The state’s largest provider of electricity has agreed to drop its bid to change the way customers with rooftop solar pay for their power — and will instead grandfather in existing net-metering customers until the year 2035.
In a settlement released Monday evening, Rocky Mountain Power, solar advocates and several state agencies outlined the details of the new agreement that includes a plan to decrease the value of credits customers receive from the utility in exchange for the excess power their panels generate.
Solar company leaders hail this compromise as one that will keep their burgeoning industry stable for the time being. And it received the approval of Gov. Gary Herbert, who announced the agreement in a news release.
“With this fair and balanced agreement, Utah will soon become the first state in the nation to preserve the vital role of our emerging solar industry as it becomes sustainable, without subsidies, in our diversifying energy market,” Herbert said.
The settlement follows the same general structure as an idea floated several months ago by the Utah Division of Public Utilities and the state’s Office of Consumer Services. Rocky Mountain Power will continue to accept new net-metering applications through Nov. 15. At that point, the utility will cap that program to new customers, and households with new rooftop solar installations will be treated more or less as any other residential customer.
The Public Services Commission must approve the settlement if it is to be implemented.
During a three-year transition phase, these new customers will receive an export credit of 9.2 cents per kilowatt hour for surplus power they deliver to the utility’s electrical grid.
By 2020, Rocky Mountain Power has agreed to initiate a study on the costs and benefits of rooftop solar that will be used to establish a permanent rate for surplus power delivered to the utility when the transition period ends.
Net-metering customers will continue to receive credits from Rocky Mountain Power for surplus power as they currently do, through the year 2035.
The utility currently credits rooftop solar customers the equivalent of 10 cents per kilowatt hour, according to company spokesman Spencer Hall. The going wholesale rate at which the utility could otherwise buy solar power, Hall said, is 3.3 cents per kilowatt hour.
“We’re happy that this moves things forward toward a solution that is market based,” he said, “and that removes the subsides currently being paid by our customers who don’t have rooftop solar.”
David Bywater, CEO of Vivint Solar, said he was glad to see months of negotiation produce a settlement that would preserve customer’s choices in Utah for the next several years, although he said he didn’t love everything about the compromise. Vivint was one of several solar companies to sign off on Monday’s accord.
“They talk about a subsidy,” he said. “We don’t believe a subsidy exists, but we have agreed to the compromise.”
The deal will give Utah’s solar industry and Rocky Mountain Power more time to “really do the math and determine the true benefit of solar,” Bywater said. And it will give Utah’s solar businesses time to adapt.
“It gives us a longer runway to work on things,” he said. “There were a lot of concessions that were made that were painful and will hurt our industry, but when you look at what was originally proposed — I think it would have completely annihilated rooftop solar in Utah.”
Last November, Rocky Mountain Power proposed to assign net-metering customers a three-part rate structure on their future electric bills. The new structure would have maintained the current one-for-one credit for surplus electricity, and it decreased the per-kilowatt hour price for power purchased from the utility. But it also introduced an element known as a demand charge that, in some circumstances, could have dramatically increased customers’ power bills.
A demand charge, typically an element of commercial power bills, is based upon the single point at which a customer draws the most power. Rocky Mountain Power argued the charge would have sent more accurate price signals to net-metering customers, whose peak power use doesn’t always align with the point at which their solar panels generate the most power. But opponents argued it would be difficult for residential users to understand and budget for, because residential customers have less control over their electrical demand than commercial customers.
Vivint Solar plans to continue selling rooftop panels to all residential customers in Utah during the 3-year transition phase, Bywater said.
“But for the next two and a half months,” he said, “we’re still on the current program, and it’s a good time to buy.”
Clarification: An earlier version of this story mis-stated Rocky Mountain Power’s role in studying of the costs and benefits of solar power before a new rate of compensation for rooftop solar customers is adopted. According to the terms of the settlement, the utility will initiate the study, and other parties will participate via a public docket at the Public Service Commission.