Proposal from PG&E, other utilities, seeks cut in benefits for solar customers

As Petaluma veterinarian ?Matthew Carter’s electricity bills reflect, caring for animals in a comfortable clinic setting is not cheap.

Carter, who co-owns Central Animal Hospital on D Street with his wife, is having solar panels installed on the roof of the business this week. He hopes to slash the clinic’s energy bills, which average about $800 a month, by about 80 percent.

And, economics aside, solar power, Carter said, “is good for the environment.”

Legions of Californians have turned to solar energy for similar reasons. But under proposals by the state’s three utility giants, rooftop solar power may become less of a good deal. The companies, including PG&E, are seeking to lower compensation rates to solar customers who supply excess power to the grid, and to also implement new “demand charges” for those customers.

The changes would cut the amount solar customers save on utility bills by an average of about $20 per month.

PG&E, which has connected more rooftop solar than any utility in America, argues the changes are needed to create a more equitable and sustainable framework for maintaining the electricity grid.

“We need to make sure the grid is robust and that it can accommodate that two-way power flow,” said Steve Malnight, PG&E’s senior vice president of regulatory affairs.

Solar companies, however, say the utilities are really seeking to dim interest in the fast-growing source of power for homes and businesses. Sonoma County alone has seen an 808 percent increase in the number of PG&E customers hooking up to solar in the past decade - and there are no signs of the trend abating.

More than 180,000 PG&E customers now have solar, representing a quarter of all rooftop solar installations in the United States.

At issue is a practice known as net energy metering, which compensates solar homeowners for any excess electricity they export to the grid. The program has helped fuel the explosive growth of solar in the consumer market, especially in California, the nation’s largest source of solar power.

Currently, solar homeowners are compensated at full retail price for the power they export to the grid, which for PG&E customers amounts to about 17 to 20 cents per kilowatt hour.

In Aug. 3 filings with the California Public Utilities Commission, PG&E proposed cutting the compensation rate to roughly 10 cents per kilowatt hour. The utility also is seeking a new demand charge based on the peak amount of electricity each solar homeowner used in a month. The charge would be set at $3 per kilowatt.

Two other major power providers in the state - Southern California Edison and San Diego Gas & Electric Co. - also have submitted proposals to state regulators seeking to cut compensation rates for customers and to impose new charges.

Malnight, with PG&E, stressed that the utility’s solar customers could could slash their electricity bills by upward of 50 percent or more under the proposed rules, depending on how customers manage their electricity during peak demand times. Still, they would not save as much under net energy metering as they do now.

“We just want to see this market continue to grow and thrive,” Malnight said.

But Walker Wright, director of public policy for Sunrun, one of the nation’s largest solar leasing companies, with 40,000 residential customers in California, called the utilities’ proposals “extreme in nature and complexity.” He said the proposals are designed to discourage companies and individuals from investing in solar technology.

“There’s no doubt that the utilities don’t want this form of competition in California,” Wright said.

Across the North Bay, solar installations have proliferated in the past decade, as have the number of companies doing the work.

In Sonoma County, the number of PG&E customers using solar increased from 991 in 2005, to 8,993 as of July 31, according to company data.

In Mendocino County, the number of solar customers rose from 181 in 2005 to 1,105 in July. For Lake County, there were 124 solar customers in 2005, compared with 892 currently.

Sonoma County has 44.3 megawatts of solar capacity installed or in development, ranking it 13th among California counties, according to the California Solar Initiative.

Some argue the solar industry has matured to the point that it no longer needs to be subsidized at the level it is now. The changes sought by the utilities were sparked by 2013 legislation directing state utility regulators to come up with a more sustainable formula to pay rooftop solar owners for power they sell back to the grid.

The CPUC is expected to rule on the issue later this year.

The changes are proposed to take effect in July 2017. Customers who go solar prior to then would fall under the current rules for pricing and benefits for 20 years after their arrays were installed.

The changes also would apply to small businesses that install solar systems that can generate up to 75 kilowatts of power, according to PG&E.

Central Animal Hospital’s new system includes 79 solar panels capable of generating about 22 kilowatts of power. The work is being done by Simply Solar, which is based in Petaluma.

Sean Green, the company’s chief technology officer, said solar would still make economic sense for customers even with the changes PG&E is seeking. But he also expressed doubts that the utility needs those changes, saying the amount of electricity being circulated back into PG&E’s grid from rooftop solar isn’t “making that much of an impact” on the company’s bottom line.

He noted other potential threats to the solar industry, including a federal tax credit that is set to expire at the end of 2016 and can cover up to 30 percent of the cost to install solar systems.

Sonoma County offers its own incentive program, providing loans for solar panels and other energy-efficiency systems that can be paid off through property tax assessments. Several private lenders now also are participating in energy- and water-saving retrofits in the county.

For Matthew Carter, putting in solar panels at his veterinarian clinic fulfills a long-held dream. By doing so now, he won’t be subject to any changes in how his business is compensated or charged for the power that’s generated.

“It seems like a good investment,” he said.

You can reach Staff Writer Derek Moore at 521-5336 or derek.moore@pressdemocrat.com. On Twitter ?@deadlinederek.