Solar industry fights SDGE proposed rate change

Last month, San Diego Gas and Electric (SDG&E) proposed to redesign its rate structure, but was immediately reproached by the Utility Consumers’ Action Network (UCAN) for allegedly submitting what it called an “illegal” application. According to the network, the motion would cause solar power users to have to pay more than other SDG&E users for the use of electricity transmission through a Network Use Charge, a Basic Service Fee and a Prepay Service option.

UCAN filed a motion Oct. 25 asking SDG&E to resubmit an application that does not violate state laws.

At a meeting held Nov. 15 with local Fallbrook business and residents using solar power, SDG&E outreach representative Ian Stewart stated that though solar power users were generating their own power, the electricity generated by their systems was going through the utility giant’s distribution system.

In a move that is meant to “protect its customers,” SDG&E would require solar customers to pay an additional $11 a month.

“[Solar power users] don’t pay for maintenance for their demand,” said Stewart, who said solar users were traditionally in Tiers 3 and 4 of the SDG&E rate paying system. By investing in solar, they were able to drop their electric bills to nearly nothing, and moving them into Tiers 1 and 2, which do not have the same infrastructure costs.”

It was stated that SDG&E was impacted by California State Assembly Bill 1X (AB1X), which imposed a rate cap on residential rates for less than 130 percent of baseline. This also made rates more “fair and equitable” among all residential customers. According to Erica Johnson of the San Diego Solar Coalition, AB1X will end in eight years.

“We cannot wait for eight years,” said Stewart.

Johnson stated that SDG&E approached the California Public Utilities Commission (CPUC) for a $1.1 billion increase in revenues.

“SDG&E has not been able to have insurance cover the costs for the fires started because of their unsafe lines and distribution, so it is trying to ride the costs on the ratepayers,” she said.

In a report released by Sempra Energy (parent company of SDG&E) in early November, third quarter earnings amounted to $296 million, or $1.22 per diluted share, compared to $131 million, or 53 cents per diluted share, in the same period last year. For the first three quarters of the year, the owner of San Diego Gas & Electric and Southern California Gas Co. had earnings of $1.1 billion, or $4.40 per diluted share. In the first nine months of 2010, earnings were $459 million, or $1.84 per diluted share. Among its major subsidiaries, SDG&E made $273 million in the first nine months of this year, compared to $264 million in the same period last year.

“We have about 1.4 million meters, and 350,000 Tier 3 and 4 customers. The cost that we are asking would allow us to recover the cost to operate the system,” said Stewart. “[Solar users] are no longer paying for infrastructure costs, and less people are picking up the costs, even though that subsidy continues to grow, and that demand is going to increase.”

Milt Davies, a member of the governing board of Fallbrook Public Utility District, questioned Stewart and asked where that demand was, as there are no new buildings being put into the area with the current economic recession. Davies also stated the users were actually profitable to SDG&E.

“SDG&E is trying to circumvent legislature,” said Johnson. “No solar customer should pay more, or for charges non-solar customers don’t pay. It’s completely illegal.”

“In the quest for more money, SDG&E might basically thwart what this industry has worked so hard for: going green,” said Davies. “The 14,000 solar users are generators that did not charge a penny for infrastructure. They are 14,000 partners, but SDG&E does not see them that way. They have a new 96-megawatt plant that they have not run at peak capacity yet. People want to do away completely with SDG&E, and [the company] is worried to death about that.”

In addition to the cost increase, more charges would mean the investment of installing solar would take significantly longer to pay off.

“We haven’t run the numbers yet, but the (FPUD) 17-year payout of $7.5 million to $8 million will have a 25- to 30-year payout,” said Davies, referencing FPUD’s recent solar system installation at its wastewater treatment plant. “We have a dilemma here. SDG&E gives us a rake hike, which causes our payout to be extended, and if we had known this going in, I don’t know that we would have done this solar project. What is the incentive? They need the rate increase, but they can’t kill the best business in the world right now.”

That is the concern echoed by UCAN.

My concern about SDG&E’s proposal is not that it will be adopted; it won’t, said Michael Shames, executive director for UCAN. “My concern is that it is the beginning of a campaign by SDG&E to poison the solar well.”

“The sun is the one indigenous energy resource that separates San Diego from most other cities in the world,” Shames continued. “To harness solar power would give San Diego a huge competitive advantage economically as it would not have to rely upon the importation of any other power source. SDG&E’s plan seeks to undermine this region’s economic interest and, for that reason, the SDG&E proposal is worrisome.”

“We have to look out for the remainder of the customers,” insisted Stewart. “The cost shift that currently exists [from traditional electric to solar] works out to $25 a year, and continues to see growth because of rooftop solar.”

Johnson said on behalf of San Diego Solar Coalition, a group of solar installers and stakeholders that SDG&E’s new plan would “cripple” the solar industry. According to information she presented from the Center for Sustainable Energy®, public utility districts and school districts would suffer heavily from the proposed rate change.

According to the information, 109 county schools would see a spike in energy costs that would go from one million to three million. Water districts would see an increase of $122,400 with the additional costs in the proposed rate.

“This will hit schools extremely hard, especially in the middle of the greatest hardship for schools in decades,” said Johnson. “We are talking about jobs, and now these schools might get hit harder for doing the right thing.”

“Part of SDG&E’s scheme is to dissuade potential investors in solar power from making that investment,” said Shames. “My hope is that the CPUC’s response will be swift and decisive, thus allowing the region to dodge this attack by SDG&E on solar investments.”

Johnson stated that SDG&E was given a field of solar panels by the coalition, which acts as a peaker power plant, valued at $500 million.

“SDG&E spent nothing for its infrastructure, yet [the company] generates income from it,” she said. “Electricity without solar comes from a plant in Mexico, and it travels 100 miles before it reaches a distribution substation, then five miles to a local transformer, where it feeds electricity to homes. When someone goes solar, they’ve made an investment and want a sustainable future. They are the nearest source of demand [for local consumers], and the cost benefits of having solar users are not being recognized.”

The SDG&E proposal not only hurts the economy, said Johnson.

“It sets a dangerous precedent for other utilities by threatening to wipe out California’s leading solar industry,” he said. “This kills growth and jobs, and is illegal under the rate metering law.”

“SDG&E is not making money on energy,” said Davies. “It’s infrastructure and distribution. They are getting gouged by a $3 billion case from the people of San Diego, and Metro Water wheeling charges, so don’t put this just on the solar people.”

Johnson stated that SDG&E sees solar growth as a “threat,” despite the small percentage of users in the county.

“What they are attempting to do is go against the people and desires of California,” she said, adding that the industry has been growing rapidly, bringing down the cost of clean, less expensive energy.

“In this dim economy, the solar industry has been the bright spot for San Diego especially,” said Johnson. “We are number one in the entire country, and the amount of jobs that have been created through this industry are substantial. While others are laying off, this is fastest growing industry in the country.”

Johnson stated that last year alone, the solar power industry grew 6.9 percent.

“It’s not only a wise financial decision for homeowners to invest in and know that they have secure investment horizon, but they are working to support local economy and the national economy,” she said. “Over 30,000 are employed in solar, and over 100 companies specialize in solar power. We have even provided SDG&E with 100 million watts of power.”

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