When the sun doesn’t shine, who should pay?

The Washington Post

It’s a sight that would bring joy to anyone who has ever paid an electric bill: that little wheel on the meter outside your home literally spinning backward, signaling a reduction in your payment and the distribution of excess electricity to your neighbors.

Yes, that actually happens at a few hundred thousand homes across the United States that have rooftop solar panels and are part of an arrangement known as “net energy metering.”

“Every time people install a solar system, it means the need for more power distribution is reduced and the need for more energy generation (by utility companies) is reduced,” said Ed Fenster, co-founder of Sunrun, a California company that installs rooftop solar systems.

That would seem to be a good thing in a nation whose government is trying to limit the burning of fossil fuels. But now some large utilities are challenging a critical part of the effort to promote renewable energy, and some in the solar power industry see that move as an attempt to slow a booming alternative that could radically transform the way electricity is supplied to homes and businesses across the country.

The utilities contend that customers without solar panels are subsidizing those who have them by paying more for the power generating stations, transmission lines and distribution wires that both groups use. They want regulators to change that pricing structure so people with solar panels pay more.

Solar advocates say every home that installs solar panels provides a savings for utility companies, and ultimately society: Fewer generating stations must be built, fewer distribution lines must be strung. Tom Beach, principal consultant for Crossborder Energy, which produced a study of the issue for the Solar Energy Industries Association (SEIA), said the savings produced by solar power users mean the price break they receive is justified.

Details vary slightly in the 43 states that have adopted net energy metering, but the basic arrangement works like this: A homeowner installs solar panels on his roof; on sunny days, particularly at midday, those panels can generate more electricity than the home needs, and the excess automatically spills back onto the electric grid and is distributed to nearby homes, causing the solar home’s electricity meter to spin counterclockwise; the electricity generator is credited for providing the power and pays less overall than a traditional utility customer.

But at night, on cloudy days and at times of high demand, that customer still needs power from the utility, which must provide it instantaneously, as it does for other homes. That electricity flows from the only place it can, the company’s generating stations. And it arrives over the giant network of transmission and distribution lines that utility customers pay to build, maintain and expand.

Utility officials contend that their solar customers enjoy the benefits of that network, whenever they need it. But they pay less to build and maintain it, shifting costs onto other ratepayers.

“Until there’s a day when the sun is up 24/7, those customers will continue to” enjoy an advantage, said Steven E. Malnight, vice president of customer energy solutions for Pacific Gas and Electric, the northern California utility that counts 85,000 solar energy users among its 5 million electricity customers.

Arizona Public Service, which has 18,000 rooftop solar systems among its 1.1 million electricity customers, estimates that solar homes each shift about $1,000 in costs annually to other ratepayers. “This is not a revenue issue. This is not a profitability issue. This is a shifting of costs issue,” said John Hatfield, the company’s vice president of communications.

In California, the Public Utilities Commission is re-examining the costs and benefits of net energy metering as part of its decision to raise the cap on the number of homes statewide that can take part in the arrangement.

Net metering has been around for decades, but until recently had few adherents because rooftop solar energy systems were so expensive. But as the cost of solar panels declined dramatically in recent years and states turned more attention toward promoting the use of renewable energy, the number of homes with rooftop solar systems has soared.

The spread of such “distributed generation,” while limited now, holds enormous potential to upend the century-old system under which monopoly utilities provide power to everyone in exchange for a rate of return guaranteed by regulators.

The new technology “is a threat to their business model,” said Carrie Cullen Hitt, SEIA’s senior vice president for state affairs. “The customer produces (his) own electricity. That’s pretty cool. That’s a big deal.”