Short-sighted Move By We Energies Against Solar Power
The power utility seeks policy changes that will hamper the development of renewable energy in Wisconsin
Solar Panels at 2830 N. Booth St. Photo by Joe Kelly.
We Energies has filed a rate change, currently pending before Wisconsin’s Public Service Commission, that threatens tariff increases for everyone and specifically aims to penalize those with solar power installations. This rate filing is in conjunction with similar changes proposed by utilities Madison Gas & Electric and Wisconsin Public Service.
A question of fairness arises when breaking down one of the proposal’s two main parts. Aside from raising fixed monthly electric rates from $9 to $16, We Energies intends to lower a user’s kWh rate from 13.9 cents to 13.5 cents. This reduction in kWh value rewards high-energy usage customers while punishing those concerned with low-energy usage lifestyles.
Michael Vickerman
As broken down by Michael Vickerman, director of RENEW Wisconsin, lowering kWh rates will reduce “customer sensitivity to the economic effects of electricity usage.” It sends out a price signal,We Energies wants its customers to use more of its electricity. The environmental impact of this particular move will increase “demand for kWh from the grid,” which will increase carbon emissions and other pollutants. “This is unusual in a rate case,” says Vickerman.
The second part of the proposal is “effectively their tax on clean energy. And that includes clean energy that people already have invested in and put on their house or business. That is the biggest threat.” We Energies is attempting to restructure how solar is measured and charged on a customer’s energy bill in a way that would diminish return on investment.
We Energies is placing a “requirement on customer-generators to own their generation equipment. No arrangements involving leases or third party financing would be allowed.” This would hurt Sunvest, for example, which is a Pewaukee-based general contractor that specializes in solar installation.
State law is not clear on the subject of solar system ownership. The holes in public policy on regulation began closing back in 2006. Vickerman developed and negotiated policy recommendations that were signed into law as the Renewable Energy Standard. The standard, increased from 10 percent to 50 percent in April, was a policy goal designed by former governor Jim Doyle to reach what was at the time considered an ambitious goal.
Sources of outside capital, like Sunvest, are supported by clear language in public policy that regulates solar energy. As an investor, a lack of “clear language creates uncertainty that inhibits investments. If you are an investor, you don’t know whether you can sell or provide energy to a customer from a system behind that customer’s meter. You could be at some risk of being subjected to legal challenge or being regulated as public utility … In those states where the language has been developed through recent law, there is no uncertainty. So a company can go in and work with a school or local government.” Or, for example, with Riverwest homeowners.
Questioning Why?
What exactly causes this sort of (re)action against solar by We Energies, and how does the current energy grid structure fit into this issue economically? Inhibiting solar investment reflects the values of the management. Vickerman believes the problem is a “short-sighted, kind of control-freak management culture” that wants “to generate all the electricity that customers use. They don’t want to share the grid with anybody else, and that includes their own customers.”
The monopoly infrastructure created with power utilities, like We Energies, is set up to establish an economically efficient system. Better to have “one provider instead of four or five with their own sets of poles and wires and power plants,” says Vickerman. One provider that is a privately owned company entitled to a profit from their investments.
Federal law requires utilities to accept power from independently sourced units like solar, which has taken shape as a return on investment for customers who have solar installations. However, this process of buyback (or net metering) can also be used detrimentally, as is currently happening with We Energies’ proposed reduction on investment return. “There is clearly a lack” of public policy “that is detrimental to the states economy and the environment and so we would like to promote the idea and the commitment among decision makers to create policies to advance solar, specifically,” Vickerman said.
The largest utility in Minnesota possesses a policy framework that progresses solar via community solar projects, customer generation and utility ownership. “So they’re gonna move forward. They’re gonna see a rapid expansion of solar and it’s gonna come at a relatively low cost. We don’t have that in Wisconsin.”
In addition to RENEW Wisconsin, the City of Milwaukee’s solar initiative Milwaukee Shines is a local resource for project organization and is tracking the development of the rate case. The technical hearing in Madison is scheduled for today, while the public hearing in Milwaukee is set for Oct. 8.
Solar cuts peak demand. This allows a utility to avoid investing in more generation equipment and fuel to meet peak demand. Therefor, solar behind the meter improves the utility companies bottom line.
Nevertheless, some folks are jerks, and some of those are on utility company boards. Screwed up people making screwed up decisions points out the need for legislative regulation. Let’s get that done.
This is an extremely interesting development in our political system. The article is well written and informative in a way that grabs my attention. I will be very interested in what the results of the hearing
We Energies claims that this is for fairness; i.e. a homeowner who cannot afford solar installation does not have to subsidize the cost of the grid for those who can afford solar. However, what I am failing to understand is how the ban on the ability to lease solar fits into this. How does prohibiting a homeowner from leasing solar equipment rather than purchasing it create a “fairness” in the distribution of the fixed costs of the grid?? It seems to me like that is simply a measure to discourage competition to We Energies, which then leads me to believe that the entire proposal (increasing the fixed rate while decreasing the kWh rate, adding the “tax” or surcharge to solar users, etc.) is not about “energy fairness” at all, but simply is about diminishing or eliminating solar in this state.
With that, I am wondering, does the ban on leasing apply only to those connected to the grid? Or is a homeowner who goes off the grid entirely also banned from leasing their solar equipment?
