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Debate over solar rates simmers in the Nevada desert

February 27, 2016 at 6:02 PM EDT
The future of home-based solar power is on the line in Nevada, as solar advocates and utility companies debate how to regulate so-called 'net energy metering' rates for customers using solar panels connected to the grid. NewsHour's John Larson reports.


With more than 300 days of sunshine a year, Nevada seems like the perfect place for rooftop solar.

And with the help of state and federal incentives, the amount of rooftop solar in the state has exploded, increasing by more than 400 percent from 2014 to 2015. But the future of the rooftop solar industry in this state is now very cloudy after a decision late last year by the state’s Public Utility Commission to change the rates for customers with solar panels.

At stake is a system known as “net metering,” which allows rooftop solar customers to get credit for the excess energy they send back to the grid when it’s sunny.

Versions of ‘net metering’ are on the books in more than 40 states and the effect for many rooftop solar customers is a dramatically reduced electric bill. But in lowering their bill, utilities and regulators around the country have been trying to determine if solar customers are paying their fair share of the electric grid’s operating costs.

In Nevada, the Public Utility Commission ruled that there was a cost-shift from non-solar customers to solar customers.

“The customers who are participating in net metering were not sharing in the costs of the utility’s distributions and transmission system – the pipes and the wires that get the electricity to your home,” said Anne-Marie Cuneo, Staff Director of Regulatory Operations for the Nevada Public Utilities Commission.

In December, the Public Utility Commission increased the basic connection fee and reduced the value of the credit that homeowners receive for excess energy to help close the gap between non-solar and solar customers, which utility NV Energy calculated to be about $16 million a year.

Solar advocates say the change threatens the whole industry and many companies said they were moving operations out of the state, including SolarCity, which laid off 550 workers in January. Advocates argue that utilities have been pushing for changes in ‘net metering’ rules because they see solar as a threat to their business model.

“Solar is becoming real,” said Marco Krapels, Executive Vice President for Strategy and Structured Finance at Solar City. “The utility monopolies are saying, ‘well wait a minute, we’ve got to crush it before it gets too big.’ And that’s what’s happening now.”

Read the full transcript of this segment below:

PROTESTERS: We’re not going to take it! We’re not going to take it!

JOHN LARSON: The rhetoric in Nevada sounds, at times, less like testimony on electricity rates and more like the run-up to a Las Vegas prize fight.

MAN: We should be promoting solar energy, not destroying it!

MAN: Talk to your representatives and fix this!

JOHN LARSON: That’s because the clash between the state’s most powerful electrical utility, NV Energy, and the surging solar power industry has all the makings of a heavyweight bout.

MARCO KRAPELS: We bait-and-switched on our own citizens!

JOHN LARSON: At stake is the future of solar energy in one of the sunniest places in the country. And how that will affect everyday Nevadans…like Pat and Craig Carrell.

PAT CARRELL: The day we moved here, the temperature was 115 degrees, so that was a welcome to Nevada.

JOHN LARSON: Former academics, the Carrells moved to a retirement community outside of Las Vegas in 2002.

JOHN LARSON: What did you notice about the energy bills as it crept towards summer?
Craig Carrell: They crept higher and the air conditioning kicks in, and our bills, over time rose to over $450.



JOHN LARSON: To reduce their electric bill, the Carrells added insulation to the attic and sun-blocking ultraviolet film to the windows. Then in 2014, they decided to go solar.

PAT CARRELL: So we’ve got panels up there and there.

JOHN LARSON: The Carrells spent $45,000 dollars on roof solar panels for their two-bedroom home. Federal government rebates and credits from the energy company reduced their out-of-pocket cost by more than 40%, and they expected the rest of the investment to pay for itself through lower electric bills. On average, their bills dropped by about 95%.

JOHN LARSON: So in the hottest days of the summer, what you had been paying $400 or more, now what was it?

PAT CARRELL: That’s when it went down to about $15.

JOHN LARSON: Their bill was so low, because their solar panels produced most of their power, and because of a special arrangement with the utility company called “net metering.” Across the country, net metering allows customers to sell excess power their solar panels generate during the day to the utility company, and buy the power back at night.

JOHN LARSON: That, along with federal and state incentives, helped Nevada increase the amount of rooftop solar installed from 2014 to 2015 by more than 400 percent, becoming one of the fastest-growing solar markets in the country. For customers worried about climate change, rooftop solar is carbon-free.

SOLARCITY EMPLOYEE: So once they inspect it and it passes inspection, three to four weeks after that you can turn it on.

JOHN LARSON: In a state with one of the highest unemployment rates in the nation Nevada saw thousands of new solar-related jobs…some created by “SolarCity,” the nation’s largest rooftop solar company, which with a state grant built its national customer call center in Las Vegas.

MARCO KRAPELS: You see all the trucks sitting here…

JOHN LARSON: Marco Krapels is SolarCity’s Executive Vice President for Strategy.

MARCO KRAPELS: Nevada is a great state for solar. There’s 320 days of sunshine, rising utility rates. And we’re giving people choice and the ability to fix their cost of power. It’s a fantastic state.

JOHN LARSON: But Krapels says the utility has a monopoly on electricity that is threatened by rooftop solar.

MARCO KRAPELS: Now solar is becoming real. The utility monopolies are saying, ‘well wait a minute, ‘We’ve got to crush it before it gets too big.’

They want to build more plants so they can make more money, and if we take a little bite out of that apple, and we say, ‘Hey guys, we’ve got solar panels everywhere on all these homes, you don’t need to build them any more power plants.’ then the utility goes, ‘Well, wait a minute, how am I going to make more money next year?’

