The Texas solar industry has just came off its best quarter ever, and experts now predict the market here could become the nation’s second largest within just five years.
The solar industry also is making strides nationwide — utility-scale installations grew in 2017 even as per-kilowatt photo-voltaic costs continued to fall.
But as with other growth industries, sticky questions have begun to arise regarding consumer impacts. And some of these questions have made waves in Texas utility rate cases.
Oncor Electric, for instance, recently floated a proposal to assess an extra fee on residential customers with solar panels. But the utility rescinded that proposal in the face of predictably stiff opposition. El Paso Electric also recently modified a plan that would have disproportionately impacted residential customers with rooftop solar systems.
Motivating both proposals and other similar ones nationwide is growing anxiety from utilities about revenues. Because customers with solar panels consume less energy, they’ll end up paying less for utility service. Utilities warn the resulting revenue loss could undermine their ability to maintain reliable systems. Left unsaid, of course, is that declining revenues also never come as welcome news to utility investors.
Charging special fees or rates for solar customers is one way to make up for the loss. Utilities generally argue that special fees are fair because those with rooftop solar continue relying upon the transmission and distribution system, and so they should continue paying a fair share to maintain it.
Solar advocates predictably oppose the fees, noting that it already takes more than a decade to recoup a hypothetical $13,000 investment on home panels — and that’s after federal tax credits. They say the addition of a solar fee makes the math even more daunting.
But if those with solar panels don’t pay, who does? The answer to that question potentially impacts all utility customers, even those without solar panels.
Fortunately it’s also a question that can be kicked down the road — at least for now. Solar penetration remains relatively modest in Texas, and so too the corresponding rate impacts to non-solar consumers.
In El Paso, for instance, just 2,973 of its 276,000 residential customers are equipped with rooftop solar systems, according to newspaper reports. Under a recently announced rate deal, those 2,973 customers will be treated like all other customers for the next 20 years.
“I think you can see from the outcome and the way that things changed in the negotiations that our side did a very good job on behalf of the ratepayers,” El Paso Mayor Dee Margo said after the agreement was announced. “I think it worked out very well for the consumers especially those that were the most vocal — the solar panel users.”
However small commercial customers with new solar installations will pay a slightly higher monthly fee, according to a report this week in the El Paso Times.
Is a policy analyst consultant for TCAP, a coalition of political subdivisions in Texas that purchase electricity in the deregulated market for their own governmental use. Because energy costs are typically a significant budget item to our members, TCAP is consistently looking for ways to save our members money, through cost-saving contracts, energy efficiency or demand response programs.
“Motivating both proposals and other similar ones nationwide is growing anxiety from utilities about revenues. Because customers with solar panels consume less energy, they’ll end up paying less for utility service. Utilities warn the resulting revenue loss could undermine their ability to maintain reliable systems.”
It’s usually (but not always) true that customers that invest in solar panels consume less electricity (some want solar panels to help offset the consumption of their electric vehicles and end up buying MORE electricity). It’s equally true that customers that invest their money in a more efficient air conditioning system, or by adding insulation to their attic, or by taking advantage of new technologies like LED light bulbs and programmable thermostats also use less electricity and pay less to the utility. These customers also rely on the transmission and distribution system and should also continue paying their fair share to maintain it.
The fact is, due to improvements in energy efficient buildings and appliances, residential electricity sales in the United States have remained flat since 2012 even as the economy has grown. This is indeed a challenge for utilities as they gradually (sometimes very gradually) adapt to new technologies and greater customer control of their electricity use. Ideally utilities and regulators will embrace technological improvements and use them to reduce costs and offer innovative new services. Arbitrarily singling out one group of consumers because they chose to reduce their electricity use by investing in solar instead of some other technology really doesn’t seem like the best way to serve Texas electricity consumers.