If you install rooftop solar to generate most of your electricity expecting to reduce your monthly bills, you may be very surprised by higher bills instead.
NorthWestern Energy has asked the Montana Public Service Commission to create a new rate class, and radically different fee structure for residential customers with rooftop solar.
NWE provides hundreds of intimidating pages of spread sheets and rationale for this change. But basic assumptions underlying their analysis are deeply flawed.
A customer with photovoltaic panels on their roof purchases fewer kilowatts of electricity. According to NWE, customers should compensate NWE for the “cost” of this “reduced revenue.” This makes no sense. People have no obligation to buy any company’s product. No one should be charged for the “offense” of purchasing less electricity — whether due to a more efficient refrigerator, turning off unneeded lights, or installing PV panels.
NWE also claims that “fixed” costs of infrastructure needed to produce and distribute electricity are included in the charge per kWh. So, NWE claims, customers who buy less electricity don’t pay their share of infrastructure costs. They “shift cost” to customers who buy more. But more expensive, higher capacity infrastructure is required because of customers who use more electricity. They should pay more of the “fixed” cost.
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The wide range of house and family sizes and lifestyles results in a wide range of electricity consumption by individual customers with or without solar. Some customers with rooftop solar purchase more electricity than some without. Even if NWE’s “reduced revenue” and “cost shifting” arguments were valid, NWE proposes a double standard to the PSC. Any fee charged for “reduced revenue” or “cost shifting” should be applied identically to all low-volume customers with or without rooftop solar. NWE proposes charging only rooftop solar customers for these “offenses.”
NWE provides a valuable service to customers with rooftop solar. When the sun is shining, electricity from PV panels is used immediately without touching the NWE grid. But if the PV panels are producing more power than the household is using, extra kWh are exported to the grid for credit. When PV panels are producing less power than needed, credits are exchanged one-for-one for kWh from the grid. This is “net metering.” After credits are used, rooftop solar customers purchase kWh from grid just like other customers. Depending on their total electricity use, and the size of their PV array, some customers export many more kWh than others.
NWE sells exported kWh to neighbors for retail price. Experts have shown that, due to avoided costs, customer-generated kWh provide benefits to NWE that compensate for any costs of net metering. Unsurprisingly, experts hired by NWE disagree.
Net metering is the fundamental difference between residential customers with and without rooftop solar. Any special fee for net metering customers should have some relationship to net metering and rooftop solar. NWE’s proposal fails that test.
Instead, NWE devised an arbitrary and capricious fee that has absolutely nothing to do with rooftop solar or net metering. NWE will determine the single hour each month (720 hours) that customers (net metering only) happen to be using maximum power from the grid. They propose charging $8.64 per kW for this “maximum demand.”
The disconnect between NWE’s “demand charge” and net metering will cause unreasonable and inequitable bills. An example: My wife and I, moderately energy frugal people in a small house, are below average electricity users. According to NWE’s proposed fees for residential customers, we would pay $35 per month.
However, we have installed rooftop solar which generates as much electricity we use – with the help of net metering. According to NWE’s proposed fees for net metering customers, our bill would be 40 percent higher — $49 per month — despite the fact that we produce all our own electricity!
Anyone considering installing rooftop solar should be concerned about NWE’s proposed fees. They will stifle people’s opportunity to use rooftop solar. Is that the intent?
Dick Walton is a retired physics professor living in Billings.