Utah Enacts Law Targeting Net-Metering Charges

Published April 30, 2014

Utah Gov. Gary Herbert (R) signed into law a bill that will allow the state’s Public Service Commission to charge small renewable power providers for costs their net-metering programs impose on electricity utilities. The governor’s signature represents a significant setback for Utah’s nascent solar energy industry, which bitterly opposed the legislation.

Freeloading and Fairness
Under net-metering, the details of which vary from state to state, utilities are required to purchase at retail prices excess electricity people produce with on-site solar panels (typically rooftop) but do not use. Solar ratepayers receive a credit on their monthly utility bill for the excess power they generate. Utilities must still pay for the infrastructure, labor, and overhead costs associated with the power purchased from individual solar producers, with the costs being paid by the utilities’ other customers.

Believing Utah’s net-metering system placed unfair burdens on Rocky Mountain Power and, by extension, the vast majority of its customers, Sen. Curtis Bramble (R-Provo) sponsored the legislation Herbert signed. It allows Rocky Mountain Power to add a $4.25 monthly charge to all net-metering customers who generate their own solar electricity or wind power.

Bramble touted the legislation as bringing fairness to the system, pointing out solar power customers inevitably plug into the infrastructure of a power grid paid for by other customers.

The bill’s opponents feared the legislation would undermine efforts to promote renewable energy, particularly solar power, in the state. Despite an abundance of sun, solar power production is costly in Utah, as it is in other states. As a result, solar power constitutes less than 1 percent of Utah electricity production.

In the end, the fairness issue prevailed.

States Moving Toward Reform 
“Utah has seen through the clouds of deceit and moved towards a rational reform of net-metering policy,” said Tom Tanton, director of science and technology for the Energy and Environment Legal Institute and president of T2 and Associates,. “Other states like Kansas have pursued rational reform as well.

“Some have tried to paint those seeking net-metering reform as being anti-renewable or anti-self-generation. Quite the contrary, reform is just about ensuring those who benefit from net-metering pay fair prices and are not subsidized by other customers,” Tanton added.

“Existing policies that require utilities to pay full retail price for excess net generation ignore the crucial role of the transmission and distribution network, including for net-metering customers. Significant cost-shifting occurs and gets worse with expanded net-metering unless those policies are changed. Those costs are shifted disproportionately to lower-income families,” Tanton observed.
Bonner R. Cohen, Ph. D., ([email protected]) is a senior fellow at the National Center for Public Policy Research.