Solar tax? Lafayette Utilities System

[mellow]

Just came across this article on LUS introducing extra fee's for solar users:

http://theind.com/article-24174-lus-quietly-clouds-solar’s-future.html

 

[begreen]

Coal industry driven no doubt. No public input? Southern tier states should have some of the best incentives and it sounds like this is what the parish wants.
http://theind.com/article-12336-coal-vs-renewables.html

 

[iamlucky13]

A big part of the problem is full rate net metering is a subsidy to the homeowner than ignores the costs of maintaining the grid and the differing day/night values of energy. When solar is a small proportion of a utility's overall portfolio, it's easy to ignore that cost difference, but as solar grows, it has to be addressed.

There's a couple ways to do so. Only a few utility's have tried a solar surcharge. A few are trying to shift to market rate net metering. Most seem to stick with having a monthly minimum charge that is intended to cover most of the infrastructure cost, and have lower per kWh costs.

Also, I didn't realize Louisiana had cheaper electricity than the Pacific NW, and in fact, the lowest rates in the nation. Looking at the EIA data, it seems they have really benefited from low natural gas prices. That makes for a difficult competitive environment for solar.

 

[jebatty]

A big part of the problem is full rate net metering is a subsidy to the homeowner than ignores the costs of maintaining the grid and the differing day/night values of energy.

As with so many things, this is only a partial truth or a partial lie, depending on the direction of the view. Utilities have so many ways to fudge the rates that making sense out of the rate/cost structure is difficult.

With our utility I notice "peak demand" charges which are very high compared to the regular rate. I also see rates which make obvious that some rate payers are subsidizing other rate payers. I see that when the utility has to buy peak power from the generating supplier, the utility buy rate can be $20/kwh or higher. I also see that as to supposed grid maintenance costs to the utility, if industry and commercial demand were separated out, a much less robust grid/generating system would do just fine meeting residential demand, and that in fact these large users are under-paying the real costs of grid maintenance and generating capacity which has been built to meet their large demand needs.

I also see that the utility does not include any of the benefits of solar: clean air, water and soil; improved health of the population and environment; improved agricultural production; less line loss from distributed generation; high solar input during high demand periods, especially during the summer and mid-day a/c loads; benefits from otherwise "free" solar kwh feeding the grid without having to pay the capital and maintenance costs of the solar generating facility; and many more.

Solar and wind kwh's are a big disrupter to a business model of regulated monopoly and guaranteed rates of return. Yes, consider added costs, but also Yes consider the benefits. My bet is that at least for homeowner PV, the benefits to the utility and other rate payers more than offset the added costs, if any.

 

[vinny11950]

Solar and wind kwh's are a big disrupter to a business model of regulated monopoly and guaranteed rates of return.

Great point. Many pension funds, retirement funds, hedge funds and so on, depend on the reliable rate of return of utilities. Local governments also depend on that rate of return so they don't have to add more funding to already depleted pension obligations. They are going to fight tooth and nail to protect that golden goose.

 

[Where2]

Install a Tesla Powerwall 2, and request to have the net meter replaced with ordinary one-way meter, the chess game goes on.

Why should a customer (powerwall 2 owner) who never sends their excess energy to the grid be forced to pay any more than a customer who line dries their clothes (or has a gas dryer), doesn't use their oven (or has a gas oven/stove), uses a gas water heater (or solar hot water) and doesn't run an A/C? Does the electric company tack on a solar hot water fee? Does the electric company tack on a monthly surcharge all the gas appliance users because they presently use a gas dryer rather than an electric dryer, a gas stove rather than an electric, or heat with gas rather than electric? Those gas appliance users could convert to an electric appliance any day, and the electric company would be obligated to provide them with all the energy they need to run their new appliance without having to pay "grid tax" all those years they used gas appliances. Should the electric utility surcharge the folks who cannot afford to run an A/C system, because some day they might buy one and use it?

Presently, my electric utility is advertising how they are connecting another 1,000,000 solar panels to the grid by the year's end. https://www.fpl.com/clean-energy/solar/energy-centers.html

If my rooftop photovoltaic system is screwing the grid balance by adding energy to the grid when my utility doesn't need it, why are they adding so much of their own photovoltaic capacity?

If I'm potentially damaging the grid by feeding my excess energy to the grid mid-day, maybe my electric utility should offer a program similar to the one where they presently credit me up to $9/mo (all summer) for allowing them the opportunity to load shed my A/C unit to reduce production demands? Apparently, if it's a bright sunny summer afternoon and they opt to load shed my A/C, I'm giving them some fairly valuable energy if it is worth up to $9 per month whether they load shed my A/C or not!! The regressive concept of the load shedding program is that the lower I drive my electric bill via PV generation, the less I am rewarded for having my A/C connected to their load shed magic call box.

A big part of the problem is full rate net metering is a subsidy to the homeowner than ignores the costs of maintaining the grid. Most seem to stick with having a monthly minimum charge that is intended to cover most of the infrastructure cost.

Why is grid maintenance for a PV system owner any more costly than a low energy consumer? Take for instance, a seasonal resident: Capacity exists 12 months out of the year, whether the seasonal resident is in town or not. The seasonal resident may only pay the base meter fee when they are not in town, yet without warning they can unlock their door, turn on the electric clothes dryer, the oven, and the A/C unit (or electric heat)at any time.

On both my PV connected residence and my seasonal residence, I already pay a base meter fee like every other grid connected customer. The power company knows precisely how many kWh every net meter user fed back into the grid. Why is a fixed rate "PV Tax" more equitable than a per kWh "trading" fee, if the "solar fee" is supposed to justly compensate the power company for the consumer's "convenience of net metering"?

