If you live in certain parts of Nevada, you won’t have a choice. You’ll have to pay. And the solar panels won’t be for your house. They’ll most likely be for your neighbor’s roof.
Rooftop solar prices have come way down. But prices haven't fallen enough for the industry to survive without subsidies. That's why solar advocates and utilities for the last few years have been sparring over an esoteric solar power pricing mechanism called net metering, which acts as a subsidy for rooftop solar customers that want to get paid to put their rooftop solar power back on the grid.
With net metering, if you own a rooftop solar system, the utility must effectively pay you the retail electric rate for all energy from your solar panels that flows back onto the grid. Yet the utility’s cost to purchase power on the market is a lot less than the retail rate, meaning the utility is forced to overpay you for the solar power it must buy. Plus, even as a rooftop solar customer, you still need the power plants, electric lines and other components of the grid that the utility provides, but under net metering you aren’t required to fully pay for them.
The rooftop solar industry knows this, but the industry isn’t viable without net metering in place given current retail electric rates.
Exhibit 1: When the Public Utility Commission of Nevada removed net metering subsidies back in 2015, SolarCity and other rooftop solar companies immediately fled the state. New rooftop solar installations dropped for one utility by more than 95%. The state’s booming rooftop solar industry came to an abrupt standstill.
So last month - on December 28th - the Nevada Public Utility Commission decided to switch course and put the net metering subsidy back in place for Sierra Pacific Power Company’s (d/b/a NV Energy) ratepayers in northern Nevada. The next 1,175 or so new rooftop solar systems installed in NV Energy's service territory over the next three years will be allowed to obtain the net metering subsidy.
In order to allow these 1,175 customers to install these solar systems and obtain the net metering subsidy, however, the remaining approximately 288,825 residential customers of the utility will have to pay $0.26 cents more per month on their electric bills. This is because utilities generally pool all of their costs among all of their customers. So when a net metering customer is paying less than its fair share, the utilities’ other customers are forced to pick up the slack via higher electric bills.
Personally, I’m all for solar power. And if I had the choice, I would gladly pay $0.26 cents more per month to increase solar penetration in my state.
But in its written decision, the Nevada Commission played a little fast and loose with the facts: it reported in the executive summary that it was restoring net metering and, in so doing, “the average residential customer in Northern Nevada may expect a decrease of approximately $0.01 (one cent) per month on [his or her] utility bills.” The mainstream press in Nevada and elsewhere picked up on this Commission statement in its order and ran articles implying that net metering was reintroduced at an overall cost savings to customers.
But this implication is false.
While the Nevada Commission’s one cent reduction statement is technically true, it's comparing apples to oranges. The utility sought as part of the same case other rate decreases for residential customers that were completely unrelated to solar power and would have applied to all 290,000 residential customers. These rate decreases, which amount to $0.27 cents per month per customer, happen to offset the $0.26 cents per month increase caused by reinstating the net metering subsidy.
By focusing on the one cent overall net decrease, the Commission (and much of the press) gave northern Nevadans the misimpression that putting net metering back in place has no cost.
In fact, the Commission’s decision shifts the cost savings that would have accrued for all residential customers without net metering (totaling $2.923 million) to just the next 1,175 or so customers that choose to install solar panels on their roofs and utilize the reinstated net metering subsidy.
For this reason, NV Energy filed for rehearing on January 12th and asked the Commission to reconsider its decision to reinstate net metering. A decision on the rehearing request is expected by mid- to late February.
In the meantime, if you live in northern Nevada, you might want to consider installing solar panels on your roof very soon. It looks like you’re going to pay for them -- whether you’ve got them, or not.
