Nevada should adopt, not marginalize, solar energy

Sunday, Jan. 3, 2016 | 2 a.m.

If ever there was a time for a Nevada leader to capitalize on his vision and political momentum to shape public policy, it’s that time now for Gov. Brian Sandoval. His objective should be to firmly establish the important role of solar power in the state’s future.

The reasons are obvious. We are the Saudi Arabia of solar, with an abundance of sunshine just waiting to be tapped for our own use and eventually to be exported as a commodity to other states.

Instead, a decision by the Nevada Public Utilities Commission last week doesn’t just chill the use of rooftop solar panels but seems to punish those who are pioneering its use, by making it financially unattractive to homeowners.

The three-member commission, appointed by the governor, answered two fundamental questions posed by the Legislature: How much should NV Energy pay rooftop solar power producers when excess electricity is added to the utility’s power grid for sale to other customers? And, how much should solar users pay NV Energy toward the maintenance of that grid and other fixed costs? (Solar households would still require access to the grid to sell their excess power or to buy electricity when the sun is hidden by clouds, or when their power needs exceed what their rooftop panels can generate.)

The PUC’s decision has stung an initial wave of homeowners who were offered financial incentives to put solar photovoltaic panels on their roofs for clean, and cheaper, power. But the PUC, siding fully with NV Energy, has now decided homeowners should be reimbursed for their excess electricity at a wholesale versus retail rate. Based on solar industry estimates, that means solar customers who expected to get about 11 cents a kilowatt hour for their surplus electricity would instead get about 3 cents per kilowatt hour — roughly the same as what NV Energy pays to buy electricity from a polluting generation station powered by coal or natural gas. In addition, solar customers are being asked to pay more, and eventually about triple what the utility's regular customers pay, in fixed charges every month to compensate, the utility says, for the loss of revenue from solar customers.

The PUC’s decision is being appealed by companies that sell or lease solar panels, and the state’s independent Bureau of Consumer Protection asked the PUC to delay the order so it can be fully analyzed.

So instead of encouraging the use of Nevada’s greatest resource in providing electricity — the sun — the PUC’s decision further entrenches NV Energy in its traditional business model.

The PUC’s job is to find the balance point in which the utility is allowed to make a profit for guaranteeing Nevadans a steady source of electricity, but not at the expense of gouging its customers with excessively high rates. In its role, the PUC becomes, in essence, a surrogate competitor to NV Energy, by approving a rate structure that would be justified if NV Energy were competing in a competitive, open market of electricity producers.

And in fact, Nevada is shifting in that direction, thanks to falling prices for photovoltaic panels. NV Energy’s portfolio of energy includes a growing share of solar power, but the utility hadn’t anticipated that its own customers would so soon become competing miniature power plants in their own right. The PUC should guide NV Energy into that new paradigm, which is reshaping the energy industry, versus acting in ways that generally preserves an outdated status quo.

Along with the PUC, NV Energy should have prepared for this inevitable moment. Communities throughout the country and in fact the world are adapting to a retail energy marketplace, in which customers have multiple choices of what sort of power to buy, and from whom — or to produce it themselves. These options are only growing, hastened by the development of affordable, industrial-sized batteries for homeowners to store their own solar-generated electricity.

But aside from tapping more solar power on its own, in order to diversify its portfolio of energy sources, NV Energy, projecting an arrogant too-big-to-fail attitude, has done little to adjust to the evolving industry.

It’s no wonder that NV Energy’s lethargy toward innovation and modernization has been tolerated in Nevada: too few voices in the Legislature are calling for the utility to innovate.

So we look to the governor, who has already addressed Nevada’s future by shepherding business diversification and greater funding for education. Sandoval has momentum on his side and enthusiastically supports technology and innovation; witness his office’s role in attracting electric car makers Tesla and Faraday Future to build plants in Nevada.

Sandoval ought to form a task force of industry and political leaders to reshape the vision for how energy can and should be produced in Nevada. Solar deserves a big piece of that equation.

There certainly are options in how the state can shift the energy playing field. NV Energy might seem best fit to operate the power grid that delivers electricity to customers — but to relinquish the generation of power to competing companies. Customers would be able to select their favorite source of electricity, based on environmental and economic criteria. Perhaps NV Energy might move into the retail solar business itself, selling or leasing panels to its customers. It might even be able to corral enough excess electricity from rooftops to sell to utilities outside Nevada.

In the immediate term, NV Energy and the PUC have a lot of explaining to do in justifying the decisions to put the screws to solar-panel enthusiasts — especially several thousand pioneers who were the first to put panels on their rooftops after being given certain financial assurances, only to now lose them at the hands of a PUC compliant with a bully utility. This was worse than being marginalized; it was a bait-and-switch.

It is time for the governor, the Legislature, the PUC and NV Energy to show the same vision for the state’s energy future as the state has demonstrated in seeking to diversify our economy. We need to tap, not squander, our greatest resource, and applaud, not punish, those customers who are bright-eyed enough to be willing to step into the renewable-energy future.