Nevada utility regulators have created an ugly legacy for themselves with their December decision to slash net metering benefits and increase fees for rooftop solar – even to those customers who have participated in the program for years.
Solar companies Sunrun and SolarCity have already announced they will cease operations in the state. SolarCity is laying off 550 workers. Sunrun will lay off hundreds more. And all 6,000 of the reported solar jobs in the state are at risk following the public utility commission decision to allow the state’s largest utility, NV Energy, to ratchet up connection fees for solar customers while obliterating the ongoing net metering credit. It is, by far, the most aggressive assault on the solar industry in any state so far.
Nevada regulators put a lot of thought into the state’s net metering plan when it was created. The plan, which credited rooftop solar users daily for the excess power they fed onto the grid, was one of few that based rates on the time of day and peak usage. It was a thoughtful and impactful program specifically designed to encourage home and business owners to invest in solar energy and contribute to a cleaner Nevada.
The state, its regulators and its utility companies all used the program to entice 18,000 home and business owners to invest their own money in energy generation equipment that feeds power onto the grid.
In oppressed and tyrannical countries with corrupt governments, only a fool would make a long-term investment based on promises from a massive monopoly with guaranteed profits overseen by a quasi-governmental body. Of course, one of “those governments” would change the rules in the middle of the game and the long-term investment would be lost.
But in Nevada? This is a state in the United States of America. Governments can’t get away with urging consumers to invest their own money in an electric grid controlled by big business and the state and then change the rules and jack up the charges to negate the economic benefits of the investment, right?
Apparently, Nevada regulators aren’t bothered by the fact that they created the previous net metering system to encourage private solar investment only to decide now that profit margins for the state’s biggest utility are more important than the financial solvency of the 18,000 individuals and business owners they urged to make that private investment.
The problem for solar companies around the country and for those individuals and business owners who might invest in rooftop solar is that the Nevada decision sets a dangerous precedent. It means that no Mr. and Mrs. Smith or Acme can safely trust that they will get the financial benefits they sign on for when they invest in rooftop solar panels. If regulators can change the rules and gut financial feasibility of an investment they urged in the first place, it will make solar investment hard to sell – not just in Nevada, but everywhere.
That’s why the Nevada decision is likely to see years of controversial fall-out. There are already discussions about hearing comments on petitions to fight the decision in Nevada. There will likely be lawsuits and court cases as well.
This decision is just the beginning of years of battle for Nevada utility regulators.
And, who knows, by the time it’s resolved, those 18,000 existing solar investors in the state might be Nevada’s first grid defectors with their own battery storage systems. If the utility and state regulators raise grid connection fees for solar customers from an average of about $11 to about $40 while slicing the credit they offer by 75 percent, as proposed, it will almost certainly drive consumers to look for alternatives – both because they’re angry and disillusioned with a corrupt system and because energy storage might just be cheaper.
While today’s headlines highlight an exodus from Nevada of leaders in one of the nation’s fastest-growing industries, media two years from now could be celebrating Nevada as the continental (it’s already happening in Hawaii) frontier of grid defection and energy storage.