“Solar Tax” on the Table in Utah General Rate Case

I spent part of this week in Utah, where the major utility has proposed a discriminatory fee for net metered solar customers as part of its General Rate Case – or GRC.

GRCs are typically complicated matters. They evaluate a utility’s assets, expenses, and capitalization to develop the revenue required by the utility to achieve a rate of return on shareholder equity (i.e. profit) high enough to attract private capital to this very capital-intensive industry. This part of the case involves truckloads of witnesses, testimony and exhibits.  And that’s just the first phase.  Once the Commission figures out how much money it is willing to let the utility collect, the second phase divvies up the total pot of revenues across all the various classes of utility customers – residential, commercial, and industrial to name some major categories.  More witnesses, more truckloads, and then a hearing rivaling the chariot race in Ben Hur.  Not surprising since all of these attorneys and expert witnesses are fighting over tens – if not hundreds of millions of dollars – include Commission authorized profits for the utility.  The granular economic, financial, legal, engineering and accounting considerations will often number in the hundreds.

That’s why when a utility files a change to net metering policy in the context of a rate case, we join with a keen appreciation for the complicated road ahead.  In Utah, Rocky Mountain Power or “RMP” filed such a rate case late last year.  We joined the fray with our friends and partners at Utah Clean Energy.  True to form, the case followed the expected pattern until early this summer when all of the disparate parties got together and settled every last darn issue!  Well, all except one.  Can you guess which one that might have been?

Right.  The net metering charge RMP seeks to impose upon those self-reliant customers who install solar on their homes.  This “solar tax” – so-called by local groups – would amount to an 8% rate increase on net-metered customers.

If a utility in Utah or any other state brings sweeping changes to the treatment of net metering customers to the Commission for consideration, it also has the legal burden of proving that the issue is indeed critical, and that its proposed resolution is reasonable and in the public interest. In our view, RMP has proven none of these points.

The utility argues that revenue reduction from customers generating their own power is a cost of net metering. Therefore, the argument goes, such customers should pay an additional charge to make up the difference.  And this should apply to all existing and new residential solar customers, and start really soon – like September 1. Meanwhile the utility has yet to undertake a comprehensive cost-benefit analysis to make their case with . . . facts. The utility’s 2,000 net metering customers account for just 0.25% of its residential customer base. This issue is clearly not so acute that there isn’t time to do the proper analysis. There is time for a fact-based conversation rather than rash action that would seriously impact solar customers in the state.

Opponents of the fee – Vote Solar included – argue that charging solar customers a fee is discriminatory and does not properly account for the very real grid benefits of rooftop solar. Private investment in local solar reduces the need for utilities to invest in (and rate base) expensive and polluting fossil fuel power plants and electricity grid infrastructure. Furthermore it is clearly in the public interest to empower more energy consumers to choose clean energy and bring economic, public health and environmental benefits to their community.

Fortunately, we have the Commissioners who strive to understand very complex GRC issues from varying perspectives and ultimately pass judgment on the utility’s solar fee proposal. The diverse set of voices speaking out against this solar fee – including 150 individuals who attended a rally at the Commission yesterday – clearly shows that Utahns care deeply about their ability to go solar. We hope that the Commission will stand strong for solar choice rather than letting the utility’s business interests outweigh the customers they serve. Stay tuned.