Regulators largely deny utility requests for fixed charge increases

A policy report finds that while utilities are increasingly asking to increase fixed charges, in more than half of recent cases these requests were denied.

August 5, 2016 Christian Roselund

Image: Lockheed Martin

Utilities have used a variety of tactics to change the economics of customer-sited rooftop PV away from retail-rate net metering, and to recoup a larger portion of the revenue that they lose when customers are wiping out their net electricity usage.

These include attempting to reduce compensation for electricity exported to the grid, implementing charges solely on PV system owners, and increasing the fixed charge portion of customer bills.

The final approach – increased fixed charges – has been the most popular with utilities. According to North Carolina Clean Energy Technology Center’s (NCCETC) Q2 2016 50 States of Solar report increased fixed charges were the most common policy being decided in the 42 states that took some form of action on distributed solar policy.

NCCETC reports that 42 utilities in 25 states and Washington D.C. either had pending or decided requests to increase monthly fixed charges on residential customers by at least 10% during Q2. This is actually down from Q1, when 61 utilities in 30 states proposed fixed charge increases. Overall, more than 1/5 of all U.S. investor-owned utilities have proposed such increases.

However, while these moves are popular, they remain largely unsuccessful. Report author Autumn Proudlove says at in over half the cases decided so far in 2016, utilities have not been allowed to increase fixed charges.

Utilities have also not given up on changing or eliminating net metering, which has been identified by trade group Edison Electric Institute as an existential threat to the utility business model. NCCETC finds that 24 states considered or enacted changes to net metering policies during Q2.

The value of electricity exported to the grid from distributed solar continues to be a defining part of these policy discussions, and 15 states and Washington D.C. formally examined or decided to examine some part of the value or distributed generation, or costs and benefits of net metering.

Previous reports have documented that who pays for these investigations often determines their outcomes. Utility-funded studies have consistently found a “cost shift”, in which PV system owners are being subsidized by other utility customers, while studies funded by legislatures and regulators almost never find a cost shift.

Instead, such reports consistently find that the value of distributed solar to the grid is higher than retail electricity, as rooftop solar can reduce the need for new grid infrastructure, reduce wear on existing infrastructure, eliminates transmission losses, and can provide for greater stability – not to mention social and environmental benefits.

Community solar is also becoming a hot issue, with 11 states taking some form of policy action on community solar during Q2.

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