By Sammy Roth, The Desert Sun
The Imperial Irrigation District could end the months-long uncertainty over its solar policy next week. But critics say the district's new plan — if approved by the utility's board of directors Tuesday — would kill the rooftop solar industry in the Imperial and eastern Coachella valleys, leading to mass layoffs and making it impossible for all but the wealthiest families to go solar.
The agency brought rooftop solar installations to a halt in February, when it abruptly eliminated net metering, the program utilities have long used to compensate solar-powered homes and businesses for the excess electricity they generate. District staff now want to replace net metering with a new arrangement called net billing, which would dramatically reduce the value of solar. Installers say they'll stop doing business in Imperial Irrigation District territory if the board approves the plan, since they won't be able to offer deals that make financial sense for most families.
Nearly 100 people packed the district's La Quinta boardroom for a public hearing on Wednesday, including solar workers who said they could find themselves unemployed if the new proposal passes. Among them was La Quinta resident Laura Fonseca, who said some of her colleagues at SolarCity have already been laid off this year because of uncertainty over the district's solar policy.
"It's not because they don't know how to do their job. It's just that there’s no business," Fonseca said. "And if this continues and it doesn't change, I probably will lose my job as well."
Under net metering, solar customers who sent more electricity onto the grid than they consumed were able to zero out their energy bills. If they consumed more from the grid than they contributed, they only had to pay for the difference, at the retail electricity rate. So a customer who consumed 1,200 kilowatt-hours from the grid but sent back 1,000 kilowatt-hours only had to pay for 200.
Under net billing, solar customers would be charged the retail rate for all the electricity they take from the grid, then credited at a far lower rate for the energy they send back. So that same customer would be charged the retail rate, 11.69 cents per kWh, for all 1,200 kilowatt-hours they consume, then credited at just 6.8 cents per kWh for the 1,000 kilowatt-hours they contribute. The 6.8-cent credit rate would probably drop over time, making rooftop solar progressively less valuable.
The result: Solar customers would pay much higher bills. They would rarely zero out, if ever.
In a letter to the district's general manager, Kevin Kelley, earlier this week, the California Solar Energy Industries Association gave an example of what the changes would mean for a hypothetical solar customer, assuming the initial credit rate of 6.8 cents. A customer who would have gotten a $22 credit on her monthly bill under net metering, the group estimated, would instead pay $28.40 that month under net billing. A customer with a similar solar system but higher energy use, who would have paid $22 in a particular month under net metering, would instead pay $64 under net billing.
The net billing system "will effectively end the installation of rooftop solar on individual customer homes," Joe Deisenroth, who runs Revco Solar's Coachella Valley office, told the district's board of directors on Wednesday. Revco started focusing on the east valley last year, but it's already had to fire five of the six employees it hired to serve that market, Deisenroth said in a follow-up interview.
"I absolutely never will market in (the Imperial Irrigation District) again if they move forward with the current proposal," he said.
District officials have criticized net metering as an unfair subsidy, saying rooftop solar customers aren't paying their fair share to maintain the electric grid. They say the agency is losing $10 million per year in revenue due to rooftop solar, and that non-solar customers — who tend to have lower incomes than their solar-powered neighbors — will ultimately pay the difference through higher rates.
That argument has highlighted divisions between the Imperial Valley — where the district is based — and the higher-income communities of the eastern Coachella Valley, where most of its energy customers live. Due to some historical quirks, the Coachella Valley doesn't have representation on the utility's board of directors. Board members say their top responsibility is to keep electricity rates low for residents of the Imperial Valley, which is home to some of the lowest incomes and highest unemployment rates in the state.
"Solar around here in this town isn’t like it is in La Quinta, where everybody has it and has the money to pay for it," Brawley resident Gerald Gauna, a member of the utility's energy advisory committee, said at a committee meeting in El Centro on Monday. "Down here it’s a whole different story. I don’t see why we who don’t have solar should pay for the people that do get the benefit."
Many solar advocates reject the idea that net metering is a subsidy. They've pointed to studies showing that rooftop solar actually benefits the grid by reducing strain on transmission lines and limiting the need for new power plants, and they've criticized the Imperial Irrigation District for refusing to take those benefits into account. Many environmentalists note that rooftop solar reduces air pollution and climate change by limiting the need to burn fossil fuels, providing public health benefits that don't show up in a utility's bottom line.
District officials, though, are unlikely to change their minds. They insisted Wednesday they're not trying to kill rooftop solar, although critics say that's exactly what the net billing proposal would do.
Under the new rate plan, solar customers would initially be credited at 6.8 cents per kilowatt-hour for the energy they contribute to the grid. District staff chose 6.8 cents because that's their cheapest contract to buy electricity from a large solar power plant. Utility officials say they shouldn't have to pay more for solar power from someone's roof than they pay for solar power from a big solar farm.
The 6.8-cent credit rate might not last long, though. The staff proposal would tie that rate to the lowest-cost solar contract signed by the district, meaning net billing customers would see the value of their solar drop if the utility signs new, cheaper contracts. That will almost certainly happen, since solar is getting cheaper all the time and state law will require the district to buy more clean energy.
Other utilities have signed solar contracts at under 4 cents per kilowatt-hour over the last year. So an Imperial or Coachella valley resident who signs up for net billing at 6.8 cents next year could find herself getting credited at a rate as low as 3 or 4 cents per kilowatt-hour in the not-so-distant future.
"They know they're proposing something that's going to kill the market for rooftop, but they seem to have no remorse for it," said Bernadette Del Chiaro, executive director of the California Solar Energy Industries Association, a trade group.
Indio City Council member Lupe Ramos Watson criticized the proposal to use the lowest solar contract rate, calling it "ridiculous." Ramos Watson, who represents Indio on the district's energy advisory committee, suggested using the average contract cost instead.
"These people are doing something that's better for all of us. Whether we can afford solar or not, going green is better for this universe, for the world, for the United States of America, for everyone," Ramos Watson said at Monday's committee meeting. "So let's give them a little bit of credit for that. We don't have to lowball them."
Homes and businesses that signed up for net metering before the district closed the program won't be affected by any of the changes, which only apply to new solar customers. But the changes will impact the hundreds of people who hurried to apply after the district closed the program, many of whom had already signed contracts with solar installers under the expectation of net metering.
It's unclear how many of those customers will sign up for the net billing program, if it's approved, and how many will choose not to go solar because they can no longer afford it.
Southern California Edison, which provides electricity in the western Coachella Valley, continues to offer net metering at retail rates. Edison also tried to gut the program last year, but its proposal was rejected by the California Public Utilities Commission, which regulates investor-owned but not publicly owned utilities, like the Imperial Irrigation District.