Inside Clean Energy: Rooftop Solar Could Lose Big in Federal Regulatory Case

Regulators are considering a proposal one opponent called “pretty close to saying solar is illegal.”

Jun 18, 2020
Solar panels on a senior housing complex in Boulder, Colorado. Credit: Dennis Schroeder/NREL

Solar panels on a senior housing complex in Boulder, Colorado. Credit: Dennis Schroeder/NREL

Inside Clean Energy

Rooftop solar as we know it is under threat from a case before federal regulators, and a broad array of clean energy advocates and state officials are getting nervous.

The Federal Energy Regulatory Commission is considering a request from an obscure consumer group that wants to end net metering, which is the compensation mechanism that allows solar owners to sell their excess electricity to the grid. By selling the electricity they don't need, solar owners get credits on their utility bills, producing savings that help to cover the costs of solar systems.

Monday was the deadline to file comments in the case, and those who responded were overwhelmingly opposed to the petition, but clean energy advocates say there is still a real chance that FERC will decide to throw out state laws that allow net metering.

"We want to be able to decide for ourselves what happens on the local grid," said Brad Heavner, policy director for the California Solar & Storage Association. "This is clearly a local issue."

He told me that getting rid of net metering "is pretty close to saying solar is illegal."

I wouldn't go quite that far, but it would be accurate to say that ending net metering would fundamentally undermine the economics of rooftop solar.

This case exists because the New England Ratepayers Association, a New Hampshire-based nonprofit organization, filed a petition in April that says net metering is an unfair subsidy that leads to a shift in costs to consumers who do not have rooftop solar.

The argument is a familiar one, often made by utilities and fossil fuel companies. It overlaps in some ways with arguments made by social justice groups that have long said that white people are getting a disproportionate share of the economic benefits of solar.

But the key difference is that utilities and fossil fuel companies are often trying to hold back development of rooftop solar, while the social justice groups are often trying to expand access to solar. Also, there is little evidence that the growth of solar leads to noticeably higher bills for non-solar customers.

The filing asks FERC to rule that net metering should be subject to wholesale pricing rules enforced by the federal government, effectively ending net metering.

The goal of the petition "is to eviscerate state net metering and therefore eviscerate financing tools to make rooftop solar systems affordable," said Tyson Slocum of the consumer group Public Citizen.

His group has said that New England Ratepayers is not being forthright about its sources of financing and is falsely claiming to stand up for low-income consumers. New England Ratepayers, which does not disclose its donors, got 90 percent of its budget from 15 companies or individuals paying dues of $20,000 or $5,000 each, according to the organization's 2018 tax form.

I asked the New England Ratepayers to respond to these points.

"NERA has hundreds of individual and business members, and like many organizations uses its own judgment on how it determines its budget and membership fee tiers," said Marc Brown, president of New England Ratepayers, in an email. "The unifying common denominator for its members is that they all pay electric utility bills, and are concerned about the cost-shift imposed on them by retail net metering."

Looking at the filings in the case, there is a striking difference between the diversity of the hundreds of parties who want FERC to reject the petition, and the fewer than a half-dozen who support it.

The opponents of the petition include Republicans who are wary of federal encroachment on state authority, such as Iowa Gov. Kim Reynolds. They also include social justice organizations such as the San Diego branch of the NAACP, which says solar is a vital part of developing a fairer and cleaner energy system.

Meanwhile, the supporters include the Heartland Institute, a leader in advancing climate denial, and Citizens Against Government Waste, an organization that describes itself as a watchdog for fiscally conservative causes.

Considering the overwhelming opposition, an outside observer might think the New England Ratepayers Association is unlikely to get what it wants, but think again.

Members of FERC's Republican majority have shown skepticism about the benefits of renewable energy and they have resisted delaying a decision in this case. In May, several opponents of the petition asked FERC for a three-month extension of time to submit comments, citing the disruption of coronavirus and the broad ramifications of the case. FERC rejected this request, and said it would give only a one-month extension.

I don't want to overstate the chances that FERC will adopt this petition, a decision that likely would come this year. But I also don't want to ignore a case that could transform an important part of the clean energy economy. I'll be following this and will let you know what happens.

Indiana Utility Says Closing Coal Plants Will Save Money. Will Lawmakers Allow It?

As Indiana lawmakers try to slow or stop coal-plant closings, the state's utilities continue to move in the other direction.

Vectren, the electricity utility that serves southwest Indiana, released a plan this week to close most of its coal plants and add a mix of wind, solar, battery storage and natural gas by 2025.

The company says the new mix of power plants would emit 75 percent less carbon than in 2005.

Right now, 78 percent of Vectren's power plant capacity comes from coal and renewables account for less than 10 percent. This would shift by 2025 to 12 percent coal and more than 60 percent renewables and battery storage. 

"Based on where Vectren is and where they have been, this is a pretty dramatic change for them," said Ben Inskeep, an Indiana-based clean energy analyst for EQ Research. "This is a utility that has been primarily reliant on coal for a long time."

Here's the kicker: This move to clean energy would save customers' about $20 million per year compared to maintaining the fossil-heavy mix, the company said.

Vectren officials are framing this as an effective way to reduce costs and risks, with benefits for air quality. The company, which has about 145,000 electricity customers in the state, is the latest of several Indiana utilities that have said that reducing coal and increasing renewables will lead to cost savings.

The coal industry has responded with alarm, since Indiana has a long tradition of coal mining and coal-fired power. Most of the mining jobs have gone away, but the state's fleet of coal-fired power plants is an essential consumer of U.S. coal. 

