State public utility commission gave only power company permission to charge higher rates and fees to users, shattering industry’s business model
There are 36 solar panels sitting in a row behind Richard Stewart’s home in north Las Vegas. The panels cost about $40,000 – most of his savings, he said. He made the investment with his wife, who has since died, hoping to save money heating and cooling their high desert home. The retiree worried then, as retirees on fixed incomes often do, about rising energy costs.
Now he regrets the investment entirely. “I’ll be lucky to get my money back in 20 years,” said Stewart, 69.
Although Nevada is one of the sunniest places in the world, there has recently been a dark cloud hovering over the rooftop solar industry in the state. Just before Christmas, Nevada’s public utility commission (PUC) gave the state’s only power company, NV Energy, permission to charge higher rates and fees to solar panel users – a move that immediately shattered the rooftop solar industry’s business model.
In addition to the new monthly fee, which will increase to $40 from $12 over the next five years, customers like Stewart will get less back from the utility for energy their solar panels capture and feed into the main power grid. Whereas previously they received full retail value for their surplus electricity, soon NV Energy will only pay a third of that price for exported electricity.
The uneven effect would be that during dark hours and cloudy days, solar customers could pay full price for energy, even after contributing two or three times as much electricity to the power grid during the same day. As the Alliance for Solar Choice frames it, the $40 fee eliminates the $11 to $15 solar users typically save on their monthly electricity bills.
“It’s simple math,” said Bryan Miller, president of the Alliance for Solar Choice. “The commission eliminated all solar savings. People would pay more for going solar rather than less. It has left companies no choice but to stop doing business in the state.”
The changes by NV Energy are part of a national trend in big utility companies arguing to eliminate the financial incentive to switch to rooftop solar, though Nevada is the only state thus far to grant such a change while also applying the new rules retroactively to existing customers.
Nevada’s governor, Brian Sandoval, and NV Energy defended the PUC decision, saying that the current rate structure put too large a burden for maintaining the grid on non-solar consumers. In an emailed statement, NV Energy wrote that the revised rate structure “fairly allocates the costs of providing electric service among all customers” and “results in no additional profit to NV Energy”.
An independent study commissioned by the state legislature in 2013 concluded, however, that solar users created a $36m net benefit for traditional customers, a finding NV Energy dismissed as reliant on outdated solar pricing data.
Rooftop solar companies have sternly rebuked Sandoval, noting that he courted their businesses and incentivized the industry in what they are now calling a bait-and-switch.
“About a year ago, the government encouraged people to go solar, saying it was a priority for the state to increase the use of renewable energy,” Miller said. “They created an incentive to bait people. That’s what jumpstarted the market. Then they switched the rules in the middle of the game.”
After the 23 December decision, Nevada’s burgeoning solar industry quickly evaporated. Several companies selling, leasing or installing solar panels – including Sunrun, Vivint Solar, and SolarCity – put out news releases announcing layoffs and their intentions to leave the state.
Jose Peña, a laid-off Sunrun technician, said: “This is the perfect market for solar. I was looking to advance with the company. They supported us as a branch. I was at the point where I was traveling, training other people. I had two promotions lined up. But it kind of dissipated little by little as things slowed down because of rumors regarding the PUC decision.”
A SolarCity news release announcing 550 job cuts stated that commission’s move “is particularly callous and leaves Nevadans to question whether the state would ever place the financial security of regular citizens above the financial interests of NV Energy”.
Miller, who is also vice-president of public policy at Sunrun, pointed out that Sandoval, who appointed two PUC members, has two aides who work as NV Energy lobbyists. In July, Sunrun filed a public records request for messages between the governor, his aides, and NV Energy. The administration refused to provide text messages made on personal cellphones, so Sunrun is suing to have those released.
Solar advocates have also accused the energy commission of coordinating with utility company lobbyists. Checks and Balances Project, a nonprofit group that investigates corporate influence on clean energy policy, filed a public records request for correspondences between the PUC commissioner, NV Energy and industry trade group Edison Electric Institute. PUC, too, has denied access to messages made on personal devices and accounts.
“The story here is one of political corruption,” Miller said. “Brian Sandoval pulled a bait-and-switch on consumers to protect NV Energy’s monopoly profits.”
Sandoval’s spokeswoman, Mari St Martin, said: “The rooftop solar industry supported the policy approved by the legislature to move the decision to the PUC. SunRun is a private business that continues to make absolutely baseless and outrageous allegations against the governor to try and cause him to improperly influence the regulatory process.”
NV Energy was acquired in late 2013 by a subsidiary of Berkshire Hathaway, Warren Buffett’s company, and in 2014 it saw its net income rise 27%.
“I feel cheated and robbed,” said Dale Matz, a retired chef who invested $30,000 in solar panels. He made the switch to solar both as a retirement decision and to help combat climate change.
Matz and Stewart are organizing a rally outside a PUC hearing on Wednesday. They hope that a demonstration with hundreds of disgruntled solar enthusiasts will inspire lawmakers to challenge the rule change.
“If they start giving us only 2.8 cents a kilowatt versus the 13 cents they charge us, I will never break even on my investment,” Matz said. “Not only that, if they are going to give us 2.8 cents a kilowatt and then sell it for 13 cents, basically 17,000 Nevada homeowners built a solar farm for Nevada power. I don’t think that can be right.”