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POLITICS: PennAve

ALEC takes aim at rooftop solar industry

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PennAve,Energy and Environment,ALEC,Zack Colman,Solar Energy

The American Legislative Exchange Council, a group that has attracted criticism from the Left for its ties to large corporations and for helping craft legislation for state lawmakers to advance conservative policies, is setting its sights on dismantling an incentive crucial to the rooftop solar industry.

ALEC's board will vote on whether to adopt a resolution slamming "net metering," a financial arrangement in which utilities pay customers who own rooftop solar panels for the excess power they generate and supply back to the grid. The group, whose annual meeting closed Friday in Washington, has suggested charging rooftop solar users for accessing the main power grid, though those customers mostly generate their own electricity.

The move could serve as a harbinger of policy battles in state capitols across the country, building off a recent ALEC-backed campaign to tear down state renewable portfolio standards. None of the 37 bills that sprung from that effort passed.

The resolution comes after a contentious battle between a major Arizona electric utility and that state's regulators over net metering, which followed similar episodes in California, Idaho and Louisiana.

"The recent debate of this issue in Arizona is indicative of the fact that this is a matter that is timely and something that legislators may be expected to consider during the 2014 legislative sessions," John Eick, who leads ALEC's energy, environment and agriculture task force, said in an email.

Net metering's proponents have prevailed where the issue has been fought over. And they see the activity as part of a coordinated effort between ALEC and the utility industry — the group counts several big electric utilities as members, as well as the industry's main trade organization, the Edison Electric Institute.

Bryan Miller, vice president with rooftop solar firm SunRun, said the net metering opposition is a page out of the Edison Electric Institute's playbook.

The trade organization put out an uncharacteristically honest assessment of the impact solar and other forms of distributed generation could have on utility bottom lines. Since utilities earn revenue from rates they charge consumers, those who don't rely as much on the grid -- like rooftop solar users -- represent lost dollars. In that report, the group identified net metering as one of several "threats to the centralized utility business model" that "have accelerated" in recent years.

"ALEC has been at this and at this in a losing way all year," Miller said. "We've been dealing with these issues all over the country all year. I think it's up to the utilities now to decide whether they want to go on the same course."

Part of the reason for the utility industry's urgency, as the Edison Electric Institute noted, is because solar prices are tumbling and becoming competitive in certain regions. While overall penetration is still low at 1 percent of the total U.S. power mix, that's likely to change — and to slow utility growth rates.

That was the case with electric utility Arizona Public Service. In its filing to the state's utility commission, it said growth would slow 0.5 percent next year because of rooftop solar.

"It's a big deal to some of the utilities," said Carrie Cullen Hitt, senior vice president of state affairs with the Solar Energy Industries Association. "They're saying, 'Wait a minute, we're losing customers and load.'"

Most utilities in the United States are monopolies — they get a dedicated customer base, but must persuade regulators to increase the rates they charge.

For its part, the Edison Electric Institute praised Arizona utility regulators' November decision to charge future rooftop solar customers — albeit at a modest $4.90 per month for the average user — for connecting to the grid.

"Importantly, the commission recognized that current net metering policies unfairly shift costs from solar homes to non-solar homes and approved changes to begin reducing this growing cost shift," it said.

The issue is now brewing in Colorado, where Xcel Energy has asked the state's utility commission to reduce the net metering rate from 10.5 cents per kilowatt-hour to 4.6 cents to reflect the "true cost" of the solar power to the utility.

Xcel depends little on the 170 megawatts of rooftop solar generated by 16,000 homes to smooth periods when power demand outstrips supply, said Mark Stutz, a spokesman.

But solar power advocates say Xcel's accounting of true cost fails to factor environmental benefits, such as lower carbon emissions, the strain it alleviates from the grid and reduced maintenance costs.

Stutz, however, said rooftop solar customers still depend on the utility's system during periods of intermittency — say, when the sun isn't shining — and that other customers are subsidizing net metering through a surcharge Xcel says is too high.

"The rooftop solar industry, in our opinion, doesn't pay for all the system costs for running a utility system in total," he said. "There are costs associated with a utility company keeping you in service."

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