These concerns have helped to fuel a process in the Indiana legislature to slow or stop coal plant closings. Gov. Eric Holcomb, a Republican, signed a bill in March that pauses coal-plant retirements until May 2021 to allow a state commission to finish work on a study of the state's electricity generation.

All of this—the utilities clamoring to close coal plants and the coal industry prodding lawmakers to stand in the way—is setting up a major battle in the 2021 legislative session.

I had thought that the prospect of a fight would make utilities reluctant to make far-reaching proposals in the meantime, but the Vectren plan shows otherwise. The hitch is that even if state regulators give their blessing to the plan, the legislature could pass a measure that would slow or otherwise complicate the process.

"The sense is that the Indiana General Assembly is out of touch with what is happening on the ground," said Kerwin Olson, executive director of Citizens Action Coalition, an Indianapolis-based consumer and environmental advocacy group.

"The utilities are moving forward," he told me. "The utilities have an obligation to serve their customers. They're not going to wait around."

Here Are Some of the People Trying to Bring Equity to the Clean Energy Economy

Last week, I wrote about how the business of clean energy has often been part of the problem in contributing to the racial inequity in our country.

The people who work in the industry, and those who have the benefits of owning rooftop solar, are predominately white and affluent. But there are organizations working hard to expand and diversify the pool of workers and consumers.

This week, we sat in, virtually, on a seminar held by the Oakland-based nonprofit, GRID Alternatives, which aims to make the solar industry accessible to low-income workers and underserved communities. Presenters discussed ways to make needed changes in the clean energy industry.

Participants in a training held by GRID Alternatives in the Los Angles area learn about solar installation on a mock roof. Photo courtesy of GRID Alternatives

Participants in a training held by GRID Alternatives in the Los Angles area learn about solar installation on a mock roof. Photo courtesy of GRID Alternatives

I should say that the goal of diversifying the workforce and the customers who benefit from clean energy is basically what GRID does all the time, as shown by one of the presenters, a solar business owner who got his start through job training organized by GRID.

"My mom always told me, you know, you got two strikes on you: You're a black man and you're a male. I've been hearing that since I was four years old," said Kenneth Wells, owner of O&M Solar in Los Angeles, interviewed before the seminar.

One of his missions is to serve as a positive example showing "that minorities can be as serious and successful in this industry as anyone else," he said. He also aims to expand access to the kinds of training and outreach that helped him get into the industry.

Adewale OgunBadejo, workforce development manager at GRID, moderated the question-and-answer session with Wells and Saun Hough, a former client at GRID and current vocational services administrator for the nonprofit SHIELDS for Families.

The presenters described solar, a booming industry in California with disproportionately low black representation, as an opportunity to include black and minority communities in the transition to clean energy.

It costs GRID about $7,000 to provide training for a single participant, OgunBadejo said. This up-front investment in one person can result in a return of $38,000 per year in an entry-level position.

"We want to make sure that access is there," he said. "And this is so important because we're talking not just about socioeconomic justice, but we're also talking about environmental justice."

I am telling you about GRID because it is a good example of a group that has been working on racial and economic equity in clean energy long before our current moment, when just about every organization is issuing statements about their commitment to the issue. 

New Power Plant Rules Leave Small Community Power Producers on the Sidelines

California's local and regional governments have chipped away at the dominance of big utilities and played a big role in expanding renewable energy in the state by setting up local, "community choice" electricity providers that are building renewable energy at a pace that is often faster than the utilities. 

So many officials from these community choice programs are understandably upset right now about a recent decision from state regulators.

Here's what happened: The California Public Utilities Commission issued an order last week that says the state's two largest utilities—Pacific Gas & Electric and Southern California Edison—will be in charge of making sure there are enough power plants to serve local areas, including the service areas of community choice programs.

This action, which takes effect in 2021, is likely to mean that the smaller local electricity providers will be relegated to a secondary role in planning to meet their customers' needs.

"The fact is we were formed by our communities to accelerate the fight against climate change and to lead on this issue," said Joe Wiedman, director of regulatory and legislative affairs for Peninsula Clean Energy, a community choice program based in Redwood City. "And when we see regulatory changes that take away our board's ability to control the resources that serve us, that's antithetical to what we were trying to do."

I should note that it is not immediately clear how the new purchasing system will work. Regulators are hoping that by having two large entities doing the planning and buying, it will reduce costs and make it easier to focus on providing reliable power. Small electricity providers  can still build projects, but the big utilities will decide whether those projects will get compensation as resources that contribute to local reliability.

In selecting the two big utilities, state regulators rejected a proposal from the community choice programs and other parties that would have allowed the programs to be in charge of building plants and receive compensation for doing so. Regulators said they considered this approach but decided against it because they found that it would be more efficient and less expensive to let the two large utilities be in charge.

This is happening the same week that PG&E, a company in bankruptcy, pleaded guilty to more than 80 counts of manslaughter related to the 2018 Camp Fire. It also comes on the heels of PG&E's use of planned blackouts last year to try to prevent fires, an approach many customers viewed as badly mismanaged. And it follows years of animosity between the company and the community choice programs. 

"The fact that it's PG&E just makes it even worse," Wiedman said.

A PG&E spokesman said the company "is supportive" of the commission's decision and looks forward to working with "all interested stakeholders to implement the decision."

Reporter Nicole Pollack contributed to this story.

Inside Clean Energy is ICN's weekly bulletin of news and analysis about the energy transition. Send news tips and questions to dan.gearino@insideclimatenews.org.

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