Thanks to Luke Metzger at the Environment Texas blog for this take on pending net metering legislation (read: making sure folks with solar panels get paid back for the excess energy they produce):
On Monday, the Texas House will decide whether to promote solar energy by requiring utilities to pay consumers fair prices for surplus solar power or to codify anti-consumer practices in order to benefit big utilities like TXU. Here’s the story.
Sick of riding the rollercoaster of high electric rates and concerned over pollution and dependence on foreign oil, many Texans are turning to solar power to get more choices than their electric company provides. More than 40 states help consumers do this by requiring electric companies to pay a fair price for the surplus electricity solar panels put back on the grid (known as net metering). In return, the electric grid benefits from a supply of pollution-free electricity during peak-demand time periods, such as hot summer afternoons, avoiding congestion costs and dampening real-time on-peak wholesale energy prices. The more renewable generation that is located at customer’s houses and businesses, the less will need to be charged in the future to all customers’ electric bills for wires, fuel and pollution costs. Incentivizing solar will also help create jobs and attract manufacturers to the state.
In addition to consumer rebates and tax credits, net metering is a key financial driver making solar power a cost-effective investment for consumers. Texas had such a policy in place in the 1980s, but with the restructuring of the electric market, old definitions of electric utilities no longer applied and net metering was inadvertently ended.
In 2007, the Texas Legislature attempted to correct this mistake by declaring the intent in HB 3693 that “that net metering…be deployed as rapidly as possible.” Unfortunately, because net metering was not defined in the legislation, the Public Utilities Commission of Texas (PUCT) determined that “use of the term ‘net metering service’ could be confusing … and is not necessary to implement the statute”. Their rule essentially makes net metering optional, leaving the decision to purchase surplus electricity up to the Retail Electric Providers. In their 2008 report, the International Renewable Energy Council (IREC) singled out Texas as a state with one of the “Worst Practices” with regard to net metering.
CSHB 1243 (Rep. Gallego, D-Alpine) improves the situation by requiring electric companies to pay consumers at least 80% of the retail price, minus non-bypassable charges. While this would not have been considered true “net metering”, it would have been a big improvement over current rules.
Rep. Gallego has been a longtime advocate of renewable energy, but now, electric companies like TXU and Reliant have convinced him to amend the bill so they only have to pay the wholesale price, which can range between zero and just 1/3 to 1/2 the retail price, minus administrative fees of their choice. In addition, the amendment caps the size of renewable energy systems to just residential systems under 10 kw. Schools, churches, and small businesses would be left in limbo on buyback just as they are today. For example, the Shallowater High School — in a suburb of Lubbock — installed a 150 kW and wanted to go bigger.
Proponents of the Gallego amendment argue this compromise is the best policy that can be passed at this point, despite the fact that the House State Affairs committee already passed the original (good) Gallego bill and the full Texas Senate passed nearly identical language in SB 545. They also argue that, even if the buyback rate is lousy, at least consumers who serviced by electric coops could finally get some renumeration. However, coop customers would be covered under Rep. Solomons’ HB 1866, which has already passed the House and will soon be considered by the Senate.
We can do much better than this TXU-written policy.
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Let’s be clear. TXU Energy supports the objective of the Gallego legislation to encourage greater use of distributed solar energy. In fact, we are exploring the possibility of installing solar panels at our headquarters in La Colinas and we already install solar panels at schools that are part of our Solar Academy program.
But, requiring retailers to purchase power back at a retail price simply doesn’t make sense. Let’s use an analogy. If you purchase a brand new car and decide to trade it in to the dealer, do you get to sell it back at a retail price? No, you don’t.
If you grow organic tomatoes in your back yard and sell what you don’t eat to your neighbors, do you get the same price as Whole Foods? No, you don’t.
H.B. 3693 establishes a floor price for unused power sent back onto the grid. That’s a reasonable state policy to encourage more consumers to use distributed solar and wind power systems. We support that. We also support the part of Senator Fraser’s S.B. 545 that creates a roughly $100 million solar rebate program.
The Sierra Club and the Environmental Defense Fund also support the amendment to H.B. 1243 that Mr. Metzger writes about. Unfortunately, his explanation of it isn’t completely accurate regarding our point of view.
