A report this year from the Edison Electric Institute, a trade group of investor-owned utilities, spells out how rooftop solar could lay waste to the utilities’ century-old business model. The group argues that, as ratepayers opt for rooftop solar (or any other type of so-called distributed energy resource), the cost to maintain “fixed assets” — like power plants, power lines, transformers, and meters — gets pushed onto a shrinking pool of non-solar customers. As rates rise, solar becomes more attractive and more customers choose it. Under that vicious, self-perpetuating cycle, utilities lose clout (and business) as power generation grows increasingly decentralized.
Last week CPS Energy — a publicly owned utility, unlike those involved with the EEI report — chose to heed EEI’s warnings, announcing plans to nix net-metering for solar customers, a scheme in which every kilowatt-hour of power solar customers produce cancels a kilowatt-hour they consume (their bill is the remainder). Under a new program, which CPS calls “SunCredit,” CPS would reimburse solar customers the flat rate of 5.6 cents for each kilowatt-hour they produce, a little more than half what they currently get. Any solar customers that sign up after April 27 would be under the new program.
Existing solar customers would be grandfathered into the new rate in 2023.
Naturally, the local solar industry feels burned.
Cutting the incentive stunts a growing industry, insists Lanny Sinkin, director of Solar San Antonio. “We had more than $5 million in contracts that were canceled or suspended just in the days after CPS made their announcement,” Sinkin said. The way CPS made the announcement only further fueled discontent, Sinkin continued. CPS informed its solar customers of the proposal before telling installers. During a contentious meeting on April 9 with CPS and local solar stakeholders, installers suddenly began fielding phone calls from confused customers.
“There was this real stunning moment in that meeting when, right in the middle of everything, every cellphone in the room just started lighting up,” Sinkin said. “There were all these confused customers calling, saying, ‘But, didn’t you tell me 9.7 cents? CPS is telling me I’ll get half that.’”
“My week has been a nightmare,” said Margo Robertson, who works with Freedom Solar. “I now have all of these clients that are on the fence, and that paperwork — and there is a lot of paperwork that goes into each of these contracts — is due April 27,” she said. “Plus, CPS did this right around Fiesta. You know what this town is like during Fiesta. Everything’s slow.”
CPS argues that as solar customers pay less to the utility, lower income ratepayers that can’t afford solar installations bear the burden. “From our perspective, we just know that we cannot continue net-metering the way that it is,” said CPS spokesman Lisa Lewis.
Local installers say CPS isn’t considering all the benefits of solar.
“This new rate doesn’t truly value what solar is contributing to the grid, and that’s what is so unfair,” said Cathy Redson, who works for Longhorn Solar.
Solar power peaks at midday, which means it’s strongest right at the point of highest electricity use. Not only do solar-powered homes and businesses reduce demand on the grid — they cut demand for utilities’ most expensive product, peak energy, which accounts for a large percentage of most utility companies’ profits.
And the protect-the-poor-ratepayers argument might just be hot air to protect those profits. As David Roberts first wrote in Grist last week, Crossborder Energy carefully studied California’s net-metering policy and tallied up a number of other ways rooftop solar provides savings for utilities, like in avoided energy costs, and avoided transmission and equipment costs, not to mention broader social benefits like reduced pollution, which CPS says is accounted for in its new reimbursement rate. When all was considered, the benefits of net-metering in California outweighed the cost, according to the Crossborder study.
“Massive rate increases on non-solar customers are its (utilities’) way of scaring policymakers into action to protect utility profits,” Roberts wrote.
Sinkin says he understands CPS’s concern, and that local installers are willing to work with the utility; he asks that CPS give installers a year to work out a more amenable reimbursement rate. “There’s no crisis here,” Sinkin said, pointing to studies that indicate that if distributed solar puts any burden on utilities and non-solar ratepayers, that only occurs when solar makes up about 20 percent of the market; in San Antonio, the roughly 1,000 rooftop solar systems make up about 0.2 percent of the market. With CPS continuing to pay out fat bonuses, the timing of the announcement feels particularly tone deaf, Sinkin says.
Regarding CPS bonuses, Lewis said, “We’re talking apples and oranges,” and defended the utility’s incentive pay. She added, “We’ve also had 937 percent growth in rooftop solar since 2009. We need a viable structure for the program that works in the long term. Now is as good a time as any to create that — before it becomes an issue.”
Sinkin says the dustup with CPS highlights a deeper conflict with the local solar industry that’s been bubbling beneath the surface for months. Installers, many of which opened up San Antonio offices and invested locally because of CPS’s promises, grew angry last year when CPS announced plans to roll back investment in the rebate program that helps subsidize rooftop solar installs. The rate was eventually cut from $2.50 per watt to $2.
CPS used to provide bill inserts advertising Solar San Antonio’s Bring Solar Home program, which connects solar-curious customers with three local installers who offer the customer competing bids. “Almost all of our inquiries came from people who saw that bill insert,” Sinkin said. “And last month, CPS decided, for whatever reason, they weren’t going to do it anymore.”
CPS’s announcement last week to do away with net-metering — a decision made without the consultation of the local solar industry, Sinkin claims — just breeds more discontent.
“The local installers, they feel like they’re in an abusive relationship,” Sinkin said.