Tuesday, Aug. 11, 2015 | 2 a.m.
NV Energy is seeking political support to put the brakes on the rooftop solar industry. It claims this is a rich man’s game and it can build solar generation for less money. The facts are strikingly different. A careful review shows the public utility is aggressively engaged in anti-competitive efforts that if successful will let it monopolize the sun.
So much is wrong about its false and misleading claims. The truth is NV Energy wants to monopolize the sun and turn it into a utility-owned cash cow. This is particularly troublesome when NV Energy uses distorting and false claims to hide its anti-competitive plans that will punish consumers in Nevada and put people out of work.
NV Energy’s first false claim is that large utility-owned solar generation would cost about half as much as customer-installed rooftop solar. This omits important costs related to transmission, network reliability, corporate overhead and other costs. These additional costs are avoided for the portion of electricity that retail customers generate on their premises and use directly.
More important, NV Energy fails to ask the question: For whom is it less expensive? When individual utility customers invest in solar, they pay for the installations on their premises. Other utility customers pay nothing for these investments. Put simply, if your neighbors add solar, they pay, but all retail customers pay more if the utility adds the same amount of solar to its regulated rate base. More bluntly and importantly, paying half of something is always more than paying nothing!
NV Energy’s second anti-competitive move is to base planned changes in its utility pricing across Nevada on the false claim that electricity customers have “a duty to buy” the electricity it delivers over its wires. In effect, NV Energy seeks tariff changes that will require customers in Nevada to “take or pay” for electricity the utility distributes and sells. Competitive alternatives such as conservation, energy-efficient choices and solar and wind generation added to customers’ premises would become less advantageous for consumers. The monopoly utility in Nevada will have positioned itself to take up the slack it created.
NV Energy seeks approval of new utility rates that will punish retail customers who choose to generate their own electricity and not purchase the utility-supplied electricity. NV Energy plans to punish rooftop solar customers through higher basic service charges, new metering and maximum demand fees. These cannot be avoided if the solar rooftop customer wants to stay connected. The new fees amount to a “departing” or “reduced-use” fee. There is no basis for NV Energy to force customers who use less utility-supplied energy to pay more, particularly in the form of much higher anti-competitive prices based on erroneous self-serving utility claims.
The utility-customer relationship is not a partnership, and there is no contract regarding what customers are required to consume. Utilities often point out that shareholders own the utility assets. When it is convenient, regulated utilities are quick to point out that customers have no claims to utility assets that customers funded entirely through their electric bills.
NV Energy also seeks to restrict and reduce the value of any extra electricity that customers self-generate but do not use. This extra electricity is provided to NV Energy at no cost to the utility and flows to a neighbor’s home, and that neighbor pays NV Energy the full retail price for the electricity. When the rooftop solar customer purchases electricity, tariffs allow the customer to use a credit from the electricity previously provided to NV Energy. This exchange is called net metering.
NV Energy calls net metering a subsidy. Facts are stubborn. When a solar customer swaps electricity using net metering, surplus clean electricity goes on to the grid. This trade avoids the expensive purchasing and transmission of fossil fuel-generated power over hundreds of miles. Since the utility also charges neighbors the full retail rate for this solar power, the swap is a wash for electricity the utility sells to others that they played no role in generating and only transported across a handful of buildings.
Nevada has been a leader in installing systems for rooftop solar. The state has added jobs and reduced utility bills. NV Energy is late to the party, but it now seeks to cash in big using unfair tariff changes and false claims that rooftop solar customers are earning unjust subsidies. Now NV Energy wants to build its own large-scale solar generation system that it will place in its rate base and still raise customers’ prices. The current system works for Nevada, and the state will be better served if NV Energy is stopped from advancing its selfish approach to put competitors out of business and monopolize the sun.
Charles Cicchetti, Ph.D., is the former Jeffrey Miller chair of government, business and the economy at the Price School of Public Policy at the University of Southern California, and professor of economics and environmental science at the University of Wisconsin.