Rooftop solar panel fans are angry. Take former Governor Arnold Schwarzenegger, for example. He wrote an essay for The New York Times last week in which he raged against a California Public Utilities Commission plan to add a new monthly charge to solar customers’ utility bills.
The CPUC’s plan, Schwarzenegger wrote, “would make it too expensive for many Californians to adopt solar power.” A new “grid participation fee” would average an estimated $57 per month for customers with solar panels, while “people who power their homes with fossil fuels wouldn’t pay that.” The new charges would also apply to customers who added batteries to their system to store solar-generated electricity.
In addition to the new monthly fee, the CPUC’s plan would reduce the credits solar customers receive on their bills for the excess electricity they generate with their rooftop panels and send to the grid, a program known as net metering. New customers and some existing customers would see a reduction of up to 80% in the credits they receive for solar power generation.
The CPUC could approve the plan as early as January 27.
Like so many problems in California, this one is the result of the blissful idiocy of state legislators. In 1996, the Legislature passed Assembly Bill 1890, which was supposed to be the deregulation of electricity, but was actually a new set of rules and cost shifting.
AB 1890 required investor-owned utilities to continue to provide distribution service to all retail customers and to supply electricity to customers who chose another supplier instead of direct access from the utility. However, the utilities had built power plants to meet their regulatory obligations to provide sufficient power, and they expected to recoup the cost by selling electricity. The new law meant they would have fewer customers for that power.
So the legislator had the brilliant idea of requiring the customers of investor-owned utilities to bear the cost of “bad investments”, the now useless power plants. Utilities would be allowed to recoup $28.5 billion in costs by adding a “competition transition fee” to customer bills. The initial cost for residential customers of Southern California Edison, for example, was a 40% surcharge on their electric bills.
AB 1890 also included a 10% reduction in rates and a temporary rate freeze, but this caused a new round of trouble in the summer of 2000 when wholesale electricity prices soared in California. Southern California Edison and Pacific Gas & Electric customers were still protected by the rate freeze, so SCE and PG&E had to absorb about $12 billion in higher costs. San Diego Gas & Electric customers were no longer subject to a full rate freeze, but a floating cap on rate increases left SDG&E with $450 million in sunk costs. “SCE and PG&E have indicated that they may be forced into bankruptcy if they do not benefit from legislative, regulatory or judicial action,” reported a legislative analysis.
The Legislative Assembly’s response in January 2001 was Assembly Bill 1 X1, the “X” indicating a special session. The bill authorized a complicated scheme by which the Department of Water Resources would borrow money, enter into power purchase agreements, and then sell the electricity to California consumers at a capped price.
By 2013, the Legislature was fed up with rate freezes and price caps, and Assembly Bill 327 was proposed to lift the restrictions. “According to the author,” reports a legislative analysis, “the energy crisis is over, but laws intended to protect residential rate users now prevent the CPUC from governing the rate structure and making the necessary changes for the thousands of mid to low tariff users and high income families struggling to afford high energy costs.
AB 327 required the California Public Utilities Commission, when approving electricity rate changes for residential customers, to make “all changes necessary to ensure that the rates paid by residential customers are fair, equitable and reflect the costs of serving those customers”.
Today, there are 1.3 million solar rooftops in California, and the CPUC is making changes.
Just as electricity customers in the 1990s had to pay for power plants they did not use, solar customers are about to be ordered to pay more to access the “grid”, even if they have solar systems and storage batteries. A CPUC study confirmed that rooftop solar incentives such as net metering shift the costs of operating the electric grid to non-solar customers, resulting in higher electricity rates. This particularly affects middle to low income people who cannot afford expensive solar installations. And that means the CPUC, under AB 327, is required to make “all necessary modifications” to make rates fair, equitable and reflective of the cost of service.
This is very bad news for companies that sell solar panels, because it means that rooftop solar customers won’t save as much money on electricity bills as before, and it will take years of more to break even on the cost of new solar panels. facilities.
It’s “a big step backwards,” Schwarzenegger wrote. He warned that California “is already so behind on its 2030 climate goals that the state is not expected to meet them until 2063.”
Prior to 1996, the CPUC was responsible for ensuring that utilities provided sufficient electricity at reasonable rates. California lawmakers rejected that goal in favor of bogus deregulation and unattainable climate goals. And since then, we have paid for it.
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