Net Metering and Valuing Rooftop Solar

Net Metering and Valuing Rooftop Solar

The debate over rooftop solar in Utah rages on. Because Rocky Mountain Power is a monopoly, it has to request permission from the Utah Public Service Commission if it wants to change its prices (aka electricity rates). Utah Clean Energy wants your electricity rates to reflect good policy—that is, we want to see price signals (for all you economics geeks out there) that encourage smart energy behaviors, like energy efficiency, electric plug-in vehicles, and rooftop solar.

Rocky Mountain Power: The Latest

You likely remember all the hubbub when Rocky Mountain Power requested a new fee specifically for rooftop solar customers in 2014. Utah Clean Energy and hundreds of others pushed back and won the day when the Utah Public Service Commission denied the fee pending an analysis of the costs and benefits of rooftop solar. As the saying goes, be careful what you wish for!

The prescribed cost-benefit analysis of rooftop solar has taken shape over the course of 2015. Over the summer and fall months, state utility regulators, Rocky Mountain Power, and solar experts including Utah Clean Energy participated in a docket exploring what factors should be considered when determining the costs and benefits of solar energy. Though very technical, this is a vital topic as it impacts our overall utility system and solar's long-term role in it.

The process included a series of working groups held by the Utah Public Service Commission which delved into the technical challenges, solutions and opportunities that come with integrating rooftop solar into our energy system. See archived information about these working groups.

To make our case that solar brings benefits to all Utahns and that utility costs should reflect those benefits, we collaborated with national experts on how to properly value solar while still having affordable, reliable energy. During the working groups, Utah Clean Energy and our experts submitted results from a preliminary analysis that showed that every $1 the Utility invests in customer owned rooftop solar results in long-term financial benefits to the tune of $12 to $24 for all customers (including those without solar on their home).  You don't have to be a fan of clean energy to see the economic benefit here!

Despite this and other compelling data, these arguments were largely ignored in the Public Service Commission's final ruling on what factors will be included in calculating the costs and benefits of rooftop solar.  Early on in the case, the Commission chose to ignore the environmental, health and societal benefits of rooftop solar.  In their decision, the Commission chose to ignore the basic long-term system and ratepayer benefits that rooftop solar energy provides. 

The ruling is a disappointing step backwards for solar,
but it is far from the last step.

What this means going forward is that in Rocky Mountain Power's next general rate case, the utility will not be required to consider rooftop solar as a resource that reduces long-term utility costs and investments. We will be heavily involved in the rate case to ensure solar prices are fair and do not discourage solar development in Utah.

Related media:  

Municipal Utilities & Net Metering

Municipal utilites differ from Rocky Mountain Power in that they are not required to offer net metering and do not need to seek Commission approval to make changes to their net metering programs. Several municipal utilities in Utah are making changes (or considering changes) to their net metering programs:  

  • Santa Clara replaced their net metering program with a feed-in-tariff in July 2015, and then quickly put the new policy on hold in September 2015 following compliants from residents.  The city is completing a study which seeks to determine the costs and benefits associated with solar in Santa Clara.
  • We're thrilled that Kaysville has lifted their temporary moratorium on net metering pending a study of the costs and benefits of rootop solar.  The policy may be revisted when results of the study are available in early 2016.
  • South Utah Valley Electric Service District (SESD) has also issued a moratorium. A spokesperson from SESD says they hope to have a plan in place that will lift the moratorium by the end of the year.
  • St. George implemented a monthly fee specifically for solar customers in Fall 2015.
  • For more information on municipal net metering programs, email Utah Clean Energy's Solar Program Coordinator Kate Bowman.

Net Metering Cost-Benefit Analysis Working Groups

The analysis of Rocky Mountain Power's net metering program began with a series of working groups to delve into the challenges, solutions and opportunities that come with integrating rooftop solar into our energy system. It’s technical, it’s complex, and oh so important for the future of solar energy in Utah! We had four working group meetings to discuss issues related to net metering. For the energy nerds reading this, here is an update on the more technical aspects of the working groups.