The issue is whether state policy should require retail electric providers, in a competitive market, to purchase power back at an artificially inflated price. Our view is that it should not. That doesn’t mean we don’t support the intent of this bill. It simply means we have different point of view on how to accomplish it.
TXU Energy supports solar power and will buy surplus at a fair price. If the Legislature wants to provide an additional subsidy, then it can appropriate funds or find some equitable means to spread the cost of that subsidy to all customers.
In my opinion,it is necessary to require electric companies to pay a fair price for the surplus electricity solar panels put back on the grid to encourage more and more people to install solar energy.
Let’s be clear right back. TXU’s investment in solar is noted and appreciated by the environmental community, including all of us here at Vote Solar. However Mr. Stewart’s net metering analogies are incorrect, and we want to clarify the assumptions behind his argument.
Net metering is NOT like a customer returning a used car. Net metering IS like banking valuable electricity on the grid. Like a bank, the utility allows the customer to withdraw an equal amount of power at another time. And like a bank, the utility uses the valuable peak solar electricity to meet the demands of other customers.
Net metering is NOT akin to your neighbor trying to sell you his extra tomatoes at an inflated price when you clearly don’t need tomatoes. Net Metering IS like your neighbor offering you home-grown juicy tomatoes in the summer – when you are really craving tomatoes, in exchange for some of your home-grown corn in the fall.
Net metered customers are never offered a “fair price” for surplus electricity. Instead, net metering customers receive “fair credit” for their clean, peak power sent to the grid. Net metering is a solar energy bill arrangement – the utilities won’t be cutting a check to you if you go solar.
If you put solar on your house in Colorado, Florida, Nevada, Kentucky, Illinois (just to name a few of the 40 states with net metering), your utility will only charge you for your net consumption of electricity. Meaning that your bill will be calculated as follows: the total energy delivered to the customer minus any energy delivered by the customer to the distribution system for use by other customers.
And make no mistake, the power that Texan solar systems are delivering to the grid is incredibly valuable. The sun shines brightest when air conditioners send local power needs through the roof. Rather than building up expensive new centralized power plants, solar offers a quick and easy (not to mention, non-polluting) way to ensure the rest of the community can keep their lights on through periods of highest demand.
Right now retail electric providers (REPs) in the ERCOT region are not required to offer this solar energy bill arrangement. Which means that many solar customers are currently giving their REPs free solar power, and often at time when the REPs would be shelling out the most to buy pricey power. We don’t think that is a fair billing arrangement, and thus we have been advocating for years, with our friends at Environment Texas and others, for true net metering for the state.
Representative Galleo’s original amendment (CSHB 1243), as Luke mentioned, was not a true net metering bill, but it was a serious step in the right direction. We heralded his efforts to create a more equitable billing arrangement for solar customers.
Unfortunately, the latest iteration of the amendment is stripped down, and would only require utilities to offer net metering credit at some unspecified value greater than “zero.” I suspect that if Mr. Stewart was offered anything less than blue book for that used car of his, he would call the deal a scam. Why should REPs be allowed to credit solar power generation at a fraction of the price that they’re going to use to resell it?
Annie Carmichael
Federal Policy Director/Texas Lead
Vote Solar
http://www.votesolar.org
annie@votesolar.org
Wait, wait, wait– so you’re saying retail prices are “artificially high”?
You’re also assuming something that your analogies don’t pick up: a kilowatt of electricity is the same whether it’s generated on a rooftop or at a power plant. A car you buy goes under certain depreciation once you drive it off the lot. If I grow a tomato in the backyard, I might be able to sell it for the same price as retail– have you not been to the Farmers’ Market?
What you’re advocating for is a monopoly on selling electricity by retailers– like HEB and Whole Foods mandating that you can’t sell your tomatoes to your neighbor, only to them, and only at wholesale prices that other large growers and selling at.
And let’s be frank– baseload wholesale power rates are drastically below peak rates. You shouldn’t be able to buy a kW of electricity for 2 cents from distributed solar generator during peak and then sell it to their neighbor at 8-12 cents. Likewise, I would say it was a raw deal if you had to be forced to pay peak prices for a kW produced off peak.
