Study Supports New Rate for Rooftop Solar Customers

November 09, 2016

Solar power

SALT LAKE CITY – Rocky Mountain Power is proposing new rates for Utah customers who want to generate their own power, but stay connected to the utility, a program called net metering. The new pricing will apply only to new net metered customers; those on the existing plan will continue with the same pricing arrangement.

Rocky Mountain Power is recommending a three-part rate for residential net metered customers, a method similar to the rate plan used now by commercial customers with self-generation. The residential rate is separated into charges of $15.00 for a fixed customer charge, $9.02 per kilowatt for peak period demand and 3.81 cents per kilowatt-hour for the amount of energy used.

Rocky Mountain Power conducted a study that found a typical rooftop solar customer underpays their actual cost of service by about $400 per year. This cost shift currently amounts to $6.5 million each year to other residential customers and is forecast to grow to as much as $78 million annually if the rate is not addressed. Over the next 20 years the cost shift to other customers is estimated to be about $667 million.

"Rocky Mountain Power supports renewable resources as long as an appropriate rate is in place that allows customers to use private generation without adversely affecting other residential customers," said Gary Hoogeveen, Rocky Mountain Power Senior Vice-President and Chief Commercial Officer. "Customers partially relying on renewable energy through the net-metering program must still pay their fair share of the costs to serve them."

The proposed rates would apply only to customers who request a net metering connection after December 9, 2016. Rocky Mountain Power supports keeping current net metering customers on the same rate schedule.

In November 2015, the Utah Public Service Commission directed Rocky Mountain Power to study the costs and benefits of residential net metering in Utah. The vast majority of these customers use solar panels to produce electricity. The energy company installed sophisticated energy meters at a sampling of rooftop solar customers’ homes to gather data and determine the costs and benefits from serving these customers.

Residential net metering customers now receive bill savings worth about 10.5 cents per kilowatt-hour of electricity they produce even though the energy company could purchase the same amount of electricity from large solar farms for about 3 to 4 cents. Rocky Mountain Power is proposing changes in rates that will result in bill savings of about 7.1 cents per kilowatt-hour. This value reflects the benefits from both the produced kilowatt hours and the reduction of the customer’s demand. These savings accurately reflect the reduced costs to serve the rooftop solar customers and do not rely on any subsidies from non-rooftop solar customers.

Rocky Mountain Power is also proposing a new $60 application fee for most net metering customers to cover the actual costs of processing the applications. In 2015, the administrative costs were $560,000 but the fees only recovered $17,000. The proposed fees would address this shortfall.

Net metered customers still rely on the grid 23.99 hours of each day. While costs for installing rooftop solar have dropped dramatically, the number of private solar customers is growing exponentially in Utah:

  • 2012 – 1,548 customers
  • 2013 – 2,222 customers
  • 2014 – 3,572 customers
  • 2015 – 6,690 customers
  • 2016 – 17,230 customers (projected)

Rocky Mountain Power will not make any additional money through the rate change. The energy company submitted the results of the study but the Utah Public Service Commission will determine the rate for net metered customers. More information can be found at utahsolarworks.com.

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