Solar Power Users Upset Over Proposed Rate Hike

CAVANAUGH: It's October 19th, I'm Maureen Cavanaugh. Our top story on Midday Edition, during public hearings in San Diego last week over a proposed rate hike for SDG&E, some of the loudest voices in protest came from solar power users because a concurrent request from the utility would make homeowners who've installed solar power pay more for their use of the grid. Here to explain SDG&E's request is my first guest, SDG&E's manager for government and regulatory affairs. Welcome to the show, JC Thomas. THOMAS: Thank you. CAVANAUGH: What would SDG&E be charging solar users for? THOMAS: I need to back up a little bit, because we have to charge all of our customers the same, whether they have solar or wind or a customer that doesn't have either. Those resources. So what we developed was a program or a new rate design that would insure that all customers pay their fair share for the use of the infrastructure that runs in their streets. CAVANAUGH: What I'm understanding is that the bill that we get from SDG&E now for regular users, are not solar users contains both the amount of electricity and energy we use plus what it would cost to maintain the transmission grid; is that right? THOMAS: That's right. So that we're talking about is not so much the transmission grid but it's the small grid, the one that runs down your neighborhood streets or it's on a wood pole and includes transformers and some other equipment on our side. And we want to make sure that if you're using the grid, and most customers who are using it first degree that don't have solar are paying their fair share and it's in what we called the tiered rate structure, and bundled service. And we're basically I pulling out a piece of that bundled service and calling it infrastructure or network use, so those who are using the distribution or network in that on their neighborhood are using that piece of it. CAVANAUGH: So this would change everyone's bills into two fees? THOMAS: Yes. CAVANAUGH: How much do you submit that it would cost solar users each month for this small grid fee? THOMAS: We've taken a look at some numbers, and it's in the range of 11 to $22, somewhere around there. But it all depends on how much usage you have and how much energy you're generating to the grid, and whether or not the energy that you're generating at the time with your solar system is being consumed on site or on your own business. CAVANAUGH: Let me get something clear. Do people who use solar power get any credit for the power they send back to the grid? THOMAS: Yes. We have in California what's called the net energy metering law, every kilowatt hour that's produced by a customer that has solar is credited. And because bee have that tiered system, they're getting credited either $0.39 or $0.29 per kilowatt hour produced, and it goes down from there, if they're producing it in tier 1 and tier 2. So they're getting 100% credit for that, and that is credit for the full retail value of electricity. Our commodity or wholesale value of electricity runs about $0.08 for our bundle, the bulk of our customers. CAVANAUGH: So when you sell that energy that the solar power so the solar user has generated from the solar panels in their own home, and it goes back to the small grid, and their neighbor using that energy, you charge them more for that energy because the customer next door than you're paying the person who generates it; is that right? THOMAS: That's a separate issue. That has to do with surplus production of solar energy. And in that particular case where we do compensate the customer after we've already given them $0.31 or $0.29 to the solar customer, then we take the excess energy and we would sell it to our other customers. CAVANAUGH: Wouldn't that difference between those two amounts of money, the one that you pay the solar producer and the one you get from the person who's using that energy, would that make up the cost of maintaining that small grid? Aren't you already getting basically a kind of a fee? THOMAS: Well, NO, we're not. Because the benefit does go to the other customers, it does not go to SDG&E. So if there's any savings or benefit from that, it flows directly to the other customers. What we found is that on average, our customers, especially the higher use customers are paying about $35 a year for a solar customer to be connected to the grid. If you think about it, a solar customer spends a great deal of money with resources and time, and they invest on the roof top. Once they start net metering, they're no longer paying for the infrastructure they're using in the street, they're not paying for the call center which the lights go out or the trouble deteriorate man or any of those things. And that's an issue we're trying to address in this. We know we can't fix it all. It's going to take a long time. But our goal behind this is really to insure we have a sustainable energy future, that we can increase access to solar for all customers, that's another piece of our proposal we're going to announce later this month, called share the sun. And on this one in particular, if anyone wants to have solar or wind or any other technology that they can connect to the grid, and we have a grid that's sustainable for them. CAVANAUGH: Why is SDG&E asking for this change now? THOMAS: Yeah, all of the utilities throughout the United States , and we feel it first here in California because we are much more progressive in terms of renewable power, reaching renewable goals and distributed generation. Are starting to realize there's some issues with the rate design that was put in 15 years ago, and the rate design -- by those who generate their own electricity, and people have the right to do that, to have a system in place, and a rate structure that supports that. Right now, we don't have a rate structure that supports something like that. CAVANAUGH: A lot of people have made an investment in solar, at least in part to stop getting month he bills from it SDG&E. And now with this proposal, the idea comes back that they're still going to be getting these bills. What do you say to customers who are sort of outraged by this idea? THOMAS: Yeah, we know that's a concern. Which we put together the proposal for the rate design, we propose phasing it in over time, and we also didn't include all of the costs related to the distribution infrastructure. We realize there's still benefit. That's a lot of benefit of having the distributed generation out this, the roof top solar, and the customer vs made an investment in that. And we want to make sure we have a smooth transition into the future. CAVANAUGH: I know you're meeting with representatives of San Diego's solar industry. What's the goal of those meetings? THOMAS: For those we really want to collaborate and have discussions with them. We've come up with one proposal. And we think it is fair, and it's equitable to all of our customers. We have to look out for all 1.4 million. That's about three million people in the region. We may not have all the ideas. The solar industry, and some of our customers may have some ideas on ways in which we can address that. So we can make sure that those who have solar