Nev. faces solar exodus in wake of rate changes

Source: Daniel Cusick, E&E reporter • Posted: Tuesday, January 12, 2016

As recently as last summer, Nevada was the nation’s No. 4 market for solar power and claimed the nation’s No. 1 ranking for solar sector employment on a per-capita basis.

Today, the state’s status as a solar leader is in free fall as a result of a new net-metering ruling adopted by the Nevada Public Utilities Commission (PUC) last month.

By Friday afternoon, at least two major solar firms — industry leaders SolarCity Corp. and Sunrun Inc. — had begun exiting Nevada, shifting their operations to states where they say government policies are friendlier to distributed solar. Experts say Nevada risks hemorrhaging thousands of manufacturing and installation jobs while freezing out the clean energy sector’s hottest commodity — distributed rooftop solar.

“It’s unfair to the Nevada ratepayers who bought into something that the state itself had promoted as good energy policy,” said Sean Gallagher, vice president of state affairs for the Solar Energy Industries Association (SEIA).

“It pulls the rug out from under those customers, some of whom made major investments in their homes and businesses,” Gallagher said.

The exodus began earlier this month when SolarCity said it would lay off 550 employees in Nevada, adding, “Where possible, the company will relocate affected employees to business-friendly states.” Among the company’s shuttered facilities is a training center in West Las Vegas that opened just over a month ago.

Sunrun, meanwhile, announced a day later that it had ceased all operations in the state, affecting both its employees and hundreds of independent contractors that it uses to install solar systems.

Placing responsibility squarely on Nevada politicians, regulators and NV Energy Inc., the state’s largest electric utility, Sunrun said the state’s new policies on solar “will block thousands of homeowners from choosing clean, affordable electricity, ending the only chance Nevadans had at enjoying choice and competition in electric energy.”

Putting ratepayers in solar handcuffs

The fallout follows last month’s decision by the Nevada PUC to apply new rules to customers of regional utility NV Energy who produce power from rooftop solar systems and sell it back to the utility to offset their power bills. The policy, called net metering, is allowed in some form in 44 states, and it has become a major driver of solar power expansion nationwide.

In Nevada, state law capped the amount of power that can be generated by net metering at 235 megawatts, a threshold that was reached last summer, effectively halting the addition of new distributed solar power. But Nevada’s new net-metering rules, which took effect Jan. 1, took another whack at solar by reducing the compensation rate for new and existing rooftop solar producers who sell their excess power to NV Energy.

The PUC made the changes to comply with a Nevada statute passed last year directing regulators to craft a new rate for net-metering customers of NV Energy, which provides power to 1.3 million customers across the state.

Under the new policy, compensation for rooftop solar will match the wholesale rate of electricity rather than the retail rate. That means customers who already installed solar systems will receive roughly half of the credit they once saw under the old net-metering policy. Distributed solar producers will also face higher rate fees to connect to NV Energy’s distribution grid, estimated at roughly $40 per month.

Renewable energy advocates, including major solar firms and leading trade associations, argue that the new Nevada policy undermines what had become a model of utility integration of emissions-free renewable energy.

Moreover, critics say regulators have economically handcuffed thousands of NV Energy ratepayers who installed solar panels on rooftops believing that the systems would help lower their costs while reducing energy-sector air pollution.

In a statement, SolarCity CEO Lyndon Rive said he had lobbied hard to prevent the net-metering changes from taking effect, “because I am convinced that [Gov. Brian Sandoval (R)] and the PUC didn’t fully understand the consequences of this decision, not only on the thousands of local jobs distributed solar has created, but on the 17,000 Nevadans that installed solar with the state’s encouragement.”

Cries of bait-and-switch

SEIA is among the groups finalizing petitions with the three-member Nevada PUC to undo the reforms to the net-metering law, saying they are inconsistent with broader state policy. But Nevada’s leading politicians appear ready to let the policy stand.

In its reconsideration petition filed Friday, SEIA said, “the new rates and charges turn the economics of investing in net metering systems on their head, effectively ending the growth of net metering in Nevada.”

For the thousands of home and business owners who have already invested in solar systems on the promise of energy cost savings, their PV systems “now represent a financial anchor and not a cost-bending asset,” the group said.

But Nevada’s leading politicians appear ready to let the policy stand.

Sandoval told local television affiliate KTNV on Thursday that he would not ask the PUC, which he appointed, to reverse its decision on net metering. He characterized it as part of a process to level the playing field between solar-producing and non-solar-producing customers of NV Energy.

The utility had argued before the commission that non-solar ratepayers were effectively subsidizing customers with rooftop solar systems at a rate of about $1.06 per month due to the higher costs of uploading the distributed energy to the grid.

But solar industry officials said such estimates were greatly exaggerated. Moreover, they said, the new policy creates an ever-greater imbalance in the playing field for Nevadans who were told that installing solar power would save them money.

“Nevada passed incentives to attract residents to go solar,” Bryan Miller, a Sunrun senior vice president and chairman of the Alliance for Solar Choice, said in a statement. “But after baiting homeowners with incentives, the state switched the rules, penalizing solar homeowners to deliver additional profit to NV Energy. This bait and switch hurts Nevada families, many of whom are retirees on fixed incomes, and who use solar savings to meet their monthly budgets.”

If solar industry petitioners fail to persuade the PUC to reverse its decision, they may file a lawsuit in state court, officials said.

In Washington, D.C., Nevada lawmakers remained quiet about the state’s solar fracas. Spokespersons for Sens. Harry Reid (D) and Dean Heller (R) did not respond to requests for comment in time for publication. An official for Rep. Dina Titus (D) said her office would not comment on a state legislative issue.

Reporter Umair Irfan contributed.