Editor’s Note: Bill Powers is a well-regarded engineer and policy expert. He sits on the Board of Directors of the Protect Our Communities Foundation, a San Diego-based nonprofit conservation group. Solar Rights Alliance invited Mr. Powers to submit this guest post to help clarify the misinformation that utilities and others are spreading through the media.
Guest Blog Post: Response to Los Angeles Times January 30, 2022 Opinion Piece That Argues Against Net-Metered Solar Power
by Bill Powers, P.E., February 3, 2022
Michael Hiltzik is a wonderful opinion writer for the Los Angeles (LA) Times, and a primary reason this San Diego resident subscribes to the LA Times. He does fine work on “follow the money” stories, and how often that money is passed from the little guy to the fat cat via artful, insider means. However, in his January 30, 2022 opinion piece on net-metered (NEM) rooftop solar, he casts NEM solar as the bad actor harming lower-income customers and shirking its duty to pay its fair share. This is not the case. NEM solar is a better mousetrap that threatens the golden goose of investor-owned utilities’ (IOUs) transmission and distribution (T&D) infrastructure growth. NEM solar reduces the need for new T&D, to a much greater extent than opponents acknowledge, causing less money to flow from all ratepayers’ pockets to IOU shareholders. This reality does not come through in the opinion piece.
The utility industry has had NEM solar in its sights for a long time. Edison Electric Institute (EEI), the national lobbying arm of America’s IOUs, identified the existential threat posed by NEM solar to the traditional IOU revenue model – and what to do about it – nearly a decade ago (2013). California’s three major IOUs collectively contribute millions per year to EEI, and millions per year to the Electric Power Research Institute (EPRI), the research/technical advocacy arm of America’s IOUs (see “Executive compensation and outside donors”) . There is no comment in the 2013 EEI document about NEM being an equity issue that disadvantages poorer customers. The only equity issue discussed is shareholder equity (p. 18):
“Investors have no desire to sit by and watch as disruptive forces slice away at the value and financial prospects of their investment . . . utilities and financial managers of investments have a fiduciary responsibility to protect the value of invested capital.”
The actions that EEI advocated in 2013 to stall NEM solar (at p. 18), are largely what Severin Borenstein, faculty director of UC Berkeley’s Energy Institute at Haas, The Utility Ratepayer Network (TURN), Natural Resources Defense Council (NRDC), the Public Advisor’s Office (PAO) of the California Public Utilities Commission – and the IOUs – advocate for the CPUC’s NEM solar proceeding. In the proceeding itself these entities are collectively known as the “anti-NEM” parties, because their positions are so similar and so negative toward NEM solar.
Severin Borenstein is an advocate for the economic advantages of deregulated wholesale energy markets. He frequently writes blog posts and Energy Institute papers on this topic, some that decry the over-compensation of residential NEM solar customers. He also sits on the board of California’s deregulated energy market grid operator, the California Independent System Operator (CAISO). CAISO is tasked with moving bulk power over the high voltage transmission system. NRDC sits on the board of EPRI. TURN and PAO have taken on the role of partisans on this issue (although we collaborate on occasion on others) and will not let other perspectives, no matter how well-substantiated, dissuade them from embracing what is essentially EEI’s anti-NEM solar strategy.
I am an expert witness in the CPUC’s NEM proceeding. My testimony in the NEM proceeding demonstrates that rooftop solar, in its current NEM tariff configuration, economically benefits all Californians. IOU T&D revenues have grown spectacularly in the last 20 years, and especially in the last 10 years. The IOUs justify T&D expansion to (1) address forecast grid congestion due to load growth (aka “reliability”), or (2) to import remote renewable power to demand centers like Los Angeles and San Francisco. NEM solar dampens the justification for T&D expansion, whether for reliability or renewable power, to a much greater degree than it is credited for in CPUC cost-benefit modeling. I was cross-examined on this point by TURN during the NEM August 2021 evidentiary hearing (pdf pp. 20-38). NEM solar is slowing the rise in new IOU T&D capital investment faster than it is allegedly shifting costs onto non-solar customers.
I gave a webinar for Clean Coalition in June 2021 on the economics of NEM solar and why it is economically beneficial to solar customers and non-solar customers alike. The webinar translates my CPUC testimony into lay language and is available here.
NEM solar and equity: The quote below on equity from the LA Times opinion piece is accurate, but it does not address the equity solution to increase solar adoption by renters and lower-income customers or even hint that there is one:
“Rooftop solar expansion shows the same economic mismatch, because it lends itself to installation on owner-occupied single-family homes.”
The equity solution is financing that is available to all, renter or homeowner, good credit or bad. This can be achieved by converting the customer’s monthly bill for grid power into the customer’s finance payment for rooftop solar and batteries. This is known as on-bill financing, or more accurately, on-bill repayment. When bill repayment is tied to the electric meter, not to a specific customer, it is known as “tariffed on-bill.” The customer’s credit history and ownership status are irrelevant under this format. Tariffed on-bill opens the door to renters and lower-income homeowners having equal access to rooftop solar and batteries.
The IOUs have opposed making this financing tool available to residential utility customers. Unknown players went so far as to turn the FBI on former Senate Pro Tem Kevin De León in 2013 when he proposed a bill that would make this type of financing available. There has been little real progress on this front since the attempt by Kevin De León in 2013.
There is a compelling need for a follow-on LA Times opinion piece that addresses the broader underlying interests of the forces arrayed against NEM solar and the implications for ratepayers going forward, including:
1) The role of EEI in influencing California energy policy and the genesis of its attack playbook to derail NEM solar;
2) The role of the California IOUs in funding the EEI effort;
3) The web of insider relationships arrayed against NEM solar in California, which includes Severin Borenstein and his outsized presence as the intellectual champion for deregulated wholesale energy markets and against the alleged economic inefficiencies of NEM solar, and the funding by the IOUs, CAISO, and the CPUC of the Energy Institute at Haas that he directs;
4) The role of NRDC in providing a green veneer to the IOU attack on NEM solar, and its function on the board of directors of EPRI, a board predominated by IOU senior executives;
5) TURN and PAO as relentless advocates for lowest marginal cost, remote renewable power while largely discounting the billions in annual spending by the IOUs to build-up the T&D system to handle the flow of this remote power; and
6) The nearly $40 billion the CPUC projects that the IOUs will spend on rural T&D fire hardening this decade (p. 62) that would drop to almost zero capital T&D spending if the relatively few customers in the rural high fire threat areas were equipped with NEM solar and batteries – at their own expense – to seamlessly ride-out fire safety shutoffs of the existing rural T&D grid.
All of these topics should be on the table for open discussion given the extreme nature of the current attack on NEM solar. The side-lining of NEM solar will limit the state to greenhouse gas reduction solutions that require massive spending on new transmission, separate and apart from the massive T&D spending for fire hardening. The CAISO just announced a draft plan to spend $30.5 billion on new transmission to move 53,000 MW of remote utility-scale solar and 24,000 MW of utility-scale wind power over the next 20 years. NEM solar can meet the same greenhouse gas reduction need without new transmission, saving California ratepayers $30.5 billion and the substantial environmental impacts of new transmission lines and large-scale solar and wind farms.
My recommendation: The LA Times should host a NEM solar debate between Severin Borenstein and myself where tough questions are asked by well-informed, neutral moderators who take the time to get to definitive answers.
Bill Powers, P.E.
Powers Engineering (also Board Member, Protect Our Communities Foundation)
4452 Park Blvd., Suite 209
San Diego, CA 92116
More reading on this topic: White Paper: How the utilities use tricky math to vilify rooftop solar