Rooftop Solar Policy Saga Comes to an End in Nevada

by Julia Pyper
September 01, 2017

As many Americans begin to kick back for Labor Day weekend, policy developments continue to unfold in the clean energy arena.

Utility regulators in Nevada finally put the state’s rooftop solar compensation debate to rest, while advocates for community-choice aggregation (CCA) are fighting against a potentially damaging policy proposal in California. Note that dozens of bills are up for a vote today in California, with a lightning round of votes scheduled before the end of day -- including on the 100 percent renewable energy target. We will dig into the outcomes in next week's column.

This week, we take a look at the net metering resolution in Nevada, followed by policy concerns among CCA stakeholders. And, finally, a list of handy links for your policy reading pleasure.

Nevada regulators settle the NEM debate

In early June, the Nevada state legislature passed AB 405 -- a bill that was expected to put the solar net energy metering (NEM) debate to rest once and for all. But the policy battle didn’t end there. Stakeholders have spent the past several weeks clashing over how to implement the law -- but that all came to an end today.

To understand the outcome, it’s helpful to review the language approved in AB 405. The law established the residential solar credit “for each kilowatt-hour of excess electricity” at 95 percent of the retail electricity rate. Over time, customer compensation is set to decline in increments of 7 percent, to a floor of 75 percent of the retail rate. The decline takes place when the Public Utilities Commission of Nevada (PUCN) determines that the cumulative installed capacity of net-metered systems equals 80 megawatts.

The law also prohibits NEM customers from being treated as a separate rate class; it directs NV Energy to file new time-of-use tariffs with the goal of encouraging the development and adoption of distributed energy storage systems; it protects consumers’ right to self-generate electricity; and it enacts a number of other consumer protection measures.

Solar advocates cheered the bill, which was signed into law on June 15. "We believe [AB 405] will be able to get solar companies back to business in Nevada, creating jobs and investment,” said Sean Gallagher, SEIA's vice president of state affairs, back in June.

But it turns out AB 405 didn’t put the rooftop solar compensation debate to rest entirely. On July 28, NV Energy filed new tariffs to comply with the law, in which the utility took a different reading on AB 405 than solar supporters did.

In its 376-page application, NV Energy proposed raising the basic or fixed service charge for all electricity customers by about 30 percent in southern Nevada and 15 percent in northern Nevada, along with a small decrease in the average volumetric charge. NV Energy argued the proposed rate changes were necessary to avoid lost revenue caused by NEM policies.

The utility also proposed that the NEM credit apply to the retail rate, minus certain non-bypassable charges that amount to 0.3 cents per kilowatt-hour. Furthermore, NV Energy sought to have the 95 percent calculation apply to every kilowatt-hour of energy a customer exports to the grid, rather than the monthly netting amount -- a change that would reduce the credit overall.

The issue of what, exactly, 95 percent of the retail rate should apply to was a hot topic during the weeks of hearings and in filings that followed NV Energy’s application. The utility’s proposed changes hurt the financials for rooftop solar, industry representatives argued, and would undermine the intent behind AB 405.

There was also debate over the 80-megawatt tranche. To be eligible for a higher credit rate, customers have to file before the tranche closes. But there can be a three-month delay between a solar system application and the installation. Stakeholders debated when, exactly, the 80-megawatt limit would be met -- when applications reach that number or when deployments reach that number?

On Friday, the PUCN approved an order 2-0 with the following key provisions (read the full order here):

Regulators rejected the utility’s proposed rate change, although new NEM customers will take service in the current residential rate classes. NV Energy can propose rate design changes in its general rate case, however, which is currently underway in Southern Nevada. That means the higher fixed charge is off the table -- but only for now.
The 95 percent retail-rate credit (followed by 88 percent, 81 percent and 75 percent) will apply to monthly net excess electricity only, and not to all energy.
The credit will apply to the retail electricity rate minus the non-bypassable charges. In southern Nevada, that total is 11.15 cents per kilowatt-hour, 95 percent of which is 10.59 cents per kilowatt-hour.
Each tranche will be limited to exactly 80 megawatts' worth of new customers. If a customer hits the 80.005-megawatt mark, he or she will be put in the new tranche, but can be moved to the tranche above if an earlier customer decides not to proceed with her installation.
New solar customers can now connect under the grandfathered tariff that was available before the 2015 decision that phased out net metering. The new tariffs will become available on December 1, 2017. At that point, customers who decide to go solar in the coming months will adopt the new tariff rate.
NEM2 customers, the handful of people who went solar under the 2015 rules, can also elect to move to the AB 405 rate set today.

With this order, Nevada’s rooftop solar market is officially back in action.

Community choice aggregation under threat in California?

As the California state legislature approaches its mid-September adjournment, the Local Energy Aggregation Network (LEAN) issued an alert to its members about a “last-minute attempt to add language in a bill that would put a freeze on the establishment of new CCAs in California.” In a follow-up email, a spokesperson said the bill number and the author are both unknown, but added that the group had been informed of the proposed change by Cal-CCA lobbyists who are tracking the issue.

LEAN called on its members to contact their lawmakers and oppose putting a freeze in place. “The requested calls are pre-emptive given how fast things are moving in Sacramento right now,” the organization said in a statement. “We need to be ahead of the curve.”

There are currently eight CCAs established in California and many more in the works. The California Public Utilities Commission forecasts that 80 percent of utility customers will receive their electricity from community-choice aggregators, rooftop solar or direct access providers by the middle of the next decade. This represents a significant disruption to the state’s electricity system structure.

CCAs are starting to play a central role in helping California meet its renewable energy targets. The current eight active CCAs are expected to drive a minimum of 3 gigawatts (DC) of solar by 2022, roughly 34 percent of all utility PV expected to come on-line in the state over the next five years, according to GTM Research solar analyst Colin Smith.

“With so many other regions expected to form their own CCAs and add to that forecast, this ruling would not derail California from hitting its 50 percent RPS by 2030, but it would prevent it from achieving that goal early,” he said.

For now, though, CCA advocates must take a step back and find out how real the policy threat is. The California legislative session closes on Friday, so the answer will be revealed soon enough. Meanwhile, it’s likely that CCAs will face other regulatory and local policy challenges in the coming months.