Rocky Mountain Power, Utah’s largest provider of solar-powered electricity, is scrapping a plan for a rapid reduction in its payment rates for excess power generated by rooftop solar systems.
Rocky Mountain Power had wanted to curtail its net metering payments sharply. Pressure from solar advocates, several state agencies, and Gov. Gary Herbert forced the company to agree instead to extend the timeframe for decreasing the value of credits customers receive from the utility in exchange for excess power their solar panels generate.
Under the agreement, current net-metering customers will continue receiving credits of about 10 cents per kilowatt hour (kWh) from the utility for surplus power until 2035, even though the going wholesale rate at which Rocky Mountain Power could buy solar power is 3.3 cents per kWh.
The utility will continue accepting new net-metering applications through November 15, then cap the program to new customers. Households installing new rooftop solar installations after that date will receive 9.2 cents kWh during a three year transition period, then will receive a credit equal to the wholesale rate for the excess power they generate.
‘Crony Capitalism’
Derek Monson, director of public policy at the Sutherland Institute, says although the settlement probably resolves the current conflict, it does not get at the real root problem: crony capitalism.
“While the dispute between Rocky Mountain Power and solar panel users is likely to end in a settlement, the whole disagreement is an illustration of what happens when crony capitalism marries a government-enforced monopoly,” Monson said. “Utah’s supposedly thriving solar industry argues the sky will fall if any taxpayer or electric ratepayer subsidy ends, and this special-interest giveaway turns into a public issue because Rocky Mountain Power is a monopoly provider that must approve changes through the state Public Service Commission.
“Utah would be better served if the provision of energy and electricity were competitive enterprises, as they are in states like Texas,” said Monson. “Until then, Utah will continue to see protests every time Rocky Mountain Power makes even commonsense changes like requiring solar panel users to pay to help maintain the grid that makes their reduced power bills possible.”
Wealth Redistribution
Governments should end energy subsidies such as net metering, says Timothy Benson, a policy analyst at The Heartland Institute, which publishes Environment & Climate News.
“Net metering is nothing more than a welfare program for the upper-middle class, the most popular type of welfare program,” Benson said. “Under net metering, lower-income ratepayers end up paying extra to subsidize higher-income customers.
“Distribution, reliability, and transmission costs are reallocated to utility customers who don’t own distributed generation (DG) systems,” said Benson. “Rooftop solar owners should be paid for the electricity they sell back to the grid at no more than the rate conventional sources are paid, reflecting the true wholesale cost of electricity.”
Benson says it’s unfortunate another generation of ratepayers will be forced to subsidize uneconomic solar power.
“Gov. Herbert has stated himself intermittent, expensive solar is not ready for prime time and would wither and die in Utah if it weren’t for the subsidies the industry receives,” Benson said. “It is unfortunate DG owners were grandfathered into the current arrangement for another generation.
“All state net-metering programs should be reduced and ultimately ended, as should all energy subsidies,” said Benson
Kenneth Artz ([email protected]) writes from Dallas, Texas.
Artz has more than 20 years’ experience in nonprofit organizations, publishing, newspaper reporting, and public policy advocacy.
