On Sep. 18 the newspaper presented an editorial in opposition to the Public Utility Commission’s phase out of net metering for solar companies, claiming that the “value” of solar far outweighs the subsidy. Not only is the study quoted in this article based on incorrect facts about Maine power system, but this editorial did not examine the real issue with net metering.
Under net metering, the customer with rooftop solar is paid the full retail rate for all electricity generated and sent into the system. The full retail rate reflects not only the cost of generating electricity but also of delivering it through the transmission and distribution systems, and the cost of reliability, billing, metering and customer care.
It also includes payments or surcharges to support the mandates for renewable energy, efficiency and low income programs that are applicable in many States, including Maine.
The power being sold back to the grid is simply replacing the power that does not need to be generated. It is not eliminating the need to provide all the other services listed above. So the solar customer is not paying their fair share of the electricity system that is essential to not only non-solar customers, but solar customers as well.
When the utility adds up these payments and subsidies to solar customers, they reallocate the responsibility to pay those lost revenues back to all other non-solar customers. Utilities are not making a profit when they shift these costs to other customers.
Utilities in Maine, New York, Arizona, Nevada, California and other states have documented cost shifts equal to hundreds of dollars per solar customer and bill impacts on non-solar customers that are the equivalent of a rate case to fund reliability and other distribution system improvements.
To make this subsidy even more questionable, this cost shift increases the bills for lower income customers and those who cannot afford and/or cannot install their own rooftop solar system. In order to invest in rooftop solar, customers must have a roof that is suitable for solar, own their own home, and have an acceptable credit score.
Several studies have documented that solar systems are, in the aggregate, predominantly marketed to and purchased by higher income customers while the responsibility to pay is transferred to lower income households.
Ironically, by establishing an arbitrarily high price for rooftop solar, net metering actually drives up the price for installing panels, thereby raising costs for solar customers as well. In short, net metering means higher profits for solar companies and higher costs for all consumers, solar and non-solar alike.
Net metering has served its purpose. It needs to be reformed.
And the sooner the better because with every year of delay more solar systems are sold to customers who will add to the subsidy burden imposed on other customers for services that cannot be avoided with more solar systems.
The solar company lobbyists who portray this issue as related to “jobs” or who attack those who raise concerns with net metering as “climate deniers,” are using the public’s understandable support for “clean” sun power to protect their business model and profits.
Most consumers simply don’t know or understand this wealth transfer to non-solar customers. Large scale solar is usually cheaper and more cost effective that disparate rooftop solar installations.
The issue is not whether solar power should be considered, but what it costs and who should pay for it.
Solar customers are a distinct class of residential customers that should be treated separately from other non-solar residential customers.
The obligation to pay their “fair share” will mean that their payments under net metering will be lower and may require these customers to assume an obligation to perhaps pay a higher initial price or loan payment for their solar system.
If the solar companies can’t make a profit under these conditions, they need to rethink their business model. Maine customers can’t afford an unfair solar subsidy because electricity must be affordable for all families.
Barbara R. Alexander is a consumer affairs consultant and a nationally recognized consumer advocate on public utility policies and programs. From 1986-1996 she was the director of the Consumer Assistance Division of the Maine Public Utilities Commission. These views should not be ascribed to any client.
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