Electric utility commissions across the nation are following the lead of California to cut compensation for rooftop solar generation. Is Idaho the next step in a death march for the industry?
Slipping the resolution through in the final days of the year, the Idaho Public Utilities Commission (PUC) passed a resolution to cut net energy metering for rooftop solar. The new rulemaking decision also approved electric rate increases that are expected to disproportionately impact low-income customers.
Net energy metering (NEM) involves the electric utility providing credit to rooftop solar customers for delivering electricity to the grid. It is an essential factor in the return on investment for rooftop solar and helps encourage local sharing of clean energy.
Utility Idaho Power will no longer be required to pay retail rates for net-metered electricity, instead shifting to a net billing format. The Sierra Club estimates that the new average annual net billing rate will be under $0.06 per kWh.
Over the past decade-plus, the United States has launched its residential solar industry, bringing predictable and often low-cost, local, and clean energy to homeowner’s rooftops. Rooftop solar is a source of financial stability for customers, and for its tens of thousands of employees, it has created decent paying jobs.
Idaho now follows California in slashing NEM. The move caused California, which was once among the most robust rooftop solar industries in the world, to suffer an 80% drop in installations in the immediate aftermath of the cuts. A major insurer of California rooftop solar businesses told pv magazine USA that 75% of California rooftop solar companies are now at high risk for bankruptcy, and as many as 17,000 jobs have already been lost. California’s struggles serve as a warning to the rest of the nation, but Idaho has not heeded that warning.
“The commissioners are saying the voices and expertise of thousands of Idahoans and small businesses are not as important as the voice of the state’s largest monopoly utility,” said Alex McKinley, Owner of Empowered Solar.
During recent Idaho PUC public hearings, not one public testimony came in favor of the resolution. Despite this unified opposition from the public, the utilities commission ruled in favor of Idaho Power’s plan.
Idaho Power justified the unpopular decision based on an internally produced report called “Value of Distributed Resources Study.” Sierra Club and other environmental groups hired an independent analyst, who concluded that the Idaho Power report severely undervalued rooftop solar’s contribution to the grid. The report was based on selective, internal utility data, said the analyst.
“The proposal willfully misleads the public on the value of rooftop solar to Idaho Power, ignores the huge environmental advantages of distributed clean energy and is likely to kill Idaho’s solar industry and the good paying jobs it brings to our state,” said Mike Engle, chair at Portneuf Resource Council.
From a business perspective, the motivation for utilities to suppress the value of customer-owned rooftop solar is clear. Idaho Power would much prefer to sell as much electricity as it can to customers in its territory, rather than sustain a market that enables homeowners to achieve a degree of energy independence and pricing clarity for the long run.
To add insult to injury, the PUC also approved a rate increase for all Idaho Power customers, assessing a monthly fixed fee called a “service charge.” Customers will be charged $10 per month in 2024, and $15 per month in 2025, regardless of power usage. The move is expected to be particularly damaging to low-income customers who monitor their energy use to avoid high bills.
“Fixed rates are regressive. They disproportionately raise rates on your poorest customers while barely increasing rates for the wealthiest,” said Lisa Young, director, Idaho Sierra Club.
Who’s next?
More utility attempts to quash rooftop solar are inevitable as other states see the “success” of California utilities in crushing the industry. The results may illuminate which utility commissions across the nation are truly operating in the interest of the public they serve.
In Oregon, Idaho Power is attempting to pass the same solar rate changes it implemented for its Idaho customer base. Oregon rejected the plan, though Idaho Power is expected to continue pushing the change.
In West Virginia, utilities Mon Power and Potomac Edison are attempting to cut rooftop solar export rates by more than half. The state’s public utility commission suggested a less severe cut, but installers in the state are warning that popular low-income solar programs will not be able to operate under the proposed rate structure.
