Utah’s solar advocates plan to fight decision by state regulators

(Trent Nelson | The Salt Lake Tribune) LJ Jenkins, with Elan Solar, installs solar panels on a Santaquin home on Friday, Nov. 6, 2020.

Rooftop solar advocates are gearing up to challenge last week’s ruling by Utah utility regulators lowering the credit Rocky Mountain Power awards its customers for the excess electricity they generate from rooftop photovoltaic panels and “export” into the grid.

Even more troubling to solar-installation companies is the Public Service Commission’s decision to reevaluate “solar export credit” every year. They say throwing such uncertainty into homeowners’ calculus for deciding whether it’s worth investing in a rooftop system could be a deal-breaker for many.

Most vexing of all to solar advocates was the commission’s refusal to consider the broader public interest and to support consumer choice in resetting the credit, according to residents’ emails to the commission shortly after its decision became public Oct. 30. Commissioners said such policy considerations were outside the scope of their authority, which is focused on ensuring safe, reliable and reasonably priced power and a healthy financial return to the regulated utility.

Raoul Nelson of Cottonwood Heights wrote that he was “appalled” with the decision, calling it “regressive.”

PacifiCorp, Rocky Mountain Power’s parent, “is a public utility that has a monopoly and has not upgraded the technology of local grids for years. They are stuck in the model of centrally distributed power with huge losses of energy due to inefficient transmission at great distances,” Nelson wrote. “They should be required to serve the public with a long-term objective of providing power in an environmentally sound manner. There should be more incentives for decentralized power generation.”

Cutting the credit to half the power’s retail value penalizes homeowners who invest in solar systems, which not only reduce emissions that pollute the air and contribute to global climate change, but also benefit the utility and its infrastructure as a whole, according to Ryan Evans, executive director of the Utah Solar Energy Association.

“While this ruling appears to be somewhat of a compromise where no party is going to be happy … the solar industry won’t even have the opportunity of having a win when there’s hardly any solar companies in business,” Evans said. “The lower rate and this annual price adjustment that the commission has approved [make] it very difficult, if not impossible, for solar companies to ever reasonably forecast future customers’ savings five to 10 years out.”

The solar trade group, and its allies like nonprofit advocates Utah Clean Energy and Vote Solar, fought Rocky Mountain Power’s request to slash the export credit by 85% and will likely request a rehearing.

Serving most Utah residents, Rocky Mountain Power argued that its growing number of solar-power customers are not paying their fair share to cover the utility’s vast fixed costs associated with maintaining the network of wires, substations and transformers, known as the grid.

After weighing several days of testimony it heard last month, the three-member governor-appointed Public Service Commission (PSC) agreed to cut the credit to 5.6 cents per kilowatt-hour, or kWh, in the winter and 6 cents in the summer, when electricity is more valuable.

That’s 35% below the “transition” 9.2-cent credit established three years ago when the commission eliminated a one-for-one credit that awards “grandfathered” customers one kWh for every one they piped into the grid. Those credits go toward electricity used in those homes when the sun is down or blocked by clouds. According to an analysis by Vote Solar, 59% of the 406 million kWh solar-powered Rocky Mountain Power customers generated in 2019 was exported into the grid.

The new rate, which applies to new solar customers going forward, is still four times the 1.5-cent credit the utility had requested, indicating the commission hardly gave the investor-owned monopoly power company everything it wanted. Still, the company accepts those findings, according to spokesman Spencer Hall, who called them “fair and reasonable.”

“This was a consumer protection issue. The commission was able to find a place that protects customers who have rooftop solar,” Hall said. “They’re able to get meaningful compensation for the excess power they generate and the customers who do not have rooftop solar are protected from incurring the costs.”

But Scott Jones, who oversees sales and designs system for the Utah-based installer Creative Energies Solar, sees the decision as anything but fair and reasonable.

“The solar industry already suffered a dramatic slowdown due to the PSC’s previous rate change in 2017,” Jones said. “And now, during an economic slowdown, a global pandemic and a climate crisis, the PSC made a contemptuous decision to kneecap the rooftop solar industry.”

Historically dependent on coal, Rocky Mountain Power is increasingly moving to renewables, but it is looking to get that juice from “utility-scale” projects and California’s peak-hour surplus. The 350 megawatts generated on Utah roofs pales in comparison with the 7,000 megawatts the company plans to get by 2023 from from solar farms now under development, according to Hall.

Currently, 40,000 homes and businesses are pumping rooftop-generated power into the Rocky Mountain Power grid. That’s only 2% of the utility’s customers, indicating there is plenty of opportunity for growth in a business sector that employs 7,000. Advocates fear the PSC ruling will result in a significant contraction for solar installation, putting hundreds out of work.

The PSC determined that the export credit should be confined to quantifiable costs the utility avoids by accepting electricity generated on customers’ roofs, such as costs directly associated with generating, transmitting and distributing the electricity.

“While we recognize the importance of environmental considerations, carbon policy, economic development, and public health, these matters fall within the regulatory ambit of other government agencies,” the commission wrote in its 25-page ruling. “We will not appropriate those agencies’ authority or pretend to their essential expertise by adopting a boundless view of our own in the context of utility ratemaking.”

Evan Johnson, a Salt Lake City homeowner considering a rooftop installation, is among those affected by the credit reduction which greatly slows a financial return on such investments.

“One of the reasons I wanted solar was for those harder to quantify benefits,” Johnson said. “It’s going to disincentivize solar installs, which make people like me feel like we can take a direct personal action to reduce carbon emissions rather than hoping a distant utility will do it for us. It feels like they are taking power out of the customers’ hands.”

Solar advocates also objected to the decision’s failure to lift the March expiration date on customers’ accumulated export credits, which was put in place to discourage homeowners from overbuilding their rooftop systems.

“If this ruling was meant to set a true value — not an incentive, but a true value of exported energy — then why should customers have those accumulated credits eliminated?” Evans, of the Utah Solar Energy Association, said.

To capture the existing 9.2-cent credit, homeowners need to have signed up for Rocky Mountain Power’s solar program by midnight on Oct. 30, the day the ruling was posted with no notice to the public. Those already on board enjoy the favorable credit until 2032 or 2035, depending on when they signed up. But the sudden effective date for the reduced credit surprised everyone, including the power company, since it had been assumed the new rate would take effect at the end of the calendar year.

Solar industry representatives on Friday filed a petition seeking to push back the deadline to Jan. 1 to give homeowners a few extra weeks to apply for the export credit program under the more favorable rate.

According to Jones, hundreds of homeowners had been waiting for the PSC decision before deciding whether to purchase a rooftop system, which runs about $20,000. The surprise deadline meant they had only a few hours to get their paperwork by midnight on Oct. 30.

By the time Jones received the ruling, it was late in the day and he spent the rest of it feverishly calling his customers. He said he got about 25 applications filed before midnight, but many more are out of luck.

“The PSC failed to serve the interests of the public over those of a monopoly utility,” Jones said. “If the state of Utah does, indeed, want to look after the best interest of its residents, then the responsibility is now on Utah lawmakers to enact legislation that will encourage rooftop solar development in the wake of this terrible decision.”