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The backlash against solar companies by California’s public utilities

Transitioning from the old way of doing things to the new way proves difficult when opposing parties having different interests. And when the government is involved, situations can grow even more stressful.

Recently, public utilities in California have lashed back against solar panel companies. Companies like Southern California Edison who have long enjoyed near monopoly power in California, argue that they face financial hardship as solar power becomes a more economical source of energy for homeowners. Less residences rely on the utilities for their power because solar energy is much more affordable.

With a slight upfront investment, solar companies can lower home owners’ energy bills in California by an average of 20%. Throughout October, California utility companies are proposing an increase in cost of using solar for homeowners through fees and cutting back how much homeowners can sell their energy for, through a process known as net metering.

One of the major utility companies in California, Southern California Edison is proposing to charge solar panel users various fees for occupying space on their grid and cut net metering, a system in which solar panel users can sell back excess energy to the utility companies by 50% of what these consumers are receiving in exchange. The CPUC has the authority to either pass these proposals the utility companies support or to deny them, under the power of the California Constitution.

Naturally, utility companies like Southern California Edison aim to remain as dominant players in California. And in order for them to survive it is imperative that they generate revenue. The fixed infrastructure owned and operated by Southern California Edison, Pacific Gas & Electric, and San Diego Gas & Electric would remain the same and continue to do so if they fail to prosper among the competitive solar market. These companies would continue to deliver their energy services powered by coal, nuclear power, and small amounts of renewable energy. The current rate of solar panel growth in California is exceeding what utility companies claim to have expected when initial solar incentive programs like net metering were devised.

Southern California Edison

Southern California Edison

Through net metering, homeowners with solar panels can sell back extra energy their systems produce to the utilities. This is attractive to residences as it is what makes approaching a next-to-nothing energy bill feasible. However, utility companies did not expect solar to grow so popular as quickly as it currently does and claim that net metering hinders their success as an increasing amount of homeowners turn to net metering.

Caroline Choi, Southern California Edison’s vice president of energy and environmental policy claims that “Costs for residential solar have fallen dramatically, and it is time to update the structure used to enable rooftop solar to reflect the advances in the solar industry” (Los Angeles Times), suggesting the current system is outdated and must be changed. Furthermore, because customers who employ net metering still rely on the grid, they should be accountable for maintenance fees that help update and maintain the grid. While they do not receive most of their energy from the grid, they still send energy back to it. Therefore utility companies such as Southern California Edison propose an  “an owner of a 6-kilowatt solar system would pay an $18-a-month charge” (Los Angeles Times) solely for using a solar energy system. In addition the amount of money the customer would receive back for net metering would be reduced by about 50%.

The survival of utility companies against the competitive solar industry is important to prevent job loss and a dent in the local economy. Utility companies have a prominent presence in California and a rigid infrastructure. Their presence is dependable because citizens need utilities companies to survive. The threat of solar companies removing citizens’ dependence on utility companies is very real as solar becomes more affordable and attractive to homeowners. It is important for the utility companies to survive so local economies do not crash, as their demise could lay off thousands of employees.

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The installment of monthly maintenance fees and cut back of net metering would lead to a strong decline in solar panel systems. Much of the reason why residences install solar panel systems is because it is an affordable means of powering their home. What the utility companies propose would not allow the homeowners to save money, therefore investing in a solar panel system would not be worthwhile.

Local San Diego solar power company Sullivan commented on this issue saying “Basically, the utilities are trying to kill the financial economics of solar so consumers don’t have a choice and they stay with the utility,” said Sullivan (CBS 8). Maintaining a financial stronghold over homeowners and against solar companies is the only way they know to prevent competition from solar companies. Preventing the solar industry’s business through increasing fees for those who switch to solar is problematic because switching to renewable and clean energy is a positive goal. In fact, the CPUC’s $2.9 billion dollar California Solar initiative of 2006 was implemented in order for California to transition towards a more solar-dependent state. The CPUC passing utility companies’ proposals that would hinder the development of solar energy in California seems ironic.

hightensionSolar companies would fail as it would not be as attractive to switch to solar energy any longer. Their importance becomes increasingly prevalent as their contribution to job growth skyrockets. Considering the United States is still facing recovery from the economic recession faced not too long ago, job growth in a newly evolving sector is a great way to boost the economy in a noble way that helps the environment. Solar energy has the potential to grow even more if California were to transition towards renewable energy. For example, “In 2011, the solar industry employed approximately 100,000 people” according to the Union of Concerned Scientists. A continued transition away from nonrenewable energy sources would create more jobs while improving the state of the planet simultaneously. However, the proposal utility companies created greatly impedes the advancement of this initiative towards sustainable, clean energy that creates economic growth.

Solar energy is not only attractive to homeowners because it saves them more money than if they were to consume energy from utility companies but because it is a limitless form of clean, renewable energy that is better for the environment than coal, oil, and nuclear energy. With environment-conscious programs like the California Solar Initiative, the reduction of financial incentives to use solar energy does not contribute to a more environment-conscious state. Dependence on finite sources of energy like coal pollute the earth with carbon dioxide, leading to climate change and an unhealthy state of the earth. Efforts to continue to depend on these fossil fuels for energy is a step backwards towards polluting the earth and diminishes the noble achievement solar companies reach towards employing renewable energy sources that are economical for homeowners.

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On the topic of what is financially sound, selling back solar energy through net metering allows utility companies to not have to increase their infrastructure. Instead, they have energy being generated for them. Solar “helps utilities avoid having to build more power plants and transmission lines, saving all customers money.” Instead of seeing solar companies as an enemy, utility companies can work with them and find advantages to their product. Pre-existing solar energy users should not be penalized for using a smarter, cleaner source of energy. Helping to improve the environment is a noble aspiration and the CPUC should recognize this over the powerful utilities.

Clean energy is better for the environment. Moving towards a cleaner source of energy gradually should be the goal of the CPUC. Californian government has the position to set a trend throughout the United States and encourage them to switch to renewable solar energy to power their homes, as well as their businesses. As a more economical means of powering structures, solar energy sector growth should not be inhibited by existing utility companies. Penalizing solar energy consumers is wrong; interfering with business can damage the natural evolvement of the economy. Less residences would employ solar panels as an alternative source of energy as they wouldn’t save any money — a huge reason for the thousands of installation in California. Instead of seeing solar companies as an enemy, utility companies can work with them and find advantages to their product.

Solar users create independent energy, therefore they should not have to suffer because of utility companies ulterior motives to remain a powerful and relied-upon source of providing energy.  From the perspective of utility companies, they are only trying to survive. The threat of solar companies removing citizens’ dependence on utility companies is very real as solar becomes more affordable and attractive to homeowners, but dis-incentivizing solar energy consumption is a step backwards towards California improving its means of powering the state.

The CPUC is expected to release a decision in mid-November, with a concrete plan due by the end of the year. Changes would occur mid 2016.

Click here to sign a petition against the removal of net metering!

This article originally appeared on JNA Solar Solutions’ blog and appears here with their permission.

About John Fitzgerald Weaver

John Fitzgerald Weaver is a solar developer; known digitally as the 'Commercial Solar Guy.' As a project developer and installer, he’s sold and managed 50+ solar projects, valued over $25 million, ranging in size from 5kW to 1500kW. He’s been involved in many aspects of the solar supply chain –- as a company founder, developer, project manager, manufacturer, permit runner, salesman, contractor and financier. In his free time he tries to get away and clear his mind by climbing mountains, or more regularly by enjoying an IPA or scotch, and really loves the strange connection between politics, energy, finance, and environment in the energy world.