly basis will result in a different ratio of imports to exports. “There are no major utilities that I am aware of using 15-minute netting, so it is a new concept for solar customers and it is difficult for customers to understand and respond to. Additionally, the energy usage profiles of two different customers can vary significantly.”
Bowman said that RMP doesn’t provide its customers with energy usage data that is sufficiently “granular” for an installer to accurately predict a customer’s return on investment. So under the new rules, “it will be difficult for someone who wants to go solar to evaluate the economic value of solar,” she said.
The next three years will be an important turning point for solar in Utah. About the Export Credit Proceeding, Utah Clean Energy Founder and Executive Director Sarah Wright was quoted as saying, “I hope that this can be a robust assessment that re-imagines our system. It’s going to be a long proceeding and it will be critical for Utah to fully evaluate all the benefits rooftop solar and other distributed energy can bring to help us create a cleaner and more resilient energy future.”