The U.S. energy markets, including those throughout Nevada, are in the midst of a massive transformation. Our one-time historical reliance on large, centrally located coal-fired power plants has gradually shifted toward growing demand for natural gas, renewables and distributed generation.
Predictably, this transition presents both opportunities and challenges — not just in terms of economics and infrastructure, but also in electricity policy.
And nowhere is the need for a balanced approach that promotes renewable and alternative energy development, a healthy electric transmission grid, and consumer access to affordable, reliable energy more apparent than in the policies that govern net metering and distributed generation.
Although the specific terms of individual net metering programs vary state-to-state, they require or allow electric utilities to “buy” excess electricity from rooftop solar users.
At issue in Nevada is the price at which solar users are compensated for this electricity.
While net metering programs have incentivized the growth of rooftop solar systems, especially when solar prices were higher, they’ve become controversial in recent years due to the cost shifting it creates toward customers without rooftop solar systems.
This cost shifting occurs when net metering programs require electric utilities to buy excess solar power at a retail rate — which allows solar users to side-step grid connection and maintenance fees. This gives reason to pause when considering that solar users must remain connected to and rely on the grid to sell excess power back to the utility.
As such, consumers without rooftop panels have been unfairly burdened with shouldering the total costs of grid infrastructure. And, as you can imagine, this cost-shift disproportionally impacts low-income families unable to afford rooftop solar systems and participate in net metering programs.
This dilemma gained significant attention in Nevada last year when Gov. Sandoval signed Senate Bill 374 into law, requiring the Nevada Public Utilities Commission to replace its net metering program with new rates at which solar users sell power back to the state’s electric grid.
Then, in December, the PUC issued an order that reduced net metering rates from retail rates to much more reasonable wholesale rates — which are closer to what utilities can buy that power for on the open market, from other power producers.
The order also increased the rate solar users pay to remain connected to the electric grid.
Finally, and somewhat controversially, the PUC opted to move all rooftop solar consumers, not just new ones, into its new rate program, denying all appeals to reverse or stay its decision.
The response from both sides has been swift.
NV Energy, the state’s biggest power provider, had proposed a “grandfathering provision” for its existing 17,500 solar customers, which would have allowed them to take advantage of previous net metering rates.
This common-sense proposal would have honored existing contracts and protected solar consumers from middle-of-the-game rule changes — but it was unfortunately denied but the PUC.
Meanwhile, pro-solar activists formed a political action committee to begin a statewide ballot initiative to vacate the PUC’s new solar rules and restore its former policies. However, this effort was dealt a major setback when a Carson City District Court judge disqualified the ballot measure on procedural grounds. An appeal is expected.
Solar electricity generation can improve our environment and reduce everyone’s electricity bills, but only with the right set of policies. The PUC’s net metering reforms are part of that strategy.
They will not only ensure that the costs of grid maintenance and investment are borne fairly by all ratepayers, but they’ll continue incentivizing investments in rooftop solar systems — both of which are good for consumers.
As Nevada moves toward a new clean energy future, it’s key that policies — including the rules of the road for net metering — be made by the Legislature and experts at the PUC rather than politically driven ballot initiatives.
These policies must also reflect the potential for solar to play an increasing role in the state’s electricity portfolio and the need to maintain a robust electric grid for all utility consumers.
Michael Whatley is the executive vice president of Consumer Energy Alliance.