New Study Reveals the Extent of Rooftop Solar Cost-Shift in Nevada
Aside from maybe Arizona, no other state has expended as much time and energy grappling with policy issues associated with distributed generation (DG) as has Nevada. This should hardly come as much of a surprise given the tremendous amount of solar energy potential within the Silver State as well as a generous menu of incentives for DG customers. Given these factors, market penetration of rooftop solar within the state has been significant, and the state reached its 235 megawatt (MW) net metering cap last summer.
As a result of reaching this cap, the Public Utilities Commission of Nevada (PUCN) was directed by the Nevada legislature to develop a new tariff for DG customers within the state. PUCN did just this and in 2015 unanimously approved of a new rate structure that would effectively compensate DG customers at the avoided cost rate rather than the retail rate for any surplus electricity generated. DG customers would also be responsible for a monthly grid hookup charge. These changes would be phased in over a 12 year period and, controversially, the estimated 30,000 existing net metering customers were not grandfathered into the old rate structures.
Amid public pressure and with support from NV Energy and Governor Brian Sandoval (R-Nev.), proposals to grandfather in the existing customers are now before PUCN and the Nevada legislature for the 2017 legislative session. In anticipation of this continued debate, members of the Nevada Legislative Committee on Energy requested that Energy and Environmental Economics, Inc. (E3) develop an update to their 2014 study analyzing the financial impact of net metering within the state.
This update was released last week and found that there was a total cost-shift of about $36 million per year from the 30,000 DG customers to non-DG ratepayers within Nevada. Furthermore, E3 determined that it would cost roughly $15 million per year to grandfather existing DG customers into the old rate structure. Significantly, these findings deviate from the earlier 2014 analysis that found no significant cost-shift for DG customers. According to E3, this change can be attributed to low natural gas prices and precipitous decrease in the cost to generate electricity from utility-scale solar over just the last couple of years.