Let’s be fair to consumers and treat them like retailers. It is, in fact, the CUSTOMER who is always right.
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Lets be fair
When I was a kid in the state of Texas in the 50′s we had the best rates on power in the country. Now thanks to the PUC and our lawmakers in the state of Texas we pay almost the highest rates in the US. As I was told when I called the PCU it was not their job to protect us it was only their job to interpret the laws. It looks like they are interpreting and giving the wrong advice to the lawmakers that almost looks like they work for the power lobby. They need to fix net metering and take a look and see what the PUC has done for Texans. Not much!
please look at my youtube my solar install and the problems I have had with Texas net metering
http://www.youtube.com/watch?v=A7i0FC61z4E
Thanks,
Gerald Freeman
Good news Gerald. The net metering bill is actually coming up this afternoon — keep your eyes peeled for an update.
[...] afternoon, the Senate has HB 1243 on their intent calendar. HB 1243 is a “net metering” bill which would ensure that owners of solar installations, small wind turbines, or biogas generators [...]
[...] still hope. This afternoon, the Senate has HB 1243 on their intent calendar. HB 1243 is a “net metering” bill which would ensure that owners of solar installations, small wind turbines, or biogas [...]
UPDATE: this bill passed the Senate Wednesday morning, with solar SB 545 and SB 921 (electric coop reform) attached!!
That sounds good but how will the PUC interpret the laws. When its all done the PUC will determine the fair market value of the net metering. Is the green solar credit value a wholesale price or should it be retail price for the small home solar net metering system. The power lobby would like to pay 2 cents per KWH but just ask them how much the pay per KWH when they have to purchase it on 100 dergee day in July. It will not be over until they the PUC sets the fair market price.
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Does the practice and/or law of this sort of thing involve any other eco-friendly means of generating power, or only solar? For example, if one found it more feasible, given the cost of equipment, to set up a wind- or water-powered generator, would their ability to sell their power be guaranteed anywhere, or denied because it isn’t solar?
Also, is there any limit on how much power the company has to buy, or could one sell as much as they can produce?
I’m curious about how this works anywhere in the US, so any info about any state is welcome.
Net metering effects any generation of power behind the meter not just renewables, in practice its usually assumed that the “netmetering laws” will be generated by renewables. Right now Texas doesn’t have a guaranteed buyback in its net metering rules. The PUC wants to see if a market (REPS) will step forward and make an offer on the “excess” generation.
Several problems have recently occurred. The PUC ruling leaves it up to the Reps to determine the buyback rate and most haven’t yet (TXU and Green Mountain are the only ones that I am sure of).
The second problem is the roll out of digital meters, the older meter with the spinning disk the disk would go backwards and forwards depending on your energy consumption, the new meters have a input register and output register so if your generation exceeds your consumption it does not zero out the input register. With the old meter it would run backwards effectively paying you the rate you paid to move the meter forward, with the digital meter any excess (more than your house is currently using ) goes out to the grid for free, talk about socialized systems. The PUC is hoping the reps will pay a fair price for the output but its not going to be near what you paid for the input.
David
I hope everyone realizes that from the utilities point of view when they buy electricity under net metering they are effectively incubating millions of small competitors that could eventually generate so much power that they drive the big utility out of business, or at the very least put a big dent in their revenue stream. Given that they have invested billions in the infrastructure that makes all this possible, it is only reasonable that they receive some kind of return on investment for this infrastructure.
Here is another bad analogy: You are a farmer that grows tomatoes amongst other farmers with very little capital so you give them access to your trucks, equipment, and roads that you paid millions for for free so that they can get their tomatoes harvested and to market for free. You will eventually be overwhelmed by your “poor” neighbors as you infrastructure deteriorates over time. Your spouse smacks you on the head and says” We should be selling those tomatoes, that is what we do!”
It should be that small generators can effectively buy transportation on the grid like natural gas producers buy transportation for their product from a pipeline company. This transportation must be reasonable such that all parties can still make a reasonable amount of money on the transaction.