As customers of We Energies, we have invested nearly $1 billion in renewable energy over the past decade alone – all in Wisconsin.
But the marketplace has changed. Customer-owned generation is growing to a point where subsidies paid by my dollars are no longer appropriate. Their rate plan — which is fair — lowers the subsidies that customers are currently paying for those who own their own generating systems.
The less than 1% who own solar equipment want We to buy their excess energy at three to four times the market price and force the other 99% pay for it.
These same folks also avoid paying their fair share for being connected to the grid. For example, customers who have a solar system on their roof are still connected to the grid. They use it in the evening. They use it on days when the sun doesn’t shine or when their energy demand exceeds their ability to produce power. And, yes, they use the grid when they sell excess power back to our network.
Today, those who do not have or cannot afford their own systems pay a greater share of the cost of maintaining the grid.
Those with their own systems are not paying their fair share for our first responders, line crews, or the poles, wires, and transformers that keep energy flowing every hour of every day. The proposed rate plan takes a positive step toward fairness for all our customers who use the grid.
When you strip away the rhetoric and look at the facts, the rate plan – which raises the monthly facility charge while lowering the kilowatt-hour charge – is reasonable. The City of Milwaukee has significantly increased their fixed charges on my water bill and other municipal utilities have also moved to balance out fixed costs.
Solar is great but I don’t want to pay for your bill reductions. Everyone should pay their fair share.
Would have been a better article had the reporter talked to someone at WE so both sides are represented. Looks like there are good arguments on both sides of this issue. I think the question in one of the comments was about leasing issue. My understanding is that is somewhat of a gray area that regulators need to work out. Someone who comes in and leases could be viewed as another utility. Not sure if regulation allows for that. That appears to be one of the issues to be decided. Hoping for some middle ground solution so those of us without solar panels don’t get stuck paying for those who do.
Yes, owners of solar generating systems do use the grid, but not as much as they did before they installed the system (assuming same usage pattern). The solar array reduces the overall load of the building, and as for generated power, it will go to the nearest neighboring loads, thus reducing their usage of the grid as as well (fewer electrons traveling the full distance from the power plant). So no, solar users are not using a greater portion of the grid than their total usage would indicate.
And what about those building owners who spent money making efficiency improvements? Now their investment, which is also contributing to the good of society by reducing pollution and slowing climate change progress, will not be rewarded as much.
I don’t mind paying for what I use, but if others are using more, fairness means they should pay proportionately more. I already pay monthly fees for the grid and for my 2nd meter that measures my solar generation. If We needs to raise their fixed charges, they can at least refrain from unfairly blaming solar and energy-efficient customers.
Steve,
Since it appears you are a spokesperson for We Energies (“…they sell excess power back to our network…” “…not paying their fair share for our first responders…,” “…step toward fairness for all our customers who use the grid…” etc.), perhaps you can clarify this for me: since WE’s PR campaign is trying to convince us that this rate proposal is in the spirit of fairness for its customers who do not generate solar power, so that they are not forced to subsidize the costs of the grid for those connected the grid who do generate solar power, then the ban on leasing solar equipment must apply only to those homeowners who would remain connected to WE’s grid, correct? Can you please explain how banning my neighbors from leasing solar equipment would protect me, as a person who does not generate solar, from having to cover their share of the grid cost? This part of the proposal seems to me like it it is designed to protect WE’s executives and investors rather than its customers, but perhaps you can explain to me how I am wrong.
Thanks!
You missed something BIG!
I am a customer generator currently. When I produce more KW’s than I consume it is applied to my bill in the form of a credit. We-energies currently buys credit back once a year in May for about a 20% of the actual credit. Last May I had approximately a 100$ credit going into May, and was sent a check for around 20$.
Another change they are proposing to WPS is to have this change from annually to monthly.
That is going to kill WI generators; here is why.
I don’t make any electricity from December through March, due to snow cover on the panels. That is my prime time to consume any credit on my We-energies bill I might be able to build up in the summer months. That means they are able to negate any credit I ever generate. If this passes, Solar in the state of Wisconsin will have a significantly slower payback period(approximately 80% slower). This is key, for small home based generators.
That reduction in kwh charge from .139 to .135 will only save me $1.80 per month on usage of 450 KWHrs. So they would be giving me $1.80 but raising the facilities charge by $7. plus I have solar so they also will charge me $3.79 per Kilowatt of Generation , $3.79 times 4.5K of solar equals an increase of $22.25 per month or an extra $267 per year to them. From just one customer. Now take that times all the solar customers and take just the $7 times all the customers . That’s a pretty big profit boost.
In response to Eric Beach’s comment, I take my credits by automatic deposit every month I have one. But I have only been generating excess electricity since July so I don’t know what will happen in may. March is my most productive month since it is cooler and the panels produce more when they are cool. So if they do that in May they are taking your most productive time of the year to only pay you 20%. If they get this price hike request put through though most people won’t have any credits because they will be reducing your payback rate from 14 cents to 3 or 4 cents. For most people any credis will be eaten up in the increased facilities charge and the Grid standby charge they want. You are right though, that will extend your recouping your solar installation cost either way. How do they justify only paying you 20%??
Barb, you make a great point! Independent sources of energy generation contribute to clean energy. The idea that solar systems hamper We Energies, and non-solar customers, is based on a logic of dependence. Why should We Energies be so dependent on its customer base? Don’t they have enough business already?