The Austin Chronicle

Then There's This: Clouds Over Solar

Is AE throwing shade at sun-powered energy?

By Amy Smith, January 10, 2014, News

The new year has ushered in a case of the winter blues for solar advocates, but the culprit isn't the weather. Rather, it's Austin Energy's arbitrary decision to cut the compensation rate to residential solar customers who generate power that feeds the electric grid.

The reduced "value of solar tariff" went into effect Jan. 1, without public input or City Council approval. Nevertheless, Council's Austin Energy Committee, which includes the entire Council, will meet this morning (Thursday, Jan. 9) to discuss whether they should try to remedy a situation that threatens to tarnish Austin's national image as a leader on solar. Most signs point to a potential downgrade in the image department, because most people in the solar community – be they advocates, customers, contractors, or other solar-related entities – view the rate change as an outright devaluation of solar and a step backward for a municipally owned utility that just a few years ago was blazing new trails in alternative energy.

Under the new structure, the rate used to calculate credits given to residential solar customers drops from 12.8 cents per kilowatt-hour generated to 10.7 cents. Additionally, any unused credits from 2013 were reset to zero at the beginning of the year. The utility based its decision on an analysis by California-based Clean Power Research – the same consulting firm that developed the more favorable value of solar rate that Council adopted in 2012 as part of a new rate design package. While AE says the firm's recommendation was driven mainly by reduced natural gas prices, environmental and consumer advocates, led by Public Citizen, don't believe it was based on accurate or complete data. Public Citizen's own analysis shows that the value of solar rate should instead be increased based on avoided environmental costs to the city – e.g., the avoidance of having to buy coal from Wyoming to fire a coal plant, for example, or uranium from Africa to fuel the South Texas nuke plant. These "avoided environmental costs" were considered in establishing the original value of solar rate.

Lost Credit

The solar rate change and credit reset effectively wiped out credits for about 11% of the estimated 2,700 existing solar customers, according to the utility. AE officials have downplayed the financial impact to those solar households, telling Council last month that the amount of credit was "fairly small" for most people: less than $100. Still, losing that amount of credit on your electric bill isn't exactly chump change to folks who've invested in rooftop solar panels on the premise that they'll be fairly compensated for the electricity they generate. Residents in the solar-intensive Mueller community – which serves as a national model for other municipalities looking to go solar – are especially unhappy with AE's decision. Many saw sizable nest eggs of credit, ranging anywhere between $200 and $500, disappear once the modified rate and credit reset took effect.

But even as AE officials say they're exploring the idea of rollover credits in the future, they're not exhibiting much public sympathy for conservation-minded solar generators. "There are about 100 customers who have produced more energy than they have consumed," Debbie Kimberly, AE vice president of Distributed Energy Services, told Council at a Dec. 5 meeting. Her tone suggested the customers themselves were to blame for the lost credits. At that meeting, discussion on the solar change was moved off the agenda after staff told Council members that there was nothing they could do.

"Is there any way to postpone this implementation?" Council Member Laura Morrison asked from the dais.

"The quick answer is no," replied AE Gen­eral Manager Larry Weis. Later in the discussion, Kimberly explained that the utility's billing system had already been modified to reflect the change, and letters and inserts to customers were set to go out that day.

The value of solar change is not the only adjustment AE has made to the program. Citing budget constraints and other market forces, AE in December reduced its rebate incentives for new residential solar installations and cut its performance-based incentives for commercial installations. Yet AE leaders say they remain committed to solar and that they continue to see "heavy activity" on the solar front.

'Get Over Being Scared'

It's that uptick in solar activity that has utilities across the country running scared, says Tom "Smitty" Smith, executive director of Public Citizen Texas. "Many of the big electric utilities in the country are now beginning to wake up and realize that the solar revolution could threaten their longtime economic viability, and there are conferences and papers talking about how to deal with the increasing use of solar on people's rooftops [while] keeping the utilities alive," he said. He likened the situation to the one big telephone companies faced a decade ago, when cell phone sales were starting to outpace LAN lines. "Those who stuck their heads in the sand and tried to fight the change withered, and many of them have died," he went on. "The solar boom is not only going to happen – it is happening – and Austin Energy is scared. So the call to Council is, get over being scared and figure out how to adapt and to make Austin a leader in the change."

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