today, it's sustainable for them, and economical for them, and that we can continue that into the future. So think it's important to have solar out there for green jobs and a green economy, that's a piece of it. And we want to make sure we can continue on that path. CAVANAUGH: I have been speaking request SDG&E's manager for government and regulatory affairs. I want to thank you so much for coming in here today and speaking with us, JC, thank you. THOMAS: Thank you, Maureen. CAVANAUGH: Now I'd like to welcome two new guests. Gill Field is a solar power customer, hi gill, thank you for being here. FIELD: Thank you Maureen, it's nice to be here. CAVANAUGH: And Daniel Sullivan is owner of solar power, in the interests of full disclosure, Sullivan solar power is an under writer of KPBS. Welcome to the show. SULLIVAN: Thank you. CAVANAUGH: I want to get your reaction to what you just heard. You invested in solar power, what's your reaction to SDG&E's request for this as we described it here, this small grid fee? FIELD: When I first heard about it, I was rather stunned. We put our solar system in on our home back in June, 2009. We have a 3.6 kilowatt system that provides our own home use, and 10% above which we sell back as surplus to SDG&E. But just the idea that we would again be getting a bill from SDG&E for a significant amount of money in comparison to what we used to pay in our electric bill was not something that we thought was reasonable nor fair. CAVANAUGH: Daniel Sullivan, could it be that solar users are not paying their fair share to maintain electric distribution networks? SULLIVAN: I don't feel that that's an accurate representation of this situation. The fact is that there are over 12,000 solar power systems deployed around SDG&E's territory. They total over one hundred million watts of power that is producing energy during on-speak hours when electricity is very expensive. In this region, we know that electricity is costly, and we also know we need more of it to sustain our growth as we grow as a region. Basically, SDG&E has a one million watt power plant that was installed in San Diego at no cost to SDG&E. And the power produced by that plant helps them mitigate peak-demand. THE COURT: And you're talking about this network of solar power users who actually put panels on their roof tops and are giving energy back to the system when they're not using it themselves? SULLIVAN: Correct. And as gill said, on an individual basis, these people are paying somewhere in the neighborhood of $30,000 on average, collectively. They've invested over $500 million in the region for this energy infrastructure that in our view, SDG&E is benefiting from. And historically, SDG&E has been an excellent utility to work with, both for solar producers and for solar integrators. We've enjoyed working with them to date. When this rate case came out, it was a head-scratcher, because it seems as though, and, well, doing the math, it indicates that the cost to solar producers is going to be substantial moving forward. As you stated earlier, we are in meetings. The industry and stakeholders are in meetings with SDG&E to come to a solution that would work moving forward. As it's currently designed, structured, this will be a disincentive for people to go solar. And we don't want that to happen. CAVANAUGH: I've read some people are saying that this is a question of solar just getting too popular and making SDG&E nervous. Do you think that that's -- that could be playing into this? SULLIVAN: I wouldn't go as far as saying SDG&E is nervous about it. I believe that SDG&E has vocalized some concerns about grid reliability with so many independent producers out there, but their technology does exist to allow SDG&E to make sure that they can adequately manage the grid. The fact of the matter is that while there are 1.3 million plus ratepayers in SDG&E's territory, there's just over 12,000 solar producers. So the solar producers represent a fraction of the ratepayers out there. To purport that that small percentage of ratepayers is causing issues for the grid or causing other ratepayers to subsidize solar producers, I reject wholeheartedly. CAVANAUGH: But what about when SDG&E says it's looking down the line? What about the time when alternative energy does become more and more popular? There are more solar panels up there. There are people getting energy from wind. Do you see that there could be a time when the ratepayers who are not using alternative energy are actually subsidizing the electrical grid for alternative energy users? SULLIVAN: NO, I don't. I would reject that concept too. Because all we have to do is look at Germany. Germany has the most solar deployed out of all kitchens, and the fact is that the amount of solar power systems or renewable energy systems deployed in Germany, that drove the price of wholesale electricity down so that it benefited everybody. So those people who did not have solar benefited from a lower cost of electricity 'cause there was such an abundance of it. CAVANAUGH: Gill, Daniel says if this stands, if this proposal goes through and it is approved by the PUC, and it's all just a proposal right now, that it could really hurt the solar industry. If that had been in place when you were thinking about going solar, would that have impacted your decision? THOMAS: It might have. I have reasonable to believe it probably would have not I think we would have probably still gone forward. We're big fans of the concept of clean energy. We think it's important for the country, we think it's important for the nation's defense just in general. CAVANAUGH: But as you said, you don't like the idea very much. THOMAS: I don't like the idea. The idea that we put a power station on our roof which benefits SDG&E every day as well as benefits our neighbor, benefits the community, benefits the quality of our air, and then we're going to be singled out as someone who has to pay what I say is a disproportionate share of the grid doesn't seem right. CAVANAUGH: Daniel, my last question to you, how is the solar industry doing in San Diego now? Has it been hurt by economic hard times? SULLIVAN: NO, it's actually one of the bright spots in the economy. There's a study that came out recently that there are 25,000 plus people employed in the State of California in the solar industry. Our firm in particular, and by no -- by no means are we the only ones. We've grown exponentially over the past seven years. Our firm has been ranked one of the fastest growing company in the United States. There are many other producers in the region, reputable firms that have grown exponentially over the past few years because solar does offer such a good value proposition to the end user, I would hate to think that that growth would be slowed down we by a rate case such as this. And looking forward, we want to maker sure that we have policies and rate structures in place that encourage the deployment of renewable energy rather than discourage it. CAVANAUGH: I have been speaking with Daniel Sullivan of Sullivan sole power, and gill field who installed solar panels on his home. I want to thank you both for speaking with us. THOMAS: Thank you Maureen. SULLIVAN: Thank you.