What is net metering?

Net metering is a billing method that gives a credit to renewable energy system owners (like those who own private rooftop solar panels) for the electricity they produce and add back into the power grid.

How does net metering work?

When rooftop solar customers don’t use all of the solar energy their panels produce, that excess energy flows into the power grid and their energy company credits them at a set rate (a certain number of cents per kilowatt hour). This rate is determined by state regulators who oversee energy companies.

Does Rocky Mountain Power support net metering?

Yes. We believe customers should be compensated for the excess energy they provide back to the power grid.

 

Proposed net metering change

In November 2016, Rocky Mountain Power filed a proposed change to net metering rates with the Utah Public Service Commission for new rooftop solar customers in Utah. The Utah Public Service Commission will ultimately decide what rates are appropriate.

Why is a new rate being proposed?

On November 9, 2016, Rocky Mountain Power filed with the Utah Public Service Commission proposed changes to rates for new net metering customers. The proposed rates would not take effect until after a full review by regulators which is expected to be completed in August or September. We support keeping the same rates for existing private solar customers.

Rocky Mountain Power is recommending a new three-part net metering rate for solar customers that will better reflect the way the electrical system is used.

The three-part rate includes:

  • $15 monthly fixed charge – for costs like customer service and meters
  • $9.02 per kilowatt peak demand charge – for costs like poles, wires and generation
  • 3.81 cents per kilowatt-hour use rate – for energy consumed

Current net metering customers will continue to pay a $6 monthly customer charge and minimum $8 total charge and receive credit for the energy they produce at the current rate of 8.8 to 14.5 cents per kilowatt-hour.

What is the application fee?

A new $60 one-time application fee is proposed for inverter-based net metering customers with systems smaller than 25 kilowatts. The proposed fee would cover administrative costs. The fee for systems above 25 kilowatts would change from $50 to $75 and the “per-kilowatt” charge would change from $1 to $1.50. The applications for systems above 25 kilowatts that require more analysis would change from $100 to $150 and the “per-kilowatt” charge would change from $2 to $3.

What does this mean for customers?

The average energy bill for a typical customer using 1,000 kilowatt-hours per month is $114 per month. Here is the difference for the same customer with private rooftop solar offsetting half of the household energy use:

  • $55/month – Average bill under current net metering rate
  • $74/month – Average bill under new net metering rate

A typical new residential net metering customer can still save about $40 per month (or 35%) compared to an average customer who isn’t net metering. At the same time, the proposed rate eliminates the subsidy paid by customers without rooftop solar:

averagecustomerbill_rmp

Won’t this change kill solar in Utah?

Definitely not. Customers with rooftop solar can still save money on their energy bills—about 35% compared to non-solar customers. Residential rooftop solar customers will simply be billed in a way that’s similar to business rooftop solar customers.

In addition, the vast majority of solar in Utah comes from large solar farms and not from private rooftop systems. Twenty solar farms built in Utah over past two years generate more than 8 times the energy of all rooftop systems in Utah.

Energy from large solar farms is the most cost effective way to add solar to the grid. Here is a comparison of how much it costs to purchase solar energy from different sources:

  • From large-scale solar farms: 3-4 cents per kilowatt-hour
  • From rooftop systems (at current net metering rate): 10.5 cents per kilowatt-hour
  • From rooftop systems (at new proposed net metering rate): 7.1 cents per kilowatt-hour

Rocky Mountain Power’s Subscriber Solar program allows customers to buy solar even if they rent or can’t afford rooftop solar panels or don’t want them on their homes.

  • For customers who are already signed up, solar power will begin coming to the grid in 2017. The power comes from a new solar farm near Holden, Utah.
  • The program is currently sold out, but additional solar farms are planned and will open more opportunities for Rocky Mountain Power customers to subscribe to get solar.

How does the current rate create a subsidy?

Residential rooftop customers impose certain unique costs to serve them, for which they are not paying through existing rates. Residential rates are calculated to recover the cost of serving all customers. Consequently those who do not have rooftop solar panels end up subsidizing those who have solar panels.

All net metering customers depend on the grid for 23.99 hours out of the day to receive power when their solar systems are not generating solar energy, and to return excess energy that they do not use.

Costs for providing service to net metering customers are still similar to non-solar customers, even though solar customers use less power from the grid.

Rocky Mountain Power is proposing the changed rates to protect all consumers. The current rate pays rooftop solar customers 3-4 times the market rate for the energy they produce. It keeps them from paying their fair share of the fixed costs like maintaining wires and poles. Right now, other customers pick up those costs.

Our responses to customer concerns

Below are responses from Rocky Mountain Power to address some of the concerns customers have expressed about the proposed change.

 

“Rocky Mountain Power is seeking the change to boost its profits, not to look out for customers without rooftop solar.”

Rocky Mountain Power doesn’t benefit from reducing the credit net metering customers receive for excess generation. The benefit would go to all other customers who would pay less on their bills.

Other utilities in Utah and elsewhere have made or proposed similar changes to net metering programs, including those that serve St. George, Logan, Bountiful and Provo. These municipal utilities don’t earn profits, but share concerns about cost-shifting from rooftop solar customers to those who can’t or choose not to have their own rooftop systems.

 

“When the Nevada Public Utilities Commission adopted a similar proposal in Nevada, the rooftop solar industry was forced to leave the state, costing hundreds of jobs. Now, Rocky Mountain Power is trying to do the same thing in Utah.”

Subsidies at the federal and state levels, and very favorable rates paid to rooftop solar customers have helped rooftop solar get off the ground and grow exponentially.  Now that rooftop solar is an established industry, many state and local governments, and utilities, are looking at what level of support makes sense going forward. The rooftop solar industry, like the utility industry and others, will need to evolve business models to adapt to changing circumstances in the energy marketplace.

 

“Rocky Mountain Power is asking the Utah Public Service Commission to approve one of the most aggressive and anti-solar proposals ever brought forth by a utility in the United States.”

Other states have adopted changes that forced all customers to pay a higher rate, including existing solar customers. Rocky Mountain Power is only proposing changes to new customers. We acknowledge current customers made investments based on the current structure and respect the need for reasonable certainty on these investments. The company has proposed a new rate that would still allow new rooftop solar customers to save about 35 percent on their bills, on average, while eliminating the subsidy paid by other customers without rooftop solar.

 

“Rocky Mountain Power’s study that led to the proposed rate change doesn’t recognize the real benefits of rooftop solar to the power system.”

The study does recognize the benefits of rooftop solar, which is why the proposal would still credit net metering customers for excess power at rates that are more than twice the price that Rocky Mountain Power can acquire solar from large solar farms.