Net metering in Nevada

Background

Under a setup known as net metering, utilities must buy excess electricity generated by people with solar panels. For example, on a sunny day, a home with solar panels generates power. If the homeowners are away and the home is using less electricity than the solar panels are generating, that excess electricity flows to the electric grid. The utility company purchases that electricity.

Retail vs. wholesale rate

Utility companies buy power at a “wholesale” rate and sell to consumers at a “retail rate.” The retail rate is higher than the wholesale rate. The retail electric rate charged by utilities are the final rates that customers get charged for using electricity. The utilities calculate these rates by taking into consideration the cost of the purchasing the power (the wholesale rate) and the fixed costs the utility incurs. Fixed costs are items are such as installing electric poles and wires, putting meters on people’s homes and businesses, and implementing technology to maintain the electric grid. The wholesale rate is what the utility pays electricity providers to buy their electricity. A competitive marketplace exists from which utilities can purchase electricity. Throughout a single day, the price of electricity on the wholesale market can change.

History

Nevada's net metering rules began in 1997. Tim Webb, a manager at Robco Electric (one of the main sellers of rooftop solar panels in Nevada), said, "It was kind of like the solar gold rush here. All these companies flocked into town, set up an office and sold systems."

Net metering customers in southern Nevada receive an average subsidy of $623 per year for their excess electricity. Northern Nevada net metering customers receive an average of $471 per year.

In 2015, the Nevada legislature passed a law that required the commission to examine the electric rate structure and to look at cost shifting. KRNV Channel 4 (NBC) of Reno, Nevada, defined cost shifting as “when non-solar residential customers are said to be subsidizing those without solar for using NV Energy’s grid.” (NV Energy is the major utility company in the state of Nevada, and it is owned by Berkshire Hathaway Energy, a subsidiary of Warren Buffett’s Berkshire Hathaway.) Specifically, the law requiring NPUC’s review was Senate Bill 374, passed during the legislature’s 2015 session. The bill set a deadline of December 31, 2015 for the commission to decide on new electric rates.

On December 22, 2015, regulators in Nevada created major controversy following their decision to reduce rooftop solar incentives in addition to creating new fees for solar owners. As a result, a lawsuit was filed against the Nevada Public Utilities Commission (PUC) based on the fact that lowering rates constituted as a violation of contracts made with installers.

Commissioner David Noble, who had presided over the PUC's net metering docket, recently had decided to break his usual silence and speak out on the regulatory body's decision at the National Association of Regulatory Utility Commissioners (NARUC) meeting held in Nashville, Tennessee over the summer. He proceeded to explain the events leading up to the decision, making it out to be a cautionary about the unethical actions and reckless comments that may ensue in such dealings.

Noble began with the May 2015 signing of Senate Bill 374, which gave the PUC the responsibility to find a fair and suitable replacement for retail rates given to net metering solar owners, which had caused significant cost shifts negatively impacting non-solar consumers.

The new order calls for higher monthly rates for solar-owning customers from $12.75 to $17.90. In addition to increase in charges, the volumetric rate was lowered from $0.111/kWh to $0.108/kWh. Also, it was determined that over a 12-year period, the rate will reach $38.51 while the volumetric rate will drop to $0.999/kWh. The new rates and conditions apply to both new and existing customers.

Noble insisted that all the terms of this new reform were created to be more than fair and free of any bias or favortism. He also pointed out the solar industry's lack of evidence supporting their claim to out-benefitting utility grids.

There was also much backlash regarding the omission of a grandfather clause for existing customers. Noble eventually compromised extending the initiation of rate changes for existing solar customers, yet denying them lower rates altogether. This was not taken well by Governor Brian Sandoval, who felt the Commission neglected to protect the interests of those customers. Shortly following this decision, it was announced that the governor will not be reappointing Noble to his post.

Noble was also faced with further backlash in a much more aggressive nature when protestors attempted to barge in a PUC meeting carrying firearms. Although Nevada is an open carry state, the meeting had to be canceled with the commissioners being escorted out.

In regard to accusations from media sources that his decision was made in retaliation to the intimiditative tactics of rooftop solar groups, Noble maintained he was not swayed by anything other than facts and evidence. He also disapproved of the media's blows to his character.

As far as the future of rooftop solar companies in Nevada, Noble acknowledged the collective effort to ease tensions among all the groups with more focus on respect and collaboration. Although the solar companies and groups are making an effort to be cooperative, they still do support a referendum to overturn the commission's decision and go back to retail rates.

