September 20, 2016 - 8:00 pm
Rooftop solar customers got their wish last week when state regulators signed off on a compromise intended to defuse the bickering and controversy over power rates that has dominated the issue for almost a year.
The Nevada Public Utilities Commission voted unanimously on Friday to grandfather in about 32,000 rooftop solar users at more favorable rates for the next two decades. Those homeowners were upset at adjustments imposed late last year after the commission determined that nonsolar electricity customers were providing about $16 million a year in subsidies to those who had the panels installed.
The new rates will now apply only to those who go rooftop solar after next February.
Interestingly, the PUC vote came just two days after lawmakers in Washington ramped up an investigation of residential solar outfits, including SolarCity which has a large presence in Nevada. Sen. Orrin Hatch, a Utah Republican, and Rep. Kevin Brady, a Republican from Texas, are looking into “whether solar-energy companies improperly received billions of dollars in tax incentives from the Obama administration,” the Wall Street Journal reported Friday.
At issue is whether the companies used proper accounting methods to justify the tax credits.
The congressional probe should serve as a reminder that — while the cost of industrial solar production has indeed been steadily decreasing — the rooftop solar industry remains a creation of subsidies and handouts.
In many cases companies agree to install panels at little or no cost in return for pocketing the 30 percent federal tax credit intended to go to the homeowner. Meanwhile, residential solar users are able to “sell back” to utilities the excess power their panels generate, often at a windfall rate two or three times higher than the wholesale price.
Residential solar companies no doubt stoked a great deal of the controversy in Nevada, creating a vocal constituency convinced that they deserved top dollar for their excess power in perpetuity even after the industry had agreed to legislation that gave the PUC the authority to adjust rates.
The rooftop solar business model, after all, depends on increasing sales by convincing homeowners that their panels will pencil out financially over the long run, all as the companies cash in millions in taxpayer largess.
According to the Journal, SolarCity admitted in a public filing that if federal auditors determine the company improperly calculated the fair market value of the systems it has built, “it could have a material adverse effect on our business, financial condition and prospects.”
In other words, without the subsidies, the business goes kaput.
Two years ago, John Beger, CEO of the solar company Sunnova, told Politico that handouts and tax credits were “hobbling the industry” by “distorting the market” and “preventing capital from coming in.”
Perhaps it’s time policymakers took notice.