JOHN LARSON: Now, after heavy lobbying by the utility company and solar companies, Nevada’s solar landscape has changed. Last December 23rd Nevada’s three-member Public Utilities Commission decided, to triple the basic service fee for rooftop solar — from $12.75 a month, to more than $38 a month. The increases began January 1 and will be fully phased in over 12 years.

JOHN LARSON: The Commission also decided NV energy no longer needed to credit customers with rooftop solar the retail rate for electricity, but instead would credit them closer to the wholesale rate – a 75 % cut.

JOHN LARSON: In other words, the power company will gradually charge people with rooftop solar more to be connected to the grid and then give them less, a lot less, for the power they generate up on their roofs.

JOHN LARSON: Citing the pending rule changes, none of the Public Utility Commissioners would agree to an interview. But staff member Anne-Marie Cuneo, who directs regulatory operations for the commission, did.

ANNE-MARIE CUNEO: The customers who are participating in net metering were not sharing in the costs of the utility’s distribution and transmission system — the pipes and the wires that get the electricity to your home.

JOHN LARSON: Cuneo says the rate changes were based on data provided by NV Energy showing that solar users were not paying their fair share of the electric grid’s operating costs.

ANNE-MARIE CUNEO: They were avoiding those costs, and those costs were getting shifted onto non-participating customers.

JOHN LARSON: How much cost was being shifted?

ANNE-MARIE CUNEO: According to the utility’s figures, it was about $16 million a year.

JOHN LARSON: No one from NV Energy would agree to an interview, but in a written statement to the NewsHour,the company said, “The net metering debate is not about NV Energy being pro or anti-solar, it’s about who pays for solar….the new net metering rules and rates adopted in Nevada will phase out the subsidy non-solar customers pay, which will be $100 million over the next 12 years.”

JOHN LARSON: Ashley Brown is the Executive Director of the Harvard Electricity Policy Group, which receives funding from utility and energy companies. He believes rooftop solar owners are being paid too much for the energy they sell utility companies.

ASHLEY BROWN: Because of the way it’s priced, which is you’re basically paying a retail price for what’s a wholesale product, it’s way overpriced. What’s happened is the electricity market has become far, far more competitive. We’ve also seen the cost of renewable energy declining dramatically.

JOHN LARSON: Opposing sides strongly disagree on whether there really is a cost to non-solar owners, and if there is, what that cost might be. But last year when the Nevada Legislature directed the Public Utility Commission to review the issue, it asked the commission to consider only the costs of rooftop solar, but none of its benefits.

JOHN LARSON: So, the benefits of distributed rooftop solar weren’t really weighed into your recommendation?

ANNE-MARIE CUNEO: It wasn’t, because this wasn’t a cost-benefit study. This was a cost study. And we were attempting to determine what sort of cost shift there was to the other customers.

JOHN LARSON: In Nevada’s third-largest city, Reno, customers at another solar company, called SUNWorks began putting their orders on hold as soon as they heard of the rate changes.

TRAVIS MILLER: We’ve got his blueprints ready to go.

JOHN LARSON: Project Manager Travis Miller says more than one million dollars of work is in limbo.

JOHN LARSON: So they froze your business?

TRAVIS MILLER: Frozen business – not a dime in revenue has come in our office since December 23rd.

JOHN LARSON: Adding to its troubles, SUNWorks recently signed a three-year lease for more office space and a bigger warehouse.

JOHN LARSON: So literally it’s empty for the next, well, however?

TRAVIS MILLER: For the foreseeable future, yeah.

MARCO KRAPELS: There’s not a single truck arriving…there’s not a single truck leaving.

TRAVIS MILLER: Back in Las Vegas, at SolarCity, 550 jobs are gone.

MARCO KRAPELS: This was bustling. People were coming in and out, trucks in and out. This was one of our best warehouses in the country.

JOHN LARSON: None of the existing 17,000 Nevada homeowners who already have rooftop solar panels, like Pat and Craig Carrell, are exempt from the new solar rates. They will see their energy bills go up.

PAT CARRELL: It’s not the rules that we bought into, they changed the game on us. That was hard earned savings, but we decided it was worth it to put it up on our roof, to have that kind of energy independence, and now it seems like it’s gone.

CRAIG CARRELL: We have created a generator out here, we’re like a little power company, that they did not have to pay for.

JOHN LARSON: You put it up?

CRAIG CARRELL: I put it up. I built the plant, and they’re deriving the benefit from it.

JOHN LARSON: The Public Utility Commission’s regulatory operations staff director rejects the notion that solar homeowners are being unfairly penalized with retroactive rate changes.

ANNE-MARIE CUNEO: I don’t know where they got the idea that they were going to have a deal. The utilities interconnection agreement that I read says that the law can change and the rates can change.

JOHN LARSON: In the meantime, rooftop solar installations have effectively ground to a halt in Nevada.

JOHN LARSON: Ashley Brown of the Harvard Electricity Policy Group argues net metering – the paying of solar panel owners a full retail rate for their excess power — has outgrown its usefulness.

ASHLEY BROWN: It was never meant to be a permanent subsidy. Why would we devise a permanent subsidy for any technology. If you’re going to have a subsidy, it’s short term. It’s designed to get things past the commercial hump. Solar costs are declining rapidly. It’s past the commercial hump.

SOLARCITY EMPLOYEE: We would design a system at this size first…

JOHN LARSON: Back in SolarCity’s new national call center in Las Vegas, the company is suddenly in the odd position of reaching out to customers almost everywhere — except Nevada.

JULIO GAMBOA: It should be up to the public to decide.

JOHN LARSON: And laid off solar workers, backed by SolarCity, hope the state’s voters will restore the previous rates for rooftop solar.

MAN: Sorry you lost your job…

JOHN LARSON: They are gathering signatures, hoping to get a referendum on the ballot in November.