States in the middle as utilities, solar advocates clash

USA TODAY.  By Pamela Prah February 19, 2014. Someone is installing a solar power system in the U.S. every four minutes. Generous state and federal tax credits for hooking up solar panels on roofs or in fields make solar energy attractive to homeowners and businesses. Another bonus is that those who generate solar energy can roll over what they don't use as credit against their next utility bills, like rollover minutes on a cell phone bill, or sell excess energy back to the utilities. Utility companies aren't happy. As the solar industry thrives, states are bracing for more showdowns this year between solar advocates and utility companies over how to balance reimbursing those who generate solar energy with supporting the country's power grid. The battles are heating up in sun-soaked states like California, Arizona and Hawaii where solar projects are surging, but also in less expected places, such as Kansas and North Carolina. Driving the debate is the rapid growth in solar installations, up 76 percent in 2012 from 2011, according to the most recent data available from the Solar Energy Industries Association.

Solar is still a small piece of the energy pie in the U.S., at around 1 percent of total energy produced. Just four states accounted for more than two-thirds of grid-connected solar system installations in 2011: Arizona, California, New Jersey and New Mexico.  New Jersey, while not considered as sunny as other states, has one of the most aggressive renewable portfolio standards in the country. The state, for example, requires suppliers and providers to procure at least 4.1 percent of sales from qualifying solar electric generation facilities by the year 2028.

At issue: Net metering

Various state and federal tax credits for installing solar panels on homes, businesses and farms make economic sense for those willing to make the investment, as Stateline has reported. Solar system users in Hawaii, for example, can take 35 percent of installation costs off their state tax bills and another 30 percent in federal tax credits. The average cost of installing a 600-square-foot solar system to power a typical home is $55,000.  What concerns utilities is the system of rolling over credits for excess electricity to future utility bills, called net metering. Currently, 43 states and the District of Columbia have policies encouraging the practice.  More than 323,000 homeowners and businesses used solar panels in net-metering programs in 2012, compared with 151,000 in 2010, federal data show.

The Coalition for Solar Rights, which advocates for solar, called net metering "one of the most important state policies for empowering Americans to generate their own power from the sun." Utilities, however, say many solar customers aren't paying their fair share. While net-metering polices vary by state, customers with solar systems are usually credited at the full retail electricity rate, which includes not just the cost of the power, but all the fixed costs of the poles, wires, meters and other infrastructure that make the electric grid safe and reliable. An average residential customer paying $110 a month for electricity is receiving $60 worth of grid service, according to a report from the Edison Electric Institute, a trade group that represents U.S. utility companies.

"Through the credit, net-metered customers effectively are avoiding paying these costs for the grid," the institute wrote. These costs then are passed on to other customers, it said.  In California, which leads the country in solar production, the state's net-metering program could end up costing state ratepayers $1.1 billion a year by 2020, according to a report last fall from the California Public Utilities Commission.

Utilities want surcharges

Some utilities are now pressing state regulators or legislatures to charge solar customers a fee or to reduce the rollover credits with the money going to help maintain the power grid. That was the issue last year in Arizona, where the state's largest electric utility, Arizona Public Service Co., succeeded in attaching a fee to new solar installations. The company estimated that each of the state's 20,000 solar rooftop customers costs $1,000 in upkeep to the grid, which was shifted to other nonsolar customers.

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