Solar Costs Not So Hot

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You may have seen the spoof ad on the Internet in which a well-dressed, middle-age white man plays an executive.

“Here at Southern California Edison,” he says, smoothly and confidently, “we’re committed to rooftop solar energy. And by committed, I mean we’re committed to keeping solar panels off your roof.”

It’s kind of amusing if histrionic. More importantly, it’s part of a pushback that’s already started to try to blunt the effort by SoCal Edison and some other utilities to change the rate structure that customers pay for electricity. Contrary to the fake ad, the utilities aren’t committed to keeping solar panels off roofs. But they do want solar customers to pay their fair share. Or I should say, something a little closer to what their fair share should be.

Let’s remember: Residents with rooftop solar are getting a sweet deal. Their systems are subsidized, which means the rest of us are forced to help pay for them. And whatever excess power their panels produce, the utility must buy not at the wholesale price but at the retail price. No other state does that.

And those with solar systems on their roof still rely on the infrastructure of wires and generators and substations, which utilities call the grid. That’s because the rooftop solar customers still need the utility to provide them electricity at night, if the sun darts behind a cloud for a minute or when an air conditioner starts up and needs a surge of power. And, as noted, the rooftop solar households need the grid at the ready so they can sell their excess power.

The grid is expensive. SoCal Edison estimates that averaged out, each residential customer needs to pay $30 a month just to maintain it. But with more residents adding solar panels, the cost of maintaining the grid is being pushed off to nonsolar customers.

Part of the utilities’ initiative is a proposal that each residential customer – solar as well as nonsolar – pay as much as an additional $10 a month to help pay for the grid.

To me, it’s unfair to demand that nonsolar customers help make up the grid maintenance shortfall that’s being caused by the rooftop solar customers.

It’s another example of the sweet deal the rooftop solar customers are getting. Maybe they should put up a fake ad thanking the nonsolar customers for subsidizing their power bills at every step.

• • •

Electricity and other energy rates in California are going up. That much we know.

How much are they going up? Ahh, that’s what we don’t know. In fact, we have no idea.

The California Energy Commission has projected electricity will cost 26 percent to 42 percent more by 2020. But it could go much higher. Or maybe lower. Nobody knows.

With that uncertain backdrop, an umbrella group last week put out a report that tried to “initiate a dialogue” on the presumed higher energy costs and their effects on the economy. It focused on the cumulative impact of California’s three big environmental initiatives – the mandate that electric utilities get 33 percent of their power from renewable sources, the carbon cap-and-trade auction and the low carbon fuel standard.

The 49-page report, in a nutshell, said the impact of those initiatives will be huge. But as for exactly how much those initiatives will cost us, there’s no telling.

“There is not a single, credible source of analysis and data that can inform companies and policymakers regarding the cumulative costs of California’s recent energy-related policies,” said Patrick Mealoy of the Navigant Consulting group, which was hired by the group to do the analysis.

The group basically called for a timeout from future environmental initiatives until we figure out the effect of these complicated, mandates on our economy.

The umbrella group is made up mostly of trade associations and business organizations, including the Los Angeles Area Chamber of Commerce and the Los Angeles County Business Federation. Naysayers could argue that such a group has a vested interest in trying to scare us into fearing the costs will be much steeper than they are likely to be.

Maybe so, but the group is a good counterpoint to the commissions, environmentalists and others who for years have been saying that the state’s aggressive environmental mandates won’t cost much at all.

We’ll see. The first effect of the 33 percent mandate will soon start showing up in the bills of SoCal Edison customers.

Charles Crumpley is editor of the Business Journal. He can be reached at [email protected].

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