Home solar panels going up across Ohio and the nation like this one are beginning to disturb electric utility executives who must absorb and pay for the extra power these systems generate. Utilities are fighting back, trying to limit how much power they must buy.
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on July 29, 2015 at 10:15 AM, updated July 29, 2015 at 2:46 PM
CLEVELAND — There are nearly 1,600 solar arrays now generating power in Ohio, and the state’s two biggest utilities think that is a problem.
FirstEnergy and Columbus-based American Electric Power have already taken the Public Utilities Commission of Ohio to the Ohio Supreme Court over how much they must pay solar owners for excess power and how much excess power they are required to buy.
The court has not ruled on either case, however the commission is now considering further revisions to its January 2014 ruling.
That has drawn the attention of the solar industry as well as environmental groups that see the utilities standing in the way of a new technology because it threatens their bottom lines.
The issue is called net metering. The PUCO has been trying to figure out an equitable policy for three years.
Net metering is what allows solar owners to hook into the local utility grid and sell any excess power they generate back to the local power company.
There are three major issues for the utilities: How much power the companies must buy from the solar owners, at what rate they have to pay for it, and what customers can even ask to be reimbursed.
In a January 2014 decision, the commission limited the “excess” electricity a customer can ship back into a power company’s local grid to 120 percent of that customer’s average monthly demand over the previous three years.
Utilities argued that anything above 100 percent was unfair. They took the case to the high court, which has yet to rule on the matter because the commission has indicated it is reviewing its original decision.
The utilities want the commission to limit the amount of power they have to buy from owners of solar systems to the average amount of power the customers bought from the utilities in the three years before they began generating power with solar panels.
Also, the companies don’t want to reimburse customers at the same rate the utility charges, now about 6 cents per kilowatt-hour, because that rate includes two parts. The largest portion is the cost of the energy itself; the remainder, usually about 6-to-10 percent of the total price, is called a capacity charge and reflects the cost to keep power plants operating.
The utilities want to pay solar owners just the energy price.
And they don’t want to reimburse a customer with solar who also happens to be buying power from another company and having it delivered through the local utility. They argue that there are no arrangements for the local utility to in turn be reimbursed by the out-of-town power supplier.
The companies don’t immediately write a monthly check to solar system owners but do have to credit these consumers on their the next month’s bills. That can reduce or even eliminate the customer’s debt to the utilities in the following months.
If a solar system generates more power annually than the solar owner’s average consumption over the preceding three years, the company is required to issue a refund check.
“The approach proposed by AEP and FirstEnergy falsely presumes solar has no value,”
The companies also argue that customers with solar systems are not paying their “fair share” to maintain the power lines that bring electricity to their neighborhoods.
That’s because delivery charges — which pay for construction and upkeep of the delivery system – are based on how much electricity a customer buys monthly from the utility. Customers that are able to lower their net purchases aren’t paying as much as customers who must buy all of their power from the utility.
From that perspective, the cost of the delivery system is pushed onto the backs of those customers who cannot afford solar.
“AEP Ohio supports,” said spokeswoman Terri Flora, “but we need to make sure regulatory policies allow for recovery of grid costs without transferring the burden unfairly to non-solar customers.”
FirstEnergy, which has been at odds with AEP over many issues, is a comrade in arms on this one.
“FirstEnergy is not opposed to the concept of net metering,” said Jennifer Young, spokeswoman. “We support rules that ensure net metering is implemented in a way that fairly compensates customers and utilities for their participation.”
But so far, the PUCO has not come up with a new way, and the case has drawn the attention of the solar industry, which sees the fight in Ohio as typical push-back.
“Certainly there is a national play book to eliminate rooftop solar,” said Amy Heart, speaking for the Alliance for Solar Choice, an industry trade group.
She said utilities are trying to upend net metering policies in more than 40 states, some of which have been on the books for three decades.
“The challenges have come through legislation and in rate cases,” she said, but predicted that solar will eventually win because it has broad political, economic and environmental support. And the price of quickly evolving solar technology is dropping.
In testimony she gave to the PUCO in May, Heart said cost-benefit analyses of solar’s value in other states consistently shows that it helps utilities reduce the need to build more power plants or transmission lines and even decreases electric rates.
One attorney for a national environmental policy group involved in the case says the issue is how to determine the true value of solar to society.
“it’s vital that the PUCO ensure that solar customers are fairly compensated for the value they provide,” said Madeline Fleisher an attorney for the Environmental Law & Policy Center in Columbus.
“On hot summer days like we’re expecting Tuesday, both demand for power and the productivity of solar panels go up,” she said.
“The approach proposed by AEP and FirstEnergy falsely presumes solar has no value in replacing generation from other, often dirtier, power sources on such peak demand days. If the PUCO adopts this perspective, solar projects that would provide a net benefit to all Ohioans won’t be built here, they’ll be built in states that value solar.”
This story was edited by the author to correct the error that the Ohio Supreme Court ordered the PUCO to reconsider its January 2014 ruling after AEP and FirstEnergy appealed the ruling to the court. The court stayed activity in the case after the commission indicated it would consider furthering revisions to its ruling.