Not only can homes with photovoltaic cells and wind turbines generate electricity, but they can also sell that juice on the backs of grids
that the power companies pay to maintain. No wonder they’re asking states to tax renewables.
In Oklahoma, the wind comes sweeping down the plain. But if you decide to harness this free resource to create electricity, you may have to
make monthly payments to a huge corporation. A law passed this week by the Oklahoma state legislature permits utilities to charge user fees
on customers with renewable energy installations—like rooftop solar panels and wind turbines.
To some observers, this is a classic Red State action to try to restrain the growth of renewable energy. “I think it’s just a
pre-emptive strike,” said Carrie Hitt, senior vice president of state affairs at the Solar Energy Industries Association. “In a few places,
utilities and others are proposing to impose fixed charges on renewable energy as a way to discourage its growth.” Indeed, the
Sooner State has lately taken pride in pushing back against anything that reeks of progressive-ness. In 2012, Governor Mary Fallin loudly
rejected the expansion of Medicaid under Obamacare. Last week, she signed a law that bars cities from raising their minimum wage above
the state minimum of $7.25.
But there are real dollars and cents behind this bit of reactionism.
Increasingly, and not without some justification, the nation’s
utilities see the rise of highly subsidized renewable energy as an
existential threat. And they’re seeking to protect themselves—and
their shareholders—by imposing new costs on green-energy producers,
even in deep-blue states like California and Massachusetts.
Historically, utilities have been highly reliable and stable
businesses—investment managers refer to them as “widows and orphans”
stocks. In many areas, utilities have a monopoly on the transmission
and distribution of electricity. And demand (and sales) tends to rise
in lockstep with the economy.
But the underpinnings of the business have begun to erode. Electricity
use seems to have stopped growing in the U.S., thanks to a renewed
focus on efficiency, new standards (good-bye old-fashioned light
bulbs!), and the fact that many homes are now producing their own
electricity. The Energy Information Administration says the electric
industry’s output in 2013 was about 2 percent below the level of 2007.
Meanwhile, renewable energy—particularly solar power—has become a
thing. Rising competition and overcapacity in the panel-producing
industry has driven down the cost of solar panel systems. Generous
federal and state tax credits and rebates further help reduce the cost
of putting panels on your roof. And in 43 states, utilities are
required to buy the power that a rooftop system produces but does not
use.
In 2013, 4.75 gigawatts of solar capacity were installed, up 41
percent from 2012, according to the Solar Energy Industries
Association. In the past 18 months, more solar generating capacity was
installed in the U.S. than in the 30 years prior. In California,
Pacific Gas & Electric, which serves the northern part of the state,
alone says it has 115,000 customers with solar panels on their roofs.
In Hawaii, home-based solar systems can supply up to 10 percent of
total electric demand.
This is bad news for utilities. The green folks aren’t really opting
out of the system. They’re connecting to the grid, selling their
excess power during the day, and drawing from the grid at night when
the sun doesn’t shine. Utilities are still required by regulation to
build and maintain the capacity and redundancy to make sure the lights
are always on in every nook and cranny of their service areas. What’s
more, the solar-produced electricity that floods into the system from
homes during the day also imposes costs. And the more solar
proliferates, the worse the problem gets—fewer people need to buy all
their electricity from the utility, and the grid has to accommodate
more suppliers.
Customers with solar installation who sell excess power “effectively
avoid paying for the costs to support the electric grid,” said Jeff
Ostermayer, spokesman at the Edison Electric Institute, the
Washington, D.C.-based utility association. “As a result, these costs
are shifted to those customers without rooftop solar or other
distributed generation systems through higher utility bills. Net
metering policies and rate structures in many states should be updated
so that everyone who uses the electric grid helps pay to maintain it
and to keep it operating reliably at all times.”
So the response has been to seek to put the brakes on the expansion of
solar—or at least make many customers think twice before going solar.
Some utilities have taken a passive-aggressive approach. In Hawaii,
which has fantastic sun and high electricity prices, rooftop solar is
extremely popular. But the state’s main utility, HECO, has been
telling some customers they can’t connect to the grid.
Other utilities have turned to state regulators for assistance. If
they can’t stop the rollout of solar, at least they can receive some
compensation for the revenue they’ll lose and the costs they might
incur. Last fall, the state utility regulator in Arizona, another
sunny state in which utilities are required to buy excess solar power
generated by homes, said utilities could charge people with rooftop
solar an interconnection fee of about $4.90 per month—or about $59 per
year. (The state’s main utility had asked for a charge of $50 per
month).
Now, utilities in Oklahoma will be able to do the same. And there’s
likely to be more where that came from—even in states where
policymakers are generally highly supportive of green energy. “In some
instances, they’re being imposed as a way to deal with the changing
grid,” said Carrie Hitt of SEIA. “As electricity use goes down, for
whatever reason, the utilities are seeking ways to recover revenues.”
In Colorado, officials are considering a request from utilities to
scale back the net metering policy. In California, utilities are
trying to drum up support for a change to the net-metering policies by
highlighting a sort of class warfare between the solar haves and the
solar have-nots. After all, rather than simply absorb higher costs,
utilities tend to pass them on to their customers. A report issued
last year by the California Public Utilities Commission, which has
been highly supportive of green energy, noted that the Golden State’s
net-metering policy could wind up costing traditional customers up to
$1.1 billion annually by 2020.
For years, the markets, technology, and the political deck seemed
stacked against renewables. But we’re in a rare moment in which
federal policy, the zeitgeist, and the macroeconomic climate are all
pushing in favor of rooftop renewables over electricity generated by
fossil fuels at giant power plants. – Yahoo Environment
