Webinar: Why fixed charges are a bad ‘fix’

By Ben Delman on August 14, 2015

Utilities across the country have tried to impose fixed charges on solar customers’ bills. The utilities claim this is necessary to recoup lost revenue to cover the cost of transmission infrastructure. Recently, VoteSolar hosted an informative webinar presented by former FERC Chairman, Jon Wellinghoff and James Tong from Clean Power Finance. They explained why these fixed charges were not a fair way to integrate solar into the grid.

They begin by discussing why the need for fixed charges is false. For example, they note a study that found LED light bulbs cause as much of a ‘cost shift’ as solar panels do. Like solar panels, LED bulbs reduce the amount of utility-sourced electricity consumers use. This reduction pushes LED users into a lower energy rate tier. This means the utility is collecting less money from those customers, even though it still has the fixed cost of providing transmission to those homes.

They then lay out why fixed charges do not present a fair solution. They said fixed charges:

Don’t address how these costs are incurred and only worsen the problem.
Undermine price signals for consumption and grid investment
Make pricing less fluid at a time when pricing needs more dynamism
Shift costs and risks from utilities to ratepayers; and
Obscure needed reforms to the utility business model.
Wellinghoff and Tong conclude by laying out needed changes to the utility business and regulatory model that will ensure fairness for all grid users.

You can watch the full webinar here.