First Working Group  - Who Can Talk Utility Distribution for 7 Hours?
We can!  The first working group kicked off by focusing on challenges and opportunities related to solar and the utility’s distribution system (how electricity gets from the transmission system to your house). Essentially, we discussed how rooftop solar is different from other sources of power, how the utility gets power from source to customer, and what impacts increased rooftop solar will have on this process.  For our contribution, Utah Clean Energy brought in two technical experts to give presentations on lessons learned by areas like Hawaii and California, who are seizing their rooftop solar potential while successfully managing its impacts on utility transmission and distribution.  Our expert from Clean Power Research showed how rooftop solar can actually help a utility avoid transmission and distribution costs as it provides energy on-site. It may not sound like a page-turner to you, but it was a thought-provoking presentation that outlined a win-win pathway for increased solar in Utah.

Download Ben Norris' presentation.

Second Working Group (May 12)
The topics of the second workgroup were (1) cost-benefit analyses and (2) how NEM is evaluated and valued through existing utility planning analyses, including IRP and Cost of Service studies.  Dr. Thomas Vitolo with Synapse provided an overview of cost and benefit categories that can be considered in a net metering cost-benefit analysis.  Jason Keyes with IREC outlined the key differences between a cost-benefit analysis and a cost of service study and highlighted best practices for both.  A cost of service study is designed to determine the cost of providing electricity service to a particular class of customers to help determine prices for each type of customer based on how they use energy.  A cost-benefit analysis takes a broader look at the costs and benefits of net metering, including benefits like avoiding delivery line losses, providing grid support, and avoiding or deferring transmission and distribution investments.

Download Dr. Thomas Vitolo’s presentation: Avoided Costs Associated with Distributed Generation

Download Jason Keyes’ presentation: Cost of Service Studies vs. Cost Benefit Analysis

Third Working Group (June 25)

This working group focused on existing cost tests, which are used to evaluate energy efficiency programs and whether (and how) these tests could be used to evaluate net metering. The DSM (or "Demand Side Management"—a fancy way of saying energy efficiency) tests tell us whether a given energy efficiency initiative - like incentives for more efficient lightbulbs - is a good deal from the perspective of the utility and its customers. These tests can tell us whether a program is a good investment, but when the time comes to recover the costs from customers, regulators must do so by establishing prices in a process called “ratemaking.” More of an art than a science, ratemaking requires utilities and regulators to balance many different, sometimes competing goals (for example, providing low-cost, reliable service; mitigating long-term risk; and ensuring access to electricity to low-income Utahns).

Download Tim Woolf's presentation: Cost-Effectiveness of Net Energy Metering

Fourth Working Group (July 8)

You may not scrutinize your electricity bill, but if you did you would discover that there are many different components to it: energy charges, customer charges, minimum bills, seasonal and time of use pricing, and for commercial customers, a demand charge or a facilities charge.  Simple, right?  When electricity bills are structured well, they incent good behaviors (like conservation) and discourage electricity usage that is wasteful or costly. When the cost-benefit analysis is completed, the findings of the analysis will need to be converted into electricity prices (“rates”).  A good electricity rate will provide adequate compensation for solar energy, protect low-income customers, reward smart energy choices, and also be simple and understandable to the average human. There are many ways to design rates for net metering customers, and it's important that we get it right.

Download Melissa Whited's presentation: Rate Design, Options for Addressing Net Metering Impacts


sophiehayes1 2
Staff Attorney Sophie Hayes looking inexplicably happy despite the giant stack of rate case testimony ahead of her.

The debate over Rocky Mountain Powers' highly controversial 2014 proposal for a $4.65 solar fee included 6 rounds of testimony, countless meetings and thousands of community advocates.  If you are interested, you can check out all of the related testimony and documents here including the testimony of Sarah Wright and Rick Gilliam on behalf of Utah Clean Energy.

In July of 2014, Utah Clean Energy submitted the last round of testimony followed by two days Public Service Commission hearing: cross examining witnesses and undergoing cross-examination regarding our testimony advocating for a fair shake for rooftop solar. 

The public hearing followed and we were thrilled with the amazing turnout! Approximately 60+ citizens participated in the public hearing, voicing opposition to the proposed solar fee. These participants included Utahns with and without solar, retirees, doctors, parents, businesses and concerned citizens of all ages.  In fall 2014, the Public Service Commission ruled against a fee for solar customers and chose to complete a cost-benefit analysis of rooftop solar.  That analysis is currently underway.



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