Nevada PUC ‘Contortionist’ Act Will Kill Rooftop Solar: Sunrun
Nevada regulators will vote Friday on a restructured net-metering scheme that increases rates over 12 years and doesn’t grandfather existing solar-energy customers — a decision sure to rile installers SolarCity ( SCTY ) and Sunrun ( RUN ). The draft order , released late Wednesday, stems from a week of hearings at the Public Utilities Commission, and pits billionaire CEOs Warren Buffett and Elon Musk in a battle over the sun. Buffett’s Berkshire Hathaway ( BRKA ) owns NV Energy, the utility pushing for a rate change, and Tesla Motors ( TSLA ) CEO Musk chairs SolarCity. SolarCity and Sunrun exited Nevada in December when the PUC first voted to cut payments to solar customers for excess energy fed back into the grid. Net-metering angers utilities because it forces them to buy energy from rooftop customers at the expensive retail rate. California regulators recently upheld net metering. Under the Nevada commission’s new proposal, the new rates won’t apply to existing solar customers for a period of 12 years. Over that time, the rates will step up five times until reaching a cost-based structure on Jan. 1, 2028. The PUC estimates that the 12-year time frame represents $81 million in costs shifted to non-solar customers. Solar Advocates Cry Foul In May, the Nevada Legislature voted to allow the PUC to create new solar-energy rates in exchange for lifting the 3% cap on customers eligible for net metering. On Dec. 23, the commission voted unanimously to cut net-metering payments. Solar-energy advocates immediately began calling for a reversal. “By eliminating net-metering, the order has discouraged private investment, which has led to layoffs and ensured that there will not be future applications to install (rooftop solar),” the Solar Energy Industries Association argued in a PUC filing. Not grandfathering existing solar-energy customers under the old net-metering rules was particularly egregious, the SEIA wrote. “The elimination of net-metering for existing customers makes their investment meaningless and creates a ‘financial catch 22’ of deciding between spending more every month or spending significantly to remove a (rooftop solar) system,” they wrote. “For potential customers, the decision is easier because there is no longer a financial incentive to invest in net-metering.” Bureau of Consumer Protection representatives argued for a 20-year grandfather clause that would allow existing solar customers to recoup the costs of their hefty investments. NV Energy, in turn, filed a proposal for a 20-year grandfathering period last month. Solar advocates also bashed the NV Energy rate study used to justify the net-metering cut, with the Southern Nevada Home Builders Association claiming it contained “logical and factual flaws.” The BCP argued that the study discounted medium- and large-scale users, which skewed the results. “No reasonable person would accept as reasonable the inference that Nevada Power Company’s ability to provide as much power to (rooftop solar) customers as they could need creates an obligation to pay for power not received,” the SNHBA wrote. Further, the SEIA argued the new rate structure ignores 9 of 11 rooftop solar values, and unfairly lets the utility buy solar energy at a wholesale price to sell it back at a retail price. “This decision denies their right to be fairly compensated,” The Alliance for Solar Choice (TASC) separately argued. ‘Kicking The Can Down The Road’ Net-metering was codified in 1997, the PUC wrote. Since then, rooftop installers have made big bucks by advertising set-in-stone solar rates and “unrealistic payback periods,” the commission argued. And as a result, non-solar customers are now paying $16 million annually to carry solar customers — a subsidy that “will cumulatively grow unreasonably larger over time,” said the PUC. Proposals to delay the necessary correction in rates to a cost-based structure only serve to kick “the can down the road,” it said. Over 40 years, the subsidy borne by non-solar customers would grow to $640 million. “These proposals do nothing to address the problem of antiquated rates that were instituted nearly 20 years ago to jump-start an industry,” the commission wrote. “The old net-metering rates are not reflective of accurate price signals or actual costs to serve.” And while the PUC understands the desire to “lock in rates and structures . . . electric utility rate-making cannot work in this manner.” Over time, new ratepayers would be forced to take up increasing incremental costs as new customers join the grid. By gradually shifting costs, solar customers can avoid “rate shock.” The structure also allows solar customers time to customize their usage to benefit from time-of-use policies. Currently, NPC and Sierra Pacific Power Company solar customers still rely on the grid 42% and 49% of the time. Under the new proposal, solar customers will save about a third on their electric bills, according to TASC estimates. That’s in line with the cost of service, the PUC wrote. The PUC also took issue with SolarCity, Sunrun and TASC’s “all-out campaign to influence public perception” by claiming the commission was in NV Energy’s pocket. Customers are now unlikely to accept the new rates. “However, this commission will not allow such actions by TASC, SolarCity, Sunrun and other rooftop vendors to dictate a certain outcome in this proceeding,” the PUC wrote. ‘Contortionist Twisting Of The Law’ Sunrun executives blamed Commissioner Dave Noble and Gov. Brian Sandoval for the ultimate death of Nevada’s solar industry, in an emailed statement to IBD. “Every party to the case, including NV Energy, recommended grandfathering these customers for a period of 20 years,” they wrote. “Once again, Noble proposes to give NV Energy more than it asked for.” As presiding officer, Noble has received a fair amount of online flak since the commission’s decision in December. Bryan Miller, TASC president and senior vice president of public policy and power markets at Sunrun, accused Noble of contorting the law to “kill” the industry. “Noble’s contortionist twisting of the law belongs in a Vegas Cirque du Soleil show, not the halls of government,” he wrote in the email to IBD. “Brian Sandoval’s legacy will be letting his hand-picked commissioners eliminate a booming industry while he complicitly stays silent.” SolarCity didn’t respond to an email seeking comment.