Study says solar customers shift utility costs to traditional ratepayers

By Daniel Rothberg

Thursday, Aug. 18, 2016 | 1:53 p.m.

Under a prior energy rate structure, current rooftop solar customers cost nonsolar ratepayers in Nevada $36 million, according to an updated study from Energy + Environmental Economics, the firm that valued rooftop solar as a benefit to ratepayers in its original study two years ago.

With rooftop solar incentives receding, the future cost of these customers would be about $15 million, according to the new study.

A steep decline in the cost of large-scale solar farms since 2014 has made rooftop solar relatively less economical, the study found, and was one input that contributed to the reversal in E3’s findings. The difference in the findings between the original and updated E3 studies, which relied on similar methodologies, highlights the difficulty of valuing rooftop solar over time.

“Overall, for the state of Nevada, (net metering) generation is a costlier approach for encouraging renewable generation than utility-scale renewables,” the report’s authors wrote.

SolarCity today said the findings need more probing. Attorney Kathleen Drakulich, representing SolarCity, said the lack of participation by interested parties in the study puts stakeholders “in real jeopardy.” SolarCity plans to weigh in during Public Utilities Commission proceedings.

The $36 million value incorporates a $20 million incentive that has been largely exhausted. The adjusted value of the subsidy is about $15 million, consistent with what regulators have found.

The finding comes during heated debate over the value of rooftop systems, one that has turned into a political fight between rooftop solar companies and the utility, which believes that deploying large-scale solar projects is a more cost-effective way of sourcing clean energy.

In the middle is the Public Utilities Commission of Nevada, which created new rates for rooftop solar customers in December. The rates, phased in over 12 years, increase bills by tripling a fixed fee and decreasing the amount NV Energy reimburses customers for excess energy they send back to the grid. The rates prompted SolarCity and Sunrun to pull operations from the state.

Utility regulators said the rates would eliminate a cost shift over time, though some criticized them because the Legislature had tasked the PUC with eliminating an “unreasonable” cost shift.

The study predicted that nonsolar ratepayers would have seen a small rate hike under the old rates. According to the E3 report, the increase would have likely amounted to about 0.5 percent.

There are more than 30,000 NV Energy customers in Nevada who have installed or are in the process of installing rooftop solar panels. Though the PUC applied the new rates to existing customers, nearly all parties, including NV Energy, believe they should be grandfathered under the old rates. The E3 study says grandfathering will result in an annual cost shift of about $15 million.

Debate over the value of rooftop solar has prompted several studies in Nevada.

The E3 report contradicts another study that SolarCity, which has poured about $2 million into a campaign to reverse the new rates, commissioned this year. In partnership with the Natural Resources Defense Council, SolarCity’s study found that the benefits of rooftop solar outweigh the costs to all ratepayers. The PUC has also asked NV Energy to provide a cost-benefit analysis.

Determining the value of rooftop solar is far from over. A spokeswoman for Bring Back Solar, the political group organizing SolarCity’s effort, called for the E3 study to be peer-reviewed.

“We look forward to working with other stakeholders to review this draft study, and provide input on the data and analysis through a transparent peer-review process,” Chandler Sherman, deputy campaign manager of Bring Back Solar, said in a statement. “The public deserves a rigorous and fair accounting of the costs and benefits of solar, and we will work with the PUC and other leadership to ensure the final study meets the high standards the public expects.”

NV Energy did not respond to a request for comment.

The PUC commissioned the updated report after the Legislative Committee on Energy asked for data that better represented current conditions. An interim energy committee is meeting Monday.

“An updated, independent study prepared by E3 will provide a foundation as we continue the discussion of ensuring that all customers benefitting from using the electric grid are paying appropriately to endure grid functions,” committee chairs Assemblyman Stephen Silberkraus and Sen. James Settelmeyer wrote in May.

Las Vegas Sun reporter Cy Ryan contributed to this report.