The Kansas Corporation Commission (KCC) ruled a utility in the state may establish electric grid maintenance fees for customers with rooftop solar electricity generation.
KCC’s decision allows Westar Energy to begin adding a “demand charge” to the bills of residents with solar rooftop solar panel systems, to avoid making other utility customers pay for those customers’ access to the grid.
Westar Energy serves almost 700,000 customers in Kansas, approximately 750 of whom have rooftop solar power systems connected to the electric grid.
Under the program approved by KCC in September, Westar will begin levying a charge of $3.00 per kilowatt in the winter and $9.00 per kilowatt in the summer on solar homes on their peak hour of usage each month. The number of kilowatts used during that hour will be multiplied by the monthly dollar figure. For example, the bill for a solar customer drawing four kilowatts of electricity during a peak summer monthly hour would increase by approximately $36 that month. The new fee applies to customers with solar systems placed in operation after October 2015.
Westar is the first Kansas energy company to obtain approval for a demand fee. Several other utilities are seeking permission for similar fees.
Government Solar Support
Kansas residents who have rooftop solar power systems installed on their homes receive a 30 percent tax credit from the federal government. In addition, Kansas utilities are forced to purchase the excess solar power generated by their customers’ rooftop solar systems, under the state’s renewable power mandate. As a result, Kansas residents without rooftop solar power equipment pay for close to half the costs of solar systems installed on others’ homes.
Utilities typically charge either a fixed fee or apply a percentage of each customer’s bill to construction and necessary maintenance of the electric grid. Rooftop solar customers add extra costs to the grid because their systems take power from the grid and supply power to it on a fluctuating basis, requiring special technologies to regulate the intermittent power flow. Those additional costs for grid access and maintenance for rooftop solar systems are effectively subsidized by those without rooftop solar.
KCC says it approved the demand charge for rooftop solar customers to eliminate this additional subsidy.
‘A Matter of Fairness’
Kansas solar power users have no reason to complain about the demand charge, says James Taylor, a senior fellow with The Heartland Institute, which publishes Environment & Climate News.
“Solar power equipment is already heavily subsidized,” said Taylor. “People who demand and receive, for example, 100 units of subsidies, but then are required to give four of those 100 units back, have no standing to complain they are being treated badly.
“Part of everybody’s electric bill goes toward maintaining the grid,” Taylor said. “Solar power users want to generate their own power, with you, me, and every other taxpayer picking up part of their bill, and then they demand grid hookup virtually for free, since they pay next to nothing for grid connection and maintenance costs everybody else must contribute towards. This demand fee is a matter of fairness.”
Paying Their Way
Tim Benson, a policy analyst at The Heartland Institute, says demand fees will help put solar and non-solar customers on a level playing field in paying for grid maintenance.
“This is just Westar trying to recoup revenue lost from Kansas’ net metering program, under which solar customers are reimbursed for the excess electricity they generated at either the retail rate of electricity or at 100 percent of the utility’s monthly system average cost of energy per kilowatt hour, depending on when the customer had their solar panels installed,” Benson said. “Because utilities like Westar pay significantly more to purchase the excess electricity generated by rooftop solar systems than they can charge when reselling it to other customers, it means distributed generation customers are getting reimbursed not only for the electricity they provide but also for the costs associated with building and maintaining the electric grid.”
Welfare for the Wealthy
Most people who purchase expensive rooftop solar systems have relatively high incomes, and the wealthy owners of rooftop solar equipment are being subsidized by those with lower incomes, says Benson.
“The cost-shifting resulting from solar subsidies impedes social equity because rooftop solar owners generally have higher incomes than others, so lower-income ratepayers, and the relatively poor, end up paying extra to subsidize higher-income customers,” Benson said. “Net metering is just another welfare program for the upper-middle class.
“I don’t doubt demand fees are going to seriously constrain the growth of residential solar in Westar’s territory, but most of these systems wouldn’t have been purchased without the incentives provided by net metering in the first place,” said Benson. “The market for residential solar is illusory, wholly a creation of government.”
‘Solar Industry’s False Narrative’
Taylor says the solar industry is built on cronyism because solar power cannot compete with other sources of electric power on the basis of cost.
“Solar power is gaining popularity and residents are installing solar units solely because the solar industry and the environmental Left have utilized government to steal money from peoples’ pocketbooks and subsidize the solar power industry,” Taylor said. “Well, that and renewable power mandates forcing increased solar power production.
“Solar power is nowhere near capable of saving people energy costs without massive taxpayer subsidies,” said Taylor. “Not publicizing this fact helps sell the environmental Left’s and the solar industry’s false narrative that solar power is economically competitive. It is not.”
Chris Talgo ([email protected]) is an editor and Emily Kaden ([email protected]) is an intern at The Heartland Institute.
Chris Talgo is senior editor at The Heartland Institute and a research fellow for Heartland’s Socialism Research Center.
