For the first time, the Public Utility Commission of Texas will decide if electric companies can systematically overcharge homeowners who chose to install solar panels.
A rate case from El Paso follows similar proposals in other states, and will have devastating consequences for ratepayers and the Texas economy. If commissioners set precedent that utilities can discriminate against solar, they will sharply disincentivize the growth of this important renewable resource.
El Paso Electric, a monopoly, would segregate solar customers into a brand-new rate class and increase bills by at least 24 percent — an increase more than double that of other homeowners, and one exceeding cost savings realized by solar. Some customers’ bills will be even higher, increasing over 200 percent!
Rates vary so widely because EPE would charge solar homeowners an exorbitant “demand charge” usually applied to ratepayers like factories or refineries, plus a significantly increased customer charge. Right now in El Paso, all homeowners are billed for electricity used. Through net metering, solar customers earn credit for electricity they produce, thereby lowering their bill.
EPE would upend this simple system. Instead of charging for power solar homeowners actually use, it would base bills on the time of day these customers get the most energy from EPE. This will certainly be times when the sun isn’t shining — meaning customers can’t use their solar panels to offset demand, effectively making them useless to save money.
So, why should solar customers pay more for energy they didn’t use?
The Office of Public Utility Counsel raised the same question. OPUC, the state agency charged with representing residential consumers as a class in utility proceedings, concluded that EPE’s proposed demand charges are unjustified because there is no relationship between the charges and customer’s use of the grid at peak times.
EPE is coming after solar because it sees solar’s growth as a looming threat to profits. When EPE filed its rate case in August, it had barely 500 solar customers. That number jumped to nearly 1,000 by November.
In a disturbing turn, the PUC’s own staff defends EPE’s proposal in part because of solar’s growth. In strongly-worded testimony that directly mirrored EPE, a PUC witness even advised against studying the proposal in a separate stakeholder process, writing, “If anything, EPE’s proposal represents an excellent opportunity to get ahead of the problem before it grows larger…”
This effort to disincentivize solar is not new. Similar proposals to remove customer choice have popped up in Kansas, Wisconsin, Oklahoma, and elsewhere. An Arizona utility succeeded in damaging the solar industry; when it applied a demand charge in 2014, it saw an immediate 96 percent drop in solar applications.
After Nevada approved a similar proposal last month, solar manufacturers and installers announced hundreds of layoffs and their intention to leave Nevada. Meanwhile, homeowners who invested thousands of dollars installing solar, expecting to pay it off through energy savings, are instead left paying more per month for electricity.
I’m convinced if the PUC does not reject EPE’s anti-solar proposal, we’ll see these trends spread across Texas next.
Interestingly, New Mexico rejected EPE’s solar proposal. EPE’s service territory extends into southern New Mexico. This alone should compel the PUC to reject EPE’s proposal. Otherwise, solar customers in El Paso would be charged more than their neighbors just a few miles away across the state line.
Commissioners should consider positive contributions solar brings. In addition to societal and environmental compliance benefits, utilities also benefit from lowered energy demand during sunny months, resulting in greater grid reliability. Additionally, excess energy produced by solar customers can be immediately resold, expanding utilities’ load base at no extra cost.
EPE and several interveners, including those representing solar, are currently engaged in negotiations. If no settlement is reached, PUC commissioners may decide rates by this summer.
I urge the commissioners to stand up for all residential customers by rejecting this proposal. We must protect consumer choice, ensure all customers are charged fairly, and ensure Texas fully capitalizes on solar’s potential to realize our energy needs.