Before I installed PV, there was no "fee" for the convenience of being able to fire up my electric clothes dryer, my electric oven, my sprinkler pump, and my A/C unit simultaneously. Each of those devices consumes far more energy than I ever "backfeed" into the grid, and they are far more unpredictable than my PV output. Everyone loves to tout how "unpredictable" the sun is. The load created by my A/C system or my dryer turning on is greater than the 2-3kW max my array every back feeds.

Personally, I continue to strive to automate my energy loads to limit what I "trade" with my electric utility. If they wish to "Solar Surcharge" me in the future, I'll calculate the ROI on a Powerwall 2 investment.

 

[EatenByLimestone]

Individual battery banks are the future. A few more years and their cost will be low enough for the average consumer to contemplate. The utility will always be there, but I think fewer and fewer will be tied to it.

Now, natural gas lines would be harder to do away with, but if costs go up, people will switch away from that too.

Maybe we will see a time where exterior house walls will be made of or covered in solar panels.

 

[iamlucky13]

Why is grid maintenance for a PV system owner any more costly than a low energy consumer? Take for instance, a seasonal resident:

Two points:

1.) The basic cost of maintaining the grid is not higher, which is part of the reason why some favor a common base charge instead of a specific surcharge.

2.) It's not actually just about the grid maintenance, but also about the imbalance of value. Depending on how much contracted power (including net metered) the utility has coming into their system, the value of additional Watts can be close to zero, or even negative at times, or it can be tens or even hundreds of times as much as the billed rate. If you feed more back to the utility at times when they're paying a low rate, but draw more at times they're paying a high rate, this imbalance is increased.

Large loads are a separate matter, although on the residential scale, there's a tendency of all us of to average our behaviors (you're probably not going to turn your drier on at the same time as I do). On the commercial and especially industrial scale, there are rather large capacity base charges for this kind of flexibility. My employer, for example, pays $4.50 per kW of peak capacity per month. If I were paying an equivalent charge for my home, my base charge would $216 per month.

That said, there are things we on the residential side do tend to do in unison, like turn on the heat in the morning or the air conditioning when we get home in the evening, hence the push for time of use billing in some utilities.

 

[Where2]

On the original topic, an apparent about face: http://theind.com/article-24195-About-face-LUS-seeks-repeal-of-‘solar-tax-ordinance.html

It's not actually just about the grid maintenance, but also about the imbalance of value. Depending on how much contracted power (including net metered) the utility has coming into their system, the value of additional Watts can be close to zero, or even negative at times, or it can be tens or even hundreds of times as much as the billed rate. If you feed more back to the utility at times when they're paying a low rate, but draw more at times they're paying a high rate, this imbalance is increased.

If there is a potential imbalance of kWh value or negative kWh value during the hours where PV works, why would my utility be adding 1,000,000 PV panels to their grid as their own production source? Solar and other renewable sources presently provide 0.06% of my utility's supply. Purchased power presently provides 7%; 70% comes from natural gas fired plants; 17% from nuclear; 5% from coal; 0.38% from oil.

 

[EatenByLimestone]

Maybe oil is going off line.

 

[mellow]

Good to see they changed their mind. Hopefully it will set a precedent, but I doubt it.

 

[CaptSpiff]

If there is a potential imbalance of kWh value or negative kWh value during the hours where PV works, why would my utility be adding 1,000,000 PV panels to their grid as their own production source? Solar and other renewable sources presently provide 0.06% of my utility's supply. Purchased power presently provides 7%; 70% comes from natural gas fired plants; 17% from nuclear; 5% from coal; 0.38% from oil.

I can answer that from my LI,NY utility's perspective, who are also promoting big commercial Solar Farms, but have effectively put the brakes on distributed residential solar by "running out" of the local subsidy. They buy the commercial solar energy at Realtime Market Wholesale Rates which typically run much lower than the Annualized Regulated Retail Rate which a residential customer is familiar with.

These Solar Farms are "price takers" and get paid similar amounts to the larger grid generators who are supplying the energy realtime. The residential solar customer gets to spin their meter backward, effectively getting compensated at the Retail Generation Rate plus the Grid Infrastructure Rate plus the added Tax Rate.

To put that into numbers:
Nominal Wholesale Generation payments are between 5-10 cents per KWHr depending on time of day.
Our annually or quarterly adjusted Retail Generation rates are about 9 cents, and grid charges about 9 cents, and tax about 2 cents per KWHr.
So the Utility would rather pay 5-10 cents vs 20 cents per KWHr for energy. No surprise there.

Re the Louisiana Utilities System rolling back it's rather punitive fixed solar monthly charge, I think that was a smart idea. They clearly got way too far out front of this issue. The author identifies a fixed Monthly solar charge of $11.30 and a $15.95 wire fee, vs a simple $7.00 Monthly charge for non-solar residents. That seems kinds usury for a customer who's normal non-solar equivalent bill runs between $40-80/month.

These are definitely uncharted waters for all parties (consumers, regulators, and utilities).

(broken link removed to http://www.nyiso.com/public/markets_operations/market_data/maps/index.jsp)

The above link Realtime Prices are shown in $/Megawatt-hours.
An example conversion for energy cost in the above map is $40/Mwhr = $0.04/Kwhr.

As I write this post the LI,NY utility is buying it's wholesale power at $20.18/Mwhr. That's 2 cents/Kwhr. They are probably not too happy paying residential solar producers 20 cents/Kwhr right now.