Commentary: Utility profits the unspoken factor in California’s rooftop solar fight
A new judgment day arrives soon for rooftop solar development in California, with the state’s Public Utilities Commission due to issue a rewrite of its abortive attempt to dun current and future residential solar owners unprecedented sums, thus discouraging development of home-based solar energy.
Never mind that more than 1 million homes in this state have solar panels, making California a world leader in localized use of energy from the sun.
Never mind also that cutting back expansion of rooftop solar would compel utilities like Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric to buy ever more energy from solar thermal plants in remote parts of the state’s vast and sun-drenched deserts.
There’s nothing these privately-owned, profit-driven utilities want more than that. For them, buying power from distant solar farms means vast profits. That’s because getting the desert’s solar power to cities requires hundreds of miles of new transmission lines, which cost many billions of dollars.
Since the private utilities get a guaranteed rate of return (e.g. profit) on capital investment that usually varies between 10% and 14% per year for 20 years, the more desert-based solar thermal, the more money they collect from customers.
So it was no wonder the utilities all lined up behind the PUC’s clumsy first attempt at cutting back rooftop solar. They even financed the largest “citizen” group pushing for that change.
The attempt, killed just before it could be adopted in late January, would have assessed new monthly fees for owning rooftop solar, also reducing payments to owners when they send excess energy to the state’s overall electric grid.
Opponents call the present system a “subsidy” of the rich by the poor and others, including renters who don’t control their rooftops. And it is, to a degree. But those folks would pay far more in rate increases from new solar thermal transmission lines than they now pay in unofficial subsidies to rooftop solar owners.
Not a single official analysis of the PUC’s now-dormant proposal even mentioned this key fact. The precise amount of new rate increases to assure utilities profit from new power lines remains unknown, because no one can yet predict how much more solar thermal power they will buy.
Because the PUC’s plan did not mention this reality, it was incomplete and deceptive. Similarly, when PG&E happily applies for rate increases to pay for undergrounding many of its fire-prone lines, it also won’t mention its guaranteed new profits.
Gov. Gavin Newsom also didn’t mention this when he demanded the PUC change its proposed new solar pricing system. He responded only to complaints from rooftop owners who disliked the planned new structure and to complaints it would cost thousands of “green” solar-installation jobs.
But there is no doubt the PUC knew it was ignoring a vital factor in the pricing of solar power.
Said a February 2021 PUC study on electric rates of the last 10 years and the next decade, “The growth in rates can be largely attributed to increases in capital additions…in transmission and distribution.”
The study went on to forecast a 10-year average annual price increase for power from PG&E at 3.7 percent. The figures were 3.5 percent for Edison and 4.7 percent for SDG&E.
That would give each company guaranteed rate increases just about the same as those they’ve gotten over the last nine years, when PG&E prices rose by 37 percent and SDG&E rates by 48 percent, according to the report.
It is plain dishonest for the PUC and critics of the present rooftop solar program to ignore this reality and claim the pulled-back proposal would have meant savings for renters and lower-income electric customers.
But dishonesty rarely stops the often scandal-plagued PUC. It has played ball with the utility companies, in matters as varied as wildfire expenses, by reportedly not collecting fines it claims to assess and by forcing customers to pay for the Edison-caused shutdown of the San Onofre Nuclear Power Station.
The discredited rooftop solar plan was part of that old song, and the new plan will be, too, unless it strongly factors in utility profit increases and rate hikes that would follow decreased rooftop solar installations.
Thomas Elias at email@example.com. For more Elias columns, visit californiafocus.net.