PUC's Northern Nevada decision

In January 2017, NV Energy asked the Public Utilities Commission to reverse a decision regarding net metering rates for future solar customers. The decision restored "more favorable net metering rates" for some rooftop solar customers in northern Nevada. NV Energy argued that the energy savings should have been directed to its Sierra Pacific customers, not redirected to rooftop solar residents in northern Nevada. In October 2016, NV Energy decreased rates for customers by approximately $2.92 million annually, which would amount to $8.77 million over a three-year period. Its intention was to make these cost savings shared among all Northern Nevada electric customers.

In 2016, the rooftop solar industry faced various obstacles when the PUC established less favorable rates for rooftop solar customers in Nevada. Solar energy supporters support PUC’s new decision. PUC has 40 days to act on the NV Energy request.

Nevada Public Utilities Commission net metering decision

At the end of 2015, the Nevada Public Utilities Commission changed the rates that utility companies pay to rooftop solar customers for the excess electricity that those customers sell to the utilities. The commission argued that paying rooftop solar customers the full retail rate for their excess electricity puts unreasonable cost increases on utility customers who do not have solar power.

According to the commission, the new rules:

Paul Thomsen, the chairman of NPUC, said, "If I reduce the burden for one individual or group of people, I have to increase it for someone else. It is that simple."

Grandfathering ruling

A deal between NV Energy and SolarCity was finally approved on September 16, 2016, allowing rooftop solar customers to retain the use of their original retail rates, which were eradicated following the Nevada Public Utilities Commission's (PUC) actions which "reduced net metering incentives for both existing and future solar customers- and made the unprecedented decision not to 'grandfather' existing solar customers into the new rate structure."

The decision prompted Nevada solar groups and the Nevada Attorney General's Bureau of Consumer Protection to intervene and challenge the PUC's decision based on the fact "it violated the contract clause of the Constitution because many rooftop solar contracts were predicated on retail rate net metering." Under the terms of the new agreement, 32,000 rooftop solar customers will be grandfathered in under the original retail net metering rates over a period of 20 years. These customers applied or installed a rooftop solar system before December 31, 2015. "The agreement also makes eligible customers who withdrew an application, or had a RenewableGenerations application expire between December 23 and December 31, 2015, for the more favorable rates."

NV Energy denies ever requesting the exclusion of a "grandfather" clause in its original proposal, and there were attempts to include such provisions. "NV Energy's intent with its grandfathering proposal was to offer a solution for customers who installed or had valid applications to install rooftop solar systems in the most efficient and timely manner." The clause was eventually denied by the regulators, then presided by Commissioner David Noble, who also authored the net metering decision. This controversy led to Nevada Governor Brian Sandoval's decision to not reappoint Noble to his position and take further action as he was "critical of the net metering decision and convened New Energy Task Force to resolve net metering issues." Both NV Energy and the solar industry applaud Gov. Sandoval's intervention in the matter in order to reach a fair and reasonable outcome.

Opposition

According to Paul Thomsen, the chairman of NPUC, Governor Sandoval was disappointed at the commission’s decision.

Greenpeace opposed NPUC’s action. Greenpeace called the Nevada Governor, Brian Sandoval, corrupt. The group wrote a post in its website with the headline "What a Bought Politician in Nevada Means for the 2016 Presidential Race." The Nevada newspaper Reno News & Review wrote in an article that Greenpeace’s article does not support the headline. The article also states, "Greenpeace lets the state legislators—who directed the PUC to act—off the hook entirely."

Harry Reid, the Democratic leader of the U.S. Senate, condemned the commission’s decision during a political visit at the Washoe County Democratic headquarters. Reid said, "Warren Buffett said it all. He said, 'People don’t buy utilities to get rich, they buy utilities to stay rich.'"

Armed protesters

On February 8, 2016, the commission held a hearing around whether to finalize or reconsider the commission’s new net metering rates. Outside the commission’s office, protesters gathered and a senior vice president of SolarCity spoke in support of the protesters. Three people carrying guns tried to enter the building to attend the hearing, but were turned away by security guards. The three people were wearing T-shirts that said “Bring Back Solar” and had wheelbarrows with petition cards. After they were turned away, they said they would be back at the next commission meeting with their guns.

According to the Las Vegas Review-Journal, an email was being circulated that contained the home addresses of the members of the commission.

In public statements, both Governor Sandoval and SolarCity